Dubai: Souq.com, a Dubai-based online shopping portal, is investing $150 million to develop its site and logistics services.
The company secured $75 million in funding from Naspers Limited, a South-Africa based media company with operations in print and electronic media, bringing the total amount raised by the company to $150 million, according to a statement on Monday.
The funds will be used to add more product categories, develop its mobile platform and enhance its operating processes and logistics, among others. As more consumers in the region use mobile devices, such as smartphones and tablets, the online population is set to grow further, according to Ronaldo Mouchawar, Co-Founder and CEO of Souq.com.
“The region is reaching the tipping point in mobile usage,” he told Gulf News in a phone interview.
The size of the region’s e-commerce market is estimated to be valued between $10 and $12 billion, he said. By 2015, it is forecast to reach $15 billion.
The company, which operates in the Gulf Cooperation Council (GCC) countries and Egypt, has 6.2 million registered users. It mostly sells consumer electronics but also offers fashion, cosmetics, watches and jewellery products, among others.
On whether Souq.com plans to expand to new geographic locations, Mouchawar said that it will continue to look at such opportunities, adding that “there is room to grow in current markets.”
Overseas funding
Souq.com is the latest e-commerce site in the region to receive funding from international companies. Last year, Namshi, an online fashion store, secured $13 million in funding led by US-based growth equity firm Summit Partners. It previously received funding from Investment AB Kinnevik, JP Morgan Chase, Blakeney Management and Holtzbrink Ventures, among others.
Also, in late 2011, Jordan-based flash sales site MarkaVIP secured $5 million in funding from the San Francisco-based venture capital firm Lumia Capital and Invus Financial Advisors in New York, and two years ago saw another round of funding worth $10 million led by Prime Ventures, an investment firm in the Netherlands.
International venture capital and private equity firms are interested in investing in Middle East-based startups for a number of reasons that include higher digital adoption and better infrastructure in the region, according to Emmanuel Durou, director of consulting at Deloitte, a global consulting firm.
“Digital adoption in the region was low compared to international benchmarks but in the last couple of years, we’ve seen a double-digit growth rate [in terms of digital adoption],” he said, especially in the areas of digital marketing and e-commerce.
Digital spend in the Middle East grew from one per cent in 2009 to between eight and 10 per cent this year, according to Durou.
Along with an improved legal and regulatory system, the region has seen in the last few years better broadband infrastructure, data centres, more postal services providers and improved international connectivity, he said.
