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Economies in the Gulf Cooperation Council (GCC) region Image Credit: File photo

The low-income consumer is an important economic driver for the Gulf economy. This deep value seeking category is generally dominated by economic migrants. According to estimates, there are 22 million plus low-income migrants in the GCC and they cumulatively earn about $150 billion annually.

However, this large economic segment is generally underserved — be it in the retail sector where the focus is on mid-to-high end luxury or the financial services space where they are largely underbanked — both in their home and host countries. In recent years, there are start-ups focusing on this space.

Online retail has seen multiple start-ups in the space. Jollychic, an online fashion retailer, is targeting the low-income segment by selling fast fashion products. Awok is an online marketplace that primarily sells refurbished products and low-ticket size unbranded products. The C2C players such as Luxury Closet and online classified companies are also playing a critical role in plugging the gap.

In financial services, the opportunity is even higher. GCC migrants remit $50 billion to their home countries, but the majority of them are underbanked as the cost to service them is higher. Online players have emerged in recent years to plug this gap. As an example, Gorise, a fintech start-up, is targeting the large cross-border remittance business.

The start-ups are not just serving demand, but also democratising access of their services. For example, players such as Service Market and UrbanClap are democratising access to demand for freelance handymen, while Facebook and Google are enabling reach through low-cost ads.

Investors are also realising the opportunities available. While Souq and Noon are burning significant funds to gain market share, our estimates show that Awok has been operationally profitable quite early. It is not a surprise that Awok raised one of the largest Series A rounds in the region at $30 million — almost five times larger than a normal series A round.

We believe this is the just the beginning of a wave, as players are still focused on solving single-use cases. Given the high cross-border trade potential between the home and host countries, there will be larger players — such as retailers and financial institutions — who will start exploring this opportunity. Players who are able to solve multiple-use cases and potentially build cross-border solutions will grow exponentially.

A unicorn beckons in this space.

Sandeep Ganediwalla is Managing Partner at Redseer Consulting, Middle East.