The e-commerce sector in Lebanon is witnessing exponential growth since more than a year as consumers are increasingly demanding online payment options and merchants are recognizing the need for an online presence. The covid-19 pandemic played a major role in this trend as people were forced to stay home and shop from their laptops, mobile phones, and tablets. This is marking a momentous shift in the world of retail. According to research firm Finaria, global e-commerce revenues are expected to reach over USD 2.7 trillion in 2021 (roughly 11 percent growth year-over-year) and continue rising to USD 3.4 trillion by 2025. This is strong evidence which alludes that online shopping will continue to be the most powerful force in retail today and in the future. Retailers in Lebanon have realized that they should either act fast to make the shift to e-commerce or quit.
E-commerce driven consumers
Looking at the past year, Lebanon seems to be faring well In comparison with Dubai, the region’s retail and e-commerce hub in which online shopping grew over 600 percent since the beginning of the Covid 19 pandemic, even though its internet infrastructure lags other countries in the Middle East and the rest of the world. Leading senior retail executives believe that, with the considerably high rate of internet penetration in the Lebanese nation, e-commerce is set to experience ongoing growth, at least in the next 5 years. They all stressed on the fact that the future of retail in their country is certainly online, despite Lebanon’s economic hardships with rampant inflation and capital control in the banking sector. According to Rudy Bekerejian, chief executive officer of Ecomz, the Middle East’s leading online store builder, Lebanon experienced 3 to 5 times quarterly growth in merchant Gross Merchandizing value (GMV) during the pandemic and this ongoing trend will grow from strength to strength. He believes that all the retailers who are not already in the online game should act fast as e-commerce is certainly becoming the new-normal in retail. This increase in online shopping activity most certainly reflects people’s preference to shop from the comfort of their home. This was reinforced by the COVID-19 pandemic but will most certainly continue mainly because everything is available online.
It is important to note that, currently, retailers who sell grocery, sanitary products, toys, FMCG, household and kitchen appliances are having the most success in online sales according to e-commerce experts. Marie-Noëlle Fattal, corporate and digital communications director at Fattal Group, reinforces the notion of e-commerce being a key economic driver by stating that her company dedicated a separate channel in its trade universe to deal specifically with e-commerce customers. She stated that her firm has been focusing greatly on its online side of the business and noticed significant growth in sales. Wael Sinno, Managing Partner at Toy Market Trading, the holding company that owns Joué Club stores across Lebanon, stated that his company’s online transactions grew by over 65 percent since the start of the pandemic and reiterated that his customers clearly adapted to the online shopping culture.
Reinventing shopping malls
The feeling among leading regional retailers is that the role played by the shopping mall as a primary retail destination early in the century is no longer valid and that mall operators really need to reinvent themselves. The great majority of them consider that shopping malls are becoming entertainment destinations for families rather than primary shopping destinations.
Sinno believes that the shopping mall has not lost its role as a retail destination due to this surge in e-commerce activity, but online selling will continue its growth trajectory in the country and around the world. Michel Bayoud, chief executive officer at Boecker, the region’s leading environmental health services provider, says that the online shopping culture has now inoculated all of us and that even the most resistant to online shopping in the past are now buying items that they least expected they would through e-commerce platforms. Moreover, he says that online shopping that was mostly popular between millennials and younger crowds has now reached the adult population and all of us buy or order things online on a daily basis. He believes the way forward will see a continued growth in online shopping to the point where we will be at par with the habits of the western world. A senior executive from one of the region’s leading technology PR firms echoes Bayoud’s statement and adds that technology will define shopping throughout the region and beyond. He believes the coming years will witness the global expansion of voice-activated payments, biometric payments, cryptocurrencies, and transaction by facial recognition, and many countries in the MENA region are currently eager to adopt and roll out these digital technologies which will be regarded as game-changers for the world of retail.
Go digital or bust
It remains to be seen if these extremely innovative technologies will be adopted in Lebanon which primarily lacks a sufficient infrastructure. A substantial upgrade is most certainly needed to roll out this pioneering knowhow. As the owner of one of Lebanon’s largest e-commerce platforms, Rudy Bekerjian believes that shopping online became the most efficient and effective way for everyone to go about buying their daily necessities and beyond, despite Lebanon’s week infrastructure. This is good news for all those who are taking a chance and building an e-commerce infrastructure as this sound investment will bear fruit with so many customers expected to join the ecommerce bandwagon going forward.
From a legal perspective, the Lebanese government has taken a step to modernize its legal system with the introduction of a new e-commerce law which clearly defines the e-commerce process. However, it does not offer individuals the needed protection when it comes to the collection, processing and use of their personal data. Legal experts believe that the law which was initially passed in 2004 and upgraded in 2018 needs to go a long way to meet the international legal standards that protect customers in their online shopping process.
Having a comprehensive law that protects customers and businesses simultaneously will provide e-commerce in the country with a major boost. Many retailers have strongly urged the government to amend the law and ensure that it facilitates both the exporting of goods and importing of products into the country from a taxation and government red tape perspective.
Overall, it remains to be seen how the government will back the e-commerce sector, going forward. However, what is certain is that much support is needed to enable this business to continue flourishing.