Why is Lebanese e-commerce so dormant?
The retail sector has evolved drastically over the past decade. Buyers are no longer limited by the physical presence of inventory, nor are they forced to vent into their overheated cars, get stuck in hours of traffic, only to find out that the overcrowded shopping center has run out of their favorite item.
E-commerce has allowed users to purchase anything they would like with the click of a few buttons and a couple of days of delivery time. Lebanon, with its increasing internet and credit card penetration, as well as its tech-savvy and trendy shoppers should be one of the region's first e-commerce adopters! Neverheless, Lebanon still relies very heavy on bricks-and-mortar shopping, while online shopping is only given a second (third, fourth, or fifth) thought! So why has e-commerce in Lebanon and the Middle East lagged behind the rest of the world? Below are the three major reasons why Lebanese e-commerce has been struggling to catch up:
1. Lack of viable payment portals:
The country has two reliably out-dated payment portals that do not integrate with the websites. As such, customers are directed to external links and forced to re-enter their credit card data for every purchase. This is highly impractical and reduces the ease of second purchases.
In addition to the out-dated nature of the payment portals, they command a monopoly on the market and charge exorbitant fees: $ 350- $ 500 initiation fee, 3.5-4.0% transaction fees, as well as $ 35- $ 50 / month "maintenance" costs .
Furthermore, the lack of Paypal and other online payment portals in Lebanon creates an incentive challenge for e-commerce businesses.
"Ease of payment" is ranked as one of the highest conversion factors for e-commerce businesses. Lebanon provides dismal options, and then online businesses struggle to provide dynamic options such as one-click purchasing and Paypal.
2- Lack of practical online shopping:
Most new e-commerce businesses in the Middle East have been set up to cater to the "trendy" and "hip" crowd. They offer flash sales of highly priced designer items, indexing of exclusive local boutique designers, or niche gift items that cater to niche consumers. Furthermore, the "old guard" of e-commerce in Lebanon provide the typical online gift selections flowers, chocolates, teddy bears, and other "one-off" emotional gifts.
With the exception of very few sites, most Lebanese websites have a very basic design with little attention to practicality and detail. Menus pop-up in impractical ways, data entry is challenging, and most products are not searchable.
Examples of these "old-guard" websites are:
Exotica flowers: This site charges high shipping costs, overcharges for its bouquets, and tends to deliver smaller and cheaper bouquets than it promises online (it's happened to me on multiple occasions!). Furthermore, they only deliver flowers! They are one of the highest ranking e-commerce sites in Lebanon at 1.3M globally (www.alexa.com). They also take credit for adopting the online delivery system early, although they have not felt the need to improve due to lack of a sizable competitor.
Buy Lebanese: Colors, fonts, sizes, photos, and boxes are not user-friendly. Neverheless, they rank pretty high on Alexa.com: 2.5M globally. This group takes credit for being one of the early adopters of e-commerce in Lebanon! Hat-tip to their foresight!
961 gifts: not sure about the website name, the design looks basic, but menu items are clear. Their product strategy is broadly based on flowers, perfumes, cosmetics, and brandless accessories – 4.2M global ranking
Examples of the newer "niche consumer" sites are:
Lebelik, Eezmeez, Marka VIP
Some of the newer websites have focused on great design and have achieved relative success in the hip and young markets. Nearheless, away from Marka VIP which is based in Dubai, none have managed to truly achieve a sufficiently large market.
3. Purchasing power is in the expat community
Businesses that focus on the local online purchasing power will struggle in the short term. Hopefully this will change as Lebanon progresses ( hopefully) . However, until then, the buying power for Lebanese e-commerce sites will be coming from Lebanon's expat community seeking to provide gifts to their families and loved ones in Lebanon. This creates a rather challenging market for e-commerce businesses. How do you target your Diaspora? Who is your target consumer? Is the market over-fitted with one-time gifts such as chocolates, flowers, and niche designer items?
How to fill the gap
As such we identified the need for the establishment of a practical well-priced website that provides customers practical and quality options for gifts or personal use. The reasons I believe that such a model will overcome the sector's challenges are:
A- The payment portal technology will inevitably improve, along with the market's trust of online payment
B- The market is arranged with one-off gift items that typically fall under the flowers, chocolates, and traditional gift items. Therefore, competition is minimal
C- The market has seen high quality designer boutiques pop up online, but these only cater to a niche market segmentation. Highlighting the fact that the adoption of online purchases is on the rise
D- There is no website that provides practical useful household gifts with high quality branded items
In summary, there is a gap in well-priced high-quality branded items online in the Middle East and Lebanon. There is a gap in websites that provide quality household items such as Riedel, Nambe, Pip Studio, Bodum, Greenpan, Images D'Orient, Voluspa, as well as many other global brands. Rather than sending flowers, chocolates or highly-priced niche products, the consumer would not want to have an online option for:
A- Housewarming gifts to Lebanon
B- Wedding registries in Lebanon
C- Wedding gifts to Lebanon
D- Lebanese gifts that do not involve cheap chinese products, high-priced niche items, or flowers and chocolates!