E-commerce transactions in Egypt reached EGP 80bn in 2021, meanwhile, it registered $71bn in the Middle East in 2021, according to the Egyptian Junior Businessmen Association (EJB) member and CEO of BOOST Sherif Makhlouf.
Makhlouf told Daily News Egypt that electronics top the revenues of e-commerce in Egypt with a percentage of 28%, followed by fashion (21%), food and personal care (19%), toys, hobby & DIY (19%), and furniture and appliances (12%).
Speaking about Direct to Consumer (D2C) companies, Makhlouf clarified that D2C companies are retailers, which sell directly to consumers, usually by investing in new product development and branding while outsourcing their supply chains, underlining they are typically selling using digital channels or direct distribution while omitting retail overheads and capitalizing heavily on social media marketing.
Makhlouf pointed out that the D2C trend is just a part of the e-commerce world, citing that marketplaces like Amazon, Jumia, and Noon only account for 50% of the e-commerce sector.
He expected that the spread of the D2C would positively impact the Egyptian economy given that many e-commerce brands are sourcing and manufacturing locally and many of them are shipping products internationally.
The EJB member thought that the e-commerce market in Egypt does not need any regulations different from the current enforced retail and consumer protection laws, asserting the importance of providing it with support and incentives to allow it to flourish.
Makhlouf predicted that the fashion industry would be the most demanded sector through the D2C because of the relatively advanced supply chain of the industry and new product development in Egypt, followed by home accessories, personal care, toys, hobby & DIY, pet products, furniture, and appliances.
He also forecasted that the electronics and media sector would not achieve progress in the D2C model due to the complexity of the production and supply chain.
The EJB member said the growth of D2C brands will lure more foreign direct investments in Egypt, referring to Amazon’s acquisition of Souq Egypt and German group Rocket Internet’s investment in Egypt through Jumia.
He noted that the D2C trend affects traditional retailers however, it encouraged many retailers to revise their digital strategies to compete with such brands maybe even building new D2C brands themselves, adding D2C is a market innovation by entrepreneurs, who decided to reach the end consumer with direct channels skipping the intermediary.
He added that selling items on Facebook out of the tax system is the form by which many of these sellers test the market and see the real demand for their products with the sophistication of the new Egyptian eCommerce buy and in the post-Covid era, noting many sellers have now legit online businesses and with large operations and mostly tax-paying like any other retailer out there.
Makhlouf said the coronavirus accelerated the adoption of e-commerce by the Egyptian consumers, but this matter would happen anyway, adding it was just a matter of time.
“They [consumers] discover products and solutions online and they buy them and they get delivered efficiently and that becomes a fact of life just like it is elsewhere in the world,” he concluded.