EJB: Egypt’s e-commerce transactions to reach EGP 80 billion in 2021

The e-commerce transactions in Egypt are expected to reach 80 billion Egyptian pounds ($5.1 billion) by the end of 2021, said Sherif Makhlouf, an Egyptian Junior Businessmen Association (EJB) member on Sunday.

Makhlouf, who is also chief executive of BOOST, also said the e-commerce transactions in Middle East region are expected to register $71 billion in 2021.

Electronics top the revenues of e-commerce in Egypt with a percentage of 28 percent, followed by fashion of 21 percent, food and personal care of 19 percent, toys, hobby and DIY of 19 percent, and furniture and appliances of 12 percent, he added.

Speaking about Direct to Consumer (D2C) Companies, Makhlouf clarified that they are retailers, which sell directly to consumers, usually by investing in new product development and branding while outsourcing their supply chains. He underlined that they are typically selling using digital channels or direct distribution while omitting retail overheads and capitalising heavily on social media marketing.

Makhlouf pointed out that the D2C trend is just a part of the e-commerce world, saying marketplaces such as Amazon, Jumia, and Noon only account for 50 percent 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.

He believes 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.

The fashion industry will be the most demanded sector through the D2C because of the relatively advanced supply chain of the industry and new product development in Egypt, Makhlouf expected. This will be followed by home accessories, personal care, toys, hobby and DIY, pet products, furniture, and appliances.

He also forecasted that the electronics and media sectors would not achieve progress in the D2C model due to the complexity of the production and supply chain.

The growth of D2C brands will lure more foreign direct investments in Egypt, Makhlouf said 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. D2C is a market innovation by entrepreneurs, who decided to reach the end consumer with direct channels skipping the middle man, Makhlouf said.

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. He noted that many sellers have now legit online businesses and with large operations and mostly tax-paying like any other retailer out there.