Egyptian e-commerce transactions have reached $5 billion in 2021, while it reached $71 billion in the Middle East.
Electronics revenues made up the largest proportion of Egypt’s e-commerce transactions (28%), followed by fashion (21%), personal care (19%), toys, hobbies and DIY goods (19%) and furniture and appliances (12%), according to Sherif Makhlouf, CEO of consulting firm BOOST.
Direct-to-consumer (D2C) companies such as Amazon, Jumia and Noon only account for 50% of the e-commerce sector, according to Makhlouf.
Egyptian e-commerce transactions
At the same time, other players, such as entrepreneurs, use other methods, like selling goods on social media sites outside of the tax system to test the market.
Makhlouf recommended retailers to revise their digital strategies to compete with the major e-commerce brands. This will potentially help building their own new D2C brands themselves, bypassing the middle-man to reach consumers directly, he said.
The fashion industry would be the most in-demand sector through D2C because of the relatively advanced supply chain of the industry and new product development in Egypt, Makhlouf predicted.
It will be followed by home accessories, personal care, toys, hobby & DIY, pet products, furniture, and appliances, he added.
The growth of D2C brands will attract more foreign direct investments in Egypt, he said. We already witnessed this in Amazon’s acquisition of Souq Egypt, and German group Rocket Internet’s investment in Egypt through Jumia, he added.
The Egyptian economy
The Egyptian economy grew at an annualized rate of 7.7% from May to June. This boosted growth for fiscal year 2020-2021.
A Reuters poll of economists forecasts GDP growing 5.1% in the year to the end of June 2022, rising to 5.5% for both 2022-23 and 2023-24.
Inflation is rising but the annual rate still stood at 6.6% in September. This is the highest figure for 20 months but comfortably within the central bank’s target range of 5-9%.
According to IMF, high liquidity levels in the banking system and strong reserve levels have helped Egypt recover from the pandemic.
The government has also been supported by $8.5bn in IMF financial assistance in the early months of the crisis. IMF will also help with a further $2.8bn due by the end of this year.
