E-commerce challenges at Middle East

Purposes: The rapid growth in industry has led to online revolution where E-commerce industry is growing at a rapid pace in the Middle East. The purchase made through e-commerce in the Middle East is expected to reach $15 billion USD in the current year. In comparison, according to payment solution provider Payfort, in 2012 it was $9 billion.
According to data, there are approximately 4.5 million internet shoppers disparately located in the Middle Eastern countries e.g. Qatar, UAE, Saudi Arabia, Egypt and Kuwait. Nevertheless, this is only represented by a handful players that provide services via e-commerce, leaving industry with tremendous challenges. The largest e-commerce market in the region is Saudi Arabia, Egypt and UAE as per study carried out by Aramex. According to (Payfort report, 2014), nonetheless, almost eighty per cent of transaction account for cash-on-delivery system having a tremendous impact on the e-commerce ecosystem.

The cost of shipment can range anything between $10 and $30 for merchants that deal in the cash-on-delivery as their main payment option. This is due to high rate of product returns, re-stocking and re-shelving of undelivered merchandizes, cost associated with cash-handling, loss incurred due to theft and customers unwilling to accept delivery. Also, for merchants, unprecedented delay by customers in settling invoice which makes the payment option unsuitable for e-commerce start-up.
This may offer some explanation for the lack of e-commerce traders as they may view the market as unhealthy and unsustainable. There are a number of reasons for prevalent cash-on-delivery system. They are (1) lack of trust using credit card payments (2) lack of clarity in law in the event of credit card fraud (3) lack of enforcement in case of website fraud. This has created a new market for small businesses to offer the acceptance of credit cards via the third party payment gateway for a transaction fee such as (1) Ebay (2) Amazon (3) Google Pay and (4) PayPal. Whilst, on the other hand, this trend has discouraged most of the enterprises throughout the Middle East region to trade online.
My research topic will be to look in to the challenges faced by e-commerce start-up in the textile industry. My aim is to investigate the inertia and reticence that prevents businesses accepting online payment and methods that can be used to overcome these challenges.