The news came on the 23rd of March about the acquisition of Souq.com, the leading e-commerce site in the Arab world, by Amazon, which at the beginning of this year had refused to acquire it.
On this occasion, the price, $650 million for a company that some have valued around one billion, seemed to satisfy both parties, and was announced by many analysts like a done deal.
Today, however, comes the surprise: Emaar Malls, the owner of some of Dubai’s largest shopping centers, announced its interest in acquiring Souq.com for $800 million. Souq.com, co-founded and led by Ronaldo Mouchawar, had commissioned Goldman Sachs to find a buyer for a significant stake in the company last year.
What does this sudden interest in becoming a significant competitor in e-commerce mean? For Amazon, it’s basically “more of the same”: the company’s operations in the region have been growing significantly recently, but the acquisition of Souq.com, a successful local competitor, offers a shortcut to dominance more quickly, with all that this entails, in an area where there is plenty of competition, from India’s Flipkart to Noon.com, launched by the Saudi sovereign fund and Emaar Malls.
For Emaar Malls, the acquisition would provide a launch pad into e-commerce Noon.com, making it a relevant competitor in a region that could complement its position in traditional commerce, or even to find synergies between online purchases and a network of physical stores. Souq.com, which besides being an e-commerce platform, has undertaken important initiatives in logistics and payment, represents a very important opportunity for a company that until now had practically no experience in this area.
On the other hand, everything indicates that Amazon is working more and more to combine its online platform with physical locations such as supermarkets without cashiers through Amazon Go, to patents registered for logistics that could be a very good fit for Arab countries (where mall malls already represent a very implanted part of social and cultural life, and where the possibility of using drones clearly faces fewer restrictions), as well as concepts for merging physical stores with collection points or opening physical stores for certain product categories.
This doesn’t look so much like a struggle between traditional and electronic commerce, but rather an evolution towards a fusion of the same into a whole, into a conglomerate of options. More and more competitors are exploring possibilities such as online buying coupled with the possibility of collection or return to physical stores, a tendency that increasingly extends to more categories. Thus, Souq.com could represent that step for a traditional retailer interested in gaining a solid position in the online environment, or for an online competitor interested in exploring the physical environment. In either case we’re talking about more convergence.
(En español, aquí)