Company Trend Analysis - Amazon-Souq.com Deal Will Be A Minor Setback For Emaar - MAY 2017
BMI View : Losing the bidding contest for Souq.com will not be an insurmountable setback for Emaar Malls. Its fledgling e-commerce business will have access to logistics and distribution channels that Amazon will not be able to add quickly to Souq.com, while it will come to market with a single brand and a clear development strategy.
Amazon has outbid Emaar Malls for control of Souq.com, a leading e-commerce platform that services most of the Middle East and parts of Northern Africa. The value of the deal has not been disclosed, but media reports had indicated that Emaar Malls had offered up to USD800mn for the privately-owned company shortly before the deal with Amazon was announced. The deal will close later in 2017, but we do not expect Emaar to come back with a counter-offer in the meantime; its eleventh-hour bid was mostly an attempt to test Amazon's resolve but would certainly have accelerated Emaar's move into the fast-growing e-commerce market had it succeeded.
Emaar Properties is spearheading a USD1bn project to create Noon.com, an e-commerce platform that would leverage Emaar's investments in logistics (Egypt-based Aramex), shopping malls (Emaar Malls) and online shopping sites ( Yoox Net-a-Porter) to create a more dynamic alternative to Souq.com. Despite its best efforts, the latter has been unable to keep pace with growth in e-commerce sales in the Middle East and will benefit from Amazon's considerable expertise in marketing, advertising, branding and partnerships, resources that current owners Naspers and Tiger Global Management have struggled to marshal.
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|e/f = BMI estimate/forecast. Source: BMI|