Middle Eastern e-commerce site Souq — a.k.a. “the Amazon of the Middle East” — is to be acquired by the actual Amazon, Reuters reports. The companies have an agreement in principle, the first step to a contract.
Dubai-based Souq operates in Egypt, Kuwait, United Arab Emirates and Saudi Arabia, and compares itself to Amazon explicitly and implicitly, using Amazon-like colors and program monikers like “Fulfillment by Souq.”
Reports surfaced in November that Amazon was ready to buy the marketplace for $1 billion, but in January Amazon reportedly walked away from the discussion. Requests for comment from Retail Dive to Amazon and Souq were not immediately returned Thursday.
As China’s e-commerce market has matured, dominated by homegrown giant Alibaba and hampered by slowing growth, Amazon, Alibaba and other e-commerce companies are looking to other parts of the world for growth.
The Middle East, which is home to not only a significant wealthy class but also a rising middle class, is increasingly important to many global brands. Like India, the Middle East includes many areas with young, educated and mobile-first populations, with an open mind toward e-commerce. Along with growing e-commerce operations, brands are also catering to the unique tastes and needs of the area. Nike earlier this month announced that it has developed a performance hijab for Muslim women athletes, for example.
That makes the Middle East an attractive area for Amazon’s ongoing global expansion efforts. The company has been experimenting with various omnichannel and delivery services in Europe, is a major player in India’s booming e-commerce sector and recently expanded its Prime membership to its Chinese customers, delivering a scaled-down version that doesn't include digital content streaming and offers free shipping only on foreign products that meet a certain price threshold.
Souq (Arabic for "market") offers more than 1.5 million products to consumers in the United Arab Emirates, Egypt and Saudi Arabia. Tiger Global and Naspers, among others, boosted their own stakes in the company a year ago, which led to another $275 million from investors, and are open to selling their interest, according to an earlier report.