Abstract

This case discusses Amazon.com Inc. (Amazon) taking over one of the leading e-commerce websites in the Middle East, souq.com (Souq), which marked its entry into the Middle East e-commerce market. Amazon had tasted success in most of the countries into which it had ventured but had never explored the Middle East. Amazon usually adopted the organic growth route wherever it stepped in for doing its business. However, for the Middle East, it adopted an acquisition strategy. Industry watchers attributed this to the growing market conditions for e-commerce in the Middle East as well as the complexity involved in the market in relation to its culture, protocols, purchasing patterns, and infrastructure. As a company based in the US, Amazon did not try to experiment and start from scratch in the Middle East but acquired Souq which had already established a presence in the Middle East. Souq was one of the leading companies to tap the growing class of consumers who were turning to the internet and their mobile devices to buy goods and services. The acquisition gave Amazon access to a total of 50 million consumers across several Middle East countries, a largely untapped market. However, it looked like success would not come easy as Amazon had to face several challenges like competition from local e-commerce sites, a cash payment system, inadequate logistics, data security concerns, etc.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand, study, and assess the issues and challenges of running an e-commerce company in the Middle East.
• Evaluate the entry strategy of Amazon in the Middle East.
• Understand the pros and cons of adopting organic and inorganic growth.
• Analyze the challenges Amazon faces in winning over the key markets like the Middle East.
• Explore strategies that Amazon could adopt to overcome these challenges and become the leading e-commerce company in the Middle East.

Keywords

International management; International Marketing; e-commerce; Globalization strategy; Evaluating country market attractiveness; Mode of entry; ‘Global-local’ dilemma; Organic growth vs Inorganic growth; Mergers and Acquisitions; Middle East