Earlier this year, Amazon jump-started its business in the Middle East by paying $580 million to acquire Souq.com, an Amazon-style marketplace based out of Dubai. Today, Amazon and Souq are making another acquisition to build out the logistics that will underpin that operation's growth: Souq has acquired Wing.ae, a startup that is building out a network for Prime-style same-day and next-day deliveries for various e-commerce marketplaces (including Souq.com).
A spokesperson for Souq said that the financial terms of the deal have not been disclosed, but we are trying to find out. Souq previously made an undisclosed, strategic investment in Wing.ae and had been working together with the company to help it scale. In fact, since Wing was founded in 2016 by Muzaffar Karabaev, Souq had been the only investor that it had ever disclosed, according to Crunchbase.
Wing.ae had been working with a number of other marketplaces in the region, and the company said that it will continue to support these if they meet a minimum size. "Wing will continue to support delivery service providers who conduct deliveries for more than 150 businesses throughout the region," a spokesperson said.
Souq today is the biggest e-commerce marketplace in the region -- with 45 million online visitors per month; 8.4 million products in 31 categories like consumer electronics, fashion, health and beauty, household goods, and baby; and local operations in Saudi Arabia, UAE and Egypt -- giving Amazon instant market share from day one of its operations there.
But as we have noted before, the Middle East is a relatively young market for services like these, so there is a lot of room for growth as well as competition. Only about two percent of all retail spend today is made online, according to a report from McKinsey.
Unsurprisingly, we're seeing some ambitious investments being made in new online marketplaces as a result. And those investments extend to the delivery aspect of online shopping, too: Mohammad Alabbar, a tycoon and retail enterpreneur who is hoping to give Amazon a run for its money in e-commerce, has backed logistics company Aramex.
"At SOUQ.com, our customers will remain our key focus and we will continue to deliver an exceptional online shopping experience," said Ronaldo Mouchawar, SOUQ.com CEO & Co-Founder, in a statement. "Fast, dependable delivery is key to this, and Wing.ae provides SOUQ.com customers with more convenience for their same and next day delivery. With Amazon’s support, we are putting all our efforts in providing an ever-improving shopping experience for customers in the Middle East.”
In that context, Souq and Amazon are buying into a startup that will help them stay ahead in an area that has been one of Amazon's traditional strengths, logistics.
Wing.ae's fast-delivery network also potentially can help Amazon build out its Prime business into the region. Prime is Amazon's the subscription-based service that provides free and fast shipping to members on many different items, along with a bunch of other perks like music and video services.
“The UAE is a leading e-commerce and smart hub in the region, and in this demanding business we work to fill the logistics supply gaps to offer customers the excellent service they want as fast as possible,” says Muzaffar Karabev, CEO and founder of WING.ae, in a statement. “With the support of SOUQ.com, Wing will accelerate investments into our technology, infrastructure and regional coverage to provide innovative delivery solutions and to make online shopping for SOUQ.com customers and merchants even more convenient.”