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Oman’s e-commerce market seen to grow by 20% annually

8 Sep 2021 By GULAM ALI KHAN

Muscat – With a very high smartphone user penetration and a shift in online shopping triggered by the COVID-19 pandemic, Oman’s e-commerce market is expected to record more than 20 per cent average annual growth between 2021 and 2026.

The sultanate’s e-commerce market – valued at US$2.19bn in 2020 – is expected to reach US$6.52bn by 2026, according to an industry report released by market intelligence and advisory firm Mordor Intelligence.

The e-commerce market in Oman, which currently accounts for a very small portion of total retail sales, has ample opportunities to grow in the future, the report ‘E-commerce Market in Oman (2021-2026)’ said.

‘Despite Oman having one of the highest smartphone usage in the Middle Eastern region, only 8 per cent of the population did mobile shopping. Most of the items purchased online in Oman are groceries and music. However, more than one-fourth of the population of Oman still purchases products from foreign websites,’ the report said.

Currently, there is limited e-commerce activity in the private sector in the sultanate, whereas the government is actively promoting ‘digital society’ and e-government services through the Information Technology Authority (ITA), it noted.

‘Omani e-shoppers mostly buy clothing, airline tickets, beauty care products, and hotel services. There is an increasing trend among businesses, especially among Omani-owned SMEs and entrepreneurs, to promote and sell their merchandise through social media. The biggest hurdle in the e-commerce market is the changing mindset of people. Customers want to buy products directly from shops,’ the report said.

It said that the Internet penetration rate in Oman is estimated to be more than 75 per cent of total population, which will drive e-commerce growth in coming years.

‘The sultanate is coming very close to 100 per cent smartphone user penetration. The country has a high mobile broadband penetration and its 4G coverage also reaches a high level. In recent years, Oman has made great efforts to build up its IT infrastructure both at governmental and private levels. Oman’s mobile phone subscriber base is increasing with a penetration rate of more than 150 per cent,’ the report added.

Growing adoption of 4G and 5G technology, Mordor Intelligence’s report said, is also driving the growth of e-commerce market. However, spending on telecom services and devices is decreasing as a result of large-scale job losses due to the ongoing COVID-19 pandemic.

‘This decreasing trend of consumer spending can create a considerable barrier for this market. Major vendors in this market are also innovating their services to cater to this untapped market. But overall economic growth of the country is expected to drive the e-commerce market,’ the report said.

The report acknowledged that different government initiatives and regulations are supporting the growth of Oman’s e-commerce market.

‘The Ministry of Commerce, Industry and Investment Promotion is continuously influencing people to adopt e-commerce for shopping, import, and other activities,’ it added.

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