Amazon snaps up major Middle Eastern online retailer Souq

Amazon will acquire major Middle Eastern online retailer Souq as it looks to establish a foothold in the region.

Amazon confirmed the sale earlier this week and said it plans to bring Souq.com into “the Amazon family”. While the global e-commerce giant did not reveal the price of the deal, The Financial Times reports Amazon put forward a last-minute bid that was reportedly between $US650-750 million ($851-981 million).

The deal heralds the end of a nine-month sale process that was kickstarted by investors wanting to exit the Souq business, which was founded in 2005.

Souq is an online marketplace that allows other businesses to sell their products to consumers, much like Chinese marketplace Tmall. TechCrunch reports the website is connected to over 75,000 businesses in the Middle East, selling more than 2 million products and attracting more than 50 million monthly visits.

The website also offers “flash sale” type deals and deep discounts.

The $US650-750 sale is a smaller number than initially anticipated, with Bloomberg reporting talks took place between Souq and Amazon in late 2016 in relation to a $US1 billion deal.

“Amazon is a great fit with us. We have a lot of common values and it is all about innovation, technology and the type of customer experience and thinking that Amazon has,” Souq co-founder Ronaldo Mouchawar told Reuters. 

In a statement, Amazon’s senior vice president of for international consumers, Russ Grandinetti, said the two retailers “share the same DNA — we’re both driven by customers, invention and long-term thinking”.

“Souq.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We’re looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we’ll work hard to provide the best possible service for millions of customers in the Middle East.”

Despite the retailer extending its presence in the Middle East, there’s still no confirmation as to when the company will arrive in Australia. Despite this, some local retailers, including the large supermarkets and department stores, have spoken about how they plan to fight back.

Gary Mortimer, retail expert and associate professor at Queensland University of Technology Business School told SmartCompany earlier this month some reactions from retailers are “alarmist”.

“At the moment, remember that with Australian online spending, the total percentage is like 7% of sales,” Mortimer said.

“We’re not going to stop going to shopping centres — and you can’t get that experience, just sitting there [shopping] on your tablet.”

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