Viaka Newsletter: Consumer digital in MENA - Opportunities Abound!
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Hi everyone! This week, we’re focusing on insights from McKinsey’s Digital Sentiment Survey in MENA. The report provides good information on digital trends in MENA, suggesting many ways for startups to expand their presence.
Companies and startups invest plenty of capital in digital channels to improve customer experience, but it is important for them to understand what consumers actually want. Consumer preferences can change rapidly, and it's unclear if consumers will return to their pre-pandemic behavior or adopt new behaviors. A McKinsey Digital Sentiment Survey of three markets in the Middle East (Egypt, Saudi Arabia, and the United Arab Emirates) provides insights into trends and patterns that companies should consider when formulating a strategy. The survey suggests that growth in the adoption of digital channels and spending will rise in the coming years, and that tailoring offerings by country and industry will be crucial for catering to digital consumers. Companies also have an opportunity to reallocate a higher share of their advertising spending to digital channels to engage consumers more effectively. The following insights found by the McKinsey report provide new channels for MENA startups to grow and build revenue.
The survey found that consumers in the Middle East are embracing digital channels across industries. The degree of digital penetration among Middle Eastern consumers is similar to that of leading European and North American countries, with Saudi Arabia and the United Arab Emirates having an average of approximately 4.5 industries that consumers interact with through digital channels, and an overall digital adoption rate of 78%. Egypt is slightly behind, but still at the level of developed markets in Europe and North America. Because of this high level of digital engagement, companies in the region have an opportunity to create an advantage by developing cutting-edge features and functionality tailored to Middle Eastern consumers that can be exported to other markets around the world.
The survey showed that mobile apps are the preferred digital channel for Middle Eastern consumers, with consumer engagement on apps that is 1.6 times higher than that of the developed markets of Europe and North America. Marketplaces are also significantly more popular in the Middle East. Egyptian consumers are the most reliant on alternative channels such as social media, call centers, or instant messaging.
The survey also found that digital adoption across industries is similar in all three countries, with rates of about 75 to 80%. However, grocery and healthcare are the least disrupted by digital with consumer adoption hovering around 55%. This suggests that businesses in these industries will need to invest in developing a digital value proposition that rivals or exceeds the physical experience. The United Arab Emirates lags behind its neighbors in the digital adoption of grocery, healthcare, and apparel, which might be influenced by Dubai's strong shopping mall culture. Consumers in UAE might require a much better value proposition to switch to digital channels. Meanwhile, Egypt has lower digital adoption of financial services (both for banking and insurance) than its counterparts. Overall, the survey provides valuable insights for companies looking to improve their digital strategy in the Middle East and other regions, especially startups who look to perfect their go-to-market strategy.
McKinsey’s full report here.
Promising Opportunities from Our Partners
New opportunities added in January 2023:
Vbout is looking for expert advice on refining its B2B growth strategy and selling add-ons to its existing user base
YallaPlay is looking for expert advice on setting up a scalable employee incentive program and exploring the possibility of a rebrand to better address global markets.
Click on the button below to see all current opportunities & get involved:
Exciting Announcements From Our Network
Below is a list of updates, wins, and asks emanating from members of the Viaka Network in the “West.”
We’re hosting a Health Tech demo day 🏥 On January 30th, five early stage Health Tech founders in the Viaka Network will present their startups (via Zoom), and receive actionable feedback (and potentially raise funds) from investors, advisors, and serial entrepreneurs in their field.
Check out this message from a Network member about a Lebanon ICT mission! “The biggest ICT outsourcing opportunities are in Lebanon. Supported by USAID, book B2B outsourcing meetings until Feb 6. Limited slots: https://calendly.com/usalebanonict/”
More Viaka events are already planned for 2023! Join the Network to get involved with our monthly coffee chats, demo days, and upcoming in-person meetups.
If you’re a member of our Network and would like to share your own update next week, email info.viaka@gmail.com or submit an update via this form.
Read of the Week
Viaka has launched a Network Reading List, where Network members are encouraged to submit media suggestions of their own.
Our suggested read this week is this piece from Fast Company Middle East about the most desirable skills in the MENA region!
Weekly Digest
Check out our weekly digest — we provide news from all across the MENA startup ecosystem, every single Friday. Be sure to follow our LinkedIn and Twitter for more.
That’s it for this week. Thank you!
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