Unlocking the Potential of E-commerce in Egypt: A Market on the Rise

Updated 12/31/2024 10:55:00 AM

Egypt's e-commerce sector is experiencing explosive growth, transforming the country's retail landscape and reshaping consumer behavior. Increasing internet and smartphone penetration have connected Egyptians to the digital world while growing consumer trust in online platforms and expanding logistics infrastructure have facilitated seamless online shopping experiences. Furthermore, the rise of digital payment solutions has removed a significant barrier to entry, enabling a wider segment of the population to participate in the e-commerce revolution. Recognizing the transformative potential of e-commerce, the Egyptian government has launched initiatives such as the National E-Commerce Strategy to foster a conducive environment for the sector's growth.

The Rise of E-Commerce in Egypt

The internet penetration rate reached 72.2% in 2022/2023, according to Brief Report on ICT Indicators issued by the ICT Ministry in November 2024. Ahmed Mewafi, a PhD holder and strategic management and continuous improvement consultant, tells Arab Finance: “The growth in internet and smartphone penetration is a game-changer for e-commerce in Egypt. With more people gaining access to the Internet, particularly in underserved rural areas, the potential customer base for e-commerce has expanded significantly. This accessibility enables even those in remote locations to engage in online shopping, contributing to market growth.”

Moreover, “the increase in smartphone usage has driven mobile commerce (m-commerce) growth. Businesses are focusing more on creating mobile-optimized experiences, which allows for easier navigation and higher conversion rates. The availability of mobile payment solutions and digital wallets has made transactions easier and more secure, encouraging customers to shop online with greater confidence and convenience,” Mewafi explains.

In this regard, Rehab Abdelhady, Owner of an online store, tells Arab Finance: “Online shopping has created a great opportunity for any brand to spread, even if the brand is in one governorate and the consumer is in another governorate. It has become easy for consumers and merchants to communicate via Facebook, Instagram, or any other application. This has created a great opportunity for the expansion of online shopping.”

Meanwhile, Samy Taha, owner of an online store, tells Arab Finance: “The increase in e-commerce is due to the ease of reaching customers through targeted sponsored advertising, lower costs compared to physical stores, technological development, and the spread of the Internet among all family members, ease of searching, speed of comparing one product between several stores, whether in terms of price or material, saving labor, and the ability to work at any time and any place.”

Accordingly, Egyptian e-commerce companies are growing, and the local market is expanding, especially in specialized fields. Egyptian e-commerce businesses have shown activity in recent years, with a rise in the number of new e-commerce startups. The Egypt e-commerce market size is estimated at $9.05 billion in 2024 and is expected to reach $18.04 billion by 2029, at a CAGR of 14.80% during the forecast period (2024-2029), according to Mordor Intelligence.

The highest online purchases made in the e-commerce Egyptian market in 2024 were electronics making 1.74 billion in revenues, followed by fashion making 1.29 billion, according to Statista's latest update in October 2024.

Consumer Behavior Shifts

Consumer behavior in Egypt is shifting significantly towards e-commerce. Sahar, a 3-year-old housewife, tells Arab Finance: “It has become easier now to purchase from online stores. I can buy things that will need me to visit stores far away from my house. Besides, the options and varieties are much better. Although sometimes one cannot be sure of the quality or size, this can usually be avoided by reading the description and reviews.”

Muna Abu El Saud, a 30-year-old Creative Writer, agrees, saying: “Now people have awareness and can decide whether a product is good or not from the reviews.” Mona goes on to explain that the factors that impact her decision to buy a product online are “quality, as well as price, as the price should be within my budget.”

Hence, consumer behavior is a major player in the growth of e-commerce in Egypt. Saber Shaker, Professor of International Economics at the Faculty of Commerce at Helwan University, Former consultant of local economic development UN-HABITAT, and Former consultant of innovation and entrepreneurship USAID tells Arab Finance: “E-commerce growth in Egypt hinges on consumer trust, built upon secure transactions, reliable product quality, excellent customer service, and positive social proof. This trust fosters brand loyalty and encourages wider adoption of online shopping.”

The growth of e-commerce not only drove stores to have their own online platforms, but it also brought about online-only stores. Shaker explains that “The rise of online-only brands is driven by factors such as lower operational costs, increased internet penetration, evolving consumer behavior, the power of social media marketing, innovative direct-to-consumer models, and a focus on niche markets. These factors collectively shape the dynamic e-commerce landscape in Egypt, influencing consumer behavior and driving the emergence of new brands.”

Governmental Support

The Egyptian government has been working to support e-commerce. Egypt's National E-commerce Strategy, launched in December 2017, aims to enhance the country's digital economy and expand online business activities. "The National E-Commerce Strategy, along with the "Regulated E-Commerce" initiative, launched earlier in December 2024, has shown promise in shaping the digital commerce landscape in Egypt. Key successes include clearer rules and guidelines for businesses, leading to better structure and predictability in the market," Mewafi points out.

Moreover, the strategy and initiative "Enhanced consumer protection laws have contributed to greater trust in e-commerce, which is vital for encouraging widespread adoption. These regulations give consumers confidence that their rights are protected when making online purchases," according to Mewafi.

This comes as the Consumer Protection Agency in Egypt launched the E-Commerce imitative for five days as the agency had witnessed some undisciplined practices by some electronic platforms and shipping companies, which in turn affect the rights of consumers, in addition to their impact on the legal entities operating in this sector. Thus, the initiative aimed to address consumer complaints and ensure consumer protection in regard to online shopping.

Future Outlook

The e-commerce market in Egypt is still facing several challenges. Among these challenges, there is growing competition between startups and international players, as well as data privacy and cyber fraud. Additionally, “while there have been strides in improving delivery systems, Egypt’s logistical infrastructure remains a key challenge, particularly when reaching customers in remote regions. Companies will need to invest in better delivery solutions to improve reliability and speed,” Mewafi explains.

Yet, there is a great opportunity for the e-commerce sector in Egypt to see noticeable growth. Mewafi says “Egypt’s growing middle class presents a substantial opportunity for the e-commerce sector. As disposable income increases, more consumers will be able to participate in the digital economy.”

Mewafi further points out that “the future of e-commerce in Egypt holds great promise, with opportunities to expand the market, improve infrastructure, and build stronger consumer trust. However, challenges such as competition, regulatory complexity, and logistical issues must be navigated thoughtfully to unlock the full potential of this sector.”

The rapid growth of Egypt's e-commerce sector marks a transformative shift in the country's retail landscape and consumer behavior. With internet penetration soaring and smartphone usage on the rise, more Egyptians are embracing online shopping, driven by improved logistics and digital payment solutions that enhance convenience and security.

By Sarah Samir