Amazon buys Souq.com, Middle East's largest online retailer

Amazon is to acquire Souq.com the Middle East’s largest online retailer for an undisclosed sum, according to a statement released by the two companies on Tuesday.

Reuters reported last week that Amazon had agreed in principle to buy the company.

But a last-minute bid yesterday from Dubai billionaire Mohamed Alabbar's Emaar Malls -  part of the conglomerate behind the world’s tallest tower, Burj Khalifa - appeared to have thwarted Amazon’s attempts.

Amazon paid less than Emaar's offer of $800 million, sources said.

Dubbed 'Amazon of the Middle East', Souq.com was founded 12 years ago by Syrian-born entrepreneur Ronaldo Mouchawar as an auction site. It has since evolved into a retailer and a marketplace for third-party sellers. The company says it attracts more than 24 million unique visits per month.

Amazon: Big and getting bigger

The deal will strengthen Amazon’s core online retail operations at a time when it has been expanding into areas including cloud computing and streaming video where it is trying to rival Netflix.

Its retail operations alone took in $26 billion in North America and $14 billion in the rest of the world during the last quarter of 2016.

In a joint statement announcing the agreement, the two companies said the deal would be finalised this year "subject to closing conditions".

Russ Gradinetti, a Senior Vice President at Amazon said in a statement: "Amazon and Souq.com share the same DNA – we’re both driven by customers, invention, and long-term thinking,”

Souq.com CEO and Co-Founder Ronaldo Mouchawar, said the “acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region.”

"By becoming part of the Amazon family, we'll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon's great track record of empowering sellers,” he added.

Middle East and e-commerce

The e-commerce site was ranked as the highest-valued internet company in the region last year after a funding round raised more than $275 million.

At the time, Mouchawar said the e-commerce market in the Middle East was "growing very fast" and expected to reach $20 billion in 2016.

According to a report last year by the consultancy McKinsey, the Middle East continues to have a "significant untapped e-commerce potential.”

The deal has also been endorsed by the Dubai government which is increasingly focusing on technology and is the region’s major business centre.

Dubai’s Crown Prince Sheikh Hamdan bin Mohammed bin Rashid al-Maktoum said that Amazon’s entry into the region showed “Dubai’s position as a regional and global hub for the world’s biggest and learning organisations.”