Amazon confirms Souq acquisition
Online retail giant Amazon has confirmed the acquisition of Souk.com, the Middle East's largest online retail and marketplace platform, in a deal rumoured to be worth $650m. Souk.com, which rejected an $800m offer from Dubai’s Emaar Malls, attracts up to 45 million visits per month, and the acquisition offers US giant Amazon an opportunity to enter a market it has previously been unable to tap.
Amazon has confirmed its acquisition of Souq.com. The acquisition was first rumored last week in a deal purported to be valued at somewhere in the neighborhood of $650 million. However, questions were later raised regarding the credibility of these reports and whether the acquisition was actually happening. Amazon confirmed the news today through a post on its Press Room.

SOUQ.com is the largest online retail and marketplace platform in the middle east. Indeed, the company is often referred to as the Amazon of the middle east. The company’s portal features more than 8.4 million products that are spread across a total of 31 categories. The platform offers articles in consumer electronics, fashion, health and beauty, household goods, and baby products. The platform attracts as many as 45 million visits per month.

Initially, the plan was for Amazon to acquire a 30 percent stake in the company. That particular deal would have valued Souq at somewhere around $1 Billion. However, the company changed its mind somewhere along the way and decided to go for an outright acquisition.

Yesterday, we reported that the Middle-eastern online retailer had also received a hefty $800 million offer from Dubai’s Emaar Malls. But, it seems to have decided to ferry its growth ride along with the largest and most experienced e-commerce player in opposition to someone who’s trying to get off the ground. Emaar is also aiming to launch its own e-commerce platform called Noon, with over 20 million products.

Speaking on the acquisition, Russ Grandinetti, Amazon Senior Vice President, International Consumer said:

Amazon and SOUQ.com 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.

The Middle East certainly had a lot to offer where c-commerce is concerned. Amazon hardly has a presence in the region, which boasts of over 50 million customers and yet, next to none of its retail spending is made online. The acquisition will allow Amazon to hit the ground running rather than forcing it to start building a service from the ground up.

SOUQ.com CEO and Co-Founder Ronaldo Mouchawar said:

We are guided by many of the same principles as Amazon, and this 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.

While some would say that the company’s price tag has decreased of late. After all, its last fund raise saw it valued at around $1 Billion. However, Souq investors, which include names like Ballie Gifford, IFC Venture Capital Group, Jabbar Internet Group, MENA Venture Investments, Naspers, Standard Chartered Bank and Tiger Global Management, still managed to walk away with a profit. Interestingly, this also marks a shift in the e-commerce giant’s strategy.

The company would appear to be amenable to acquiring companies and then growing their operations as opposed to building its platform from the ground up. This could have some really, really important consequences with regards to other countries. In India for instance, the company is receiving some tough competition from the likes of Flipkart.