A Change in Egypt’s E-Commerce Landscape

May 27, 2021



For all the economic turmoil in 2020, one winner stands out: e-commerce. Internet services increased by 50% and everything digital got a lot more attention. Online retail sales saw as much as a 500% increase compared to the previous year, according to Islam El-Saadany, a strategic consultant and marketing trends analyst, speaking to eMarketing Egypt.

With stores closed and mobile service providers offering faster speeds and higher data limits, people flocked to online shopping to continue buying what they want. Fashion and jewelry benefited greatly from that transition, noted market experts.

That presented a window of opportunity for Egyptian brands selling mostly online to grow their clientele. As international brands expand their internet presence, competition is heating up for digital consumers.

Quantity vs. quality

There is often a perception that the quality of locally made products is inferior to imported products. Ever since international retail stores became popular in Egypt starting in the 1990s, local brands have catered to a loyal niche of customers.

Farah Sherif, a 23-year-old living in Cairo, attributed her lack of interest in local brands to personal taste. “It is mainly a matter of style,” she says. “Usually, when I check out an Egyptian brand, I find a lot of colorful statement pieces. I rarely find something that I want to wear to work or out.”

The main difference between locally made and international products is the speed of production. Not only are established international brands capable of turning out more pieces per design, but they also can generate more designs.

According to SCM Globe, a collaborative tool for supply-chain planning, Spanish brand Zara produces more than 11,000 designs per year. While that is fewer than Zara’s significant competitors, it is a staggering number for Egyptian companies. For example, women’s clothing manufacturer Opio produces 300 designs per season, the most of any Egyptian company.

Norhan El Sakkout, lead designer and founder of the Egyptian fashion brand saqhoute, an online-only local fashion brand, opted not to compete with the mass-produced labels. She says her customers are interested in her brand because of its exclusivity. “A lot of our early-stage customers were not really looking for local products,” she says. “They liked the uniqueness and exclusive nature of our garments, and that is what drove them to make the first purchase.”

El Sakkout’s brand focuses on capsule wardrobes: collections of 10-15 items that are timeless and flexible, meaning they are “transferable from one occasion to the next … with each piece being an investment,” according to the brand’s website.

It is a sustainable concept that focuses on the best use of raw materials to limit waste and produce the best products possible. “We adhere to top-quality standards that are applied on a global level,” El Sakkout says. “We chose to work with a niche [local] workshop to also monitor the quality of the work environment and standards set in place.”

Smaller collections and working with small workshops have improved quality and allowed the brand to prioritize customer service. “The workshop has a garment lifetime guarantee when it comes to alterations and mending, which also makes our efforts in lengthening the life cycle of our garments more attainable,” El Sakkout says.

Longevity of products is a selling point for customers like Sherif, who says she would be willing to “spend a little more if [she] knew the product is well made and if [she was] really going make good use of it.”


When one door closes

The coronavirus-driven lockdowns caught many international brands off guard. In June 2020, Inditex, the company that owns Zara, announced it would close more than 1,000 stores worldwide to boost its commitment to online retail, according to The Guardian. None of the company’s Egyptian branches were affected. Zara’s in-store sales dropped by 44% between Feb. 1, 2020, and Apr. 30, 2020. However, online sales jumped 50%, up 95% year-on-year in April.

As international fashion brands adapted to e-commerce, consumer attention turned to Egyptian brands with a well-established presence on social media and e-commerce. Saqhoute was one of the brands that benefited. “We needed to pivot in a very limited way when the first lockdown hit us,” El Sakkout says. “Therefore, we were able to survive it easier than other businesses that had to figure out what to do about it overnight.” She didn’t disclose sales figures or percentage increases over previous years.

She attributes this to her e-commerce presence and online engagement with her customer base. “We also are much closer to our clients and audience; we can sense what they need and then have direct conversations with them, which is an extremely valuable communication line.”

That paid off in unforeseen ways. For example, when customers shifted their shopping from stores to online, they sought local brands to help them navigate. “When it comes to first-time online shoppers, we started receiving messages from people asking us how the process works,” says El Sakkout.

According to the Egyptian Internal Trade Development Authority, e-commerce sales reached $4.8 million as of 2020, up from $3.6 million in 2018. This figure does not account for types of informal e-commerce such as Instagram or Facebook marketplace, which are the bread and butter of hundreds of rising Egyptian brands. Ibrahim Ashmawy, the head of the Internal Trade Development Authority estimates at five times the formal e-market.

Instead of investing in a brick-and-mortar store or website, unregistered brands set up Instagram business accounts to promote and sell their products. That can be done through direct messaging, enabling them to explain the products and process to consumers. “You have less cost” by focusing on e-commerce, says El Sakkout.

Jewelry designer Yomna Zaki, founder of the Ivory brand, used this line of communication to adjust prices and receive material requests from her customers. “Online activity has increased, for sure,” she says.

Because “the income of most people did not remain the same,” Ivory did not experience the same sales boom as El Sakkout at the beginning of the pandemic, Zaki says, noting sales started picking back up in June 2020. “Through Instagram, direct communication makes it easier for me to understand what the customer wants,” El Sakkout says. “Customers like the gemstones that I use, but they are expensive. To make [the jewelry pieces] affordable, I can use brass-plated metal while giving customers the option of customizing them in silver or gold.”

Zaki invests in photo shoots to market her jewelry, creating content that appeals to her target audience and advertising on Instagram.

What happens now?

By the fourth quarter of 2020, international brands had switched their focus and invested in e-commerce. H&M, which launched its Egyptian website a couple of months before the pandemic, increased its presence and consistently discounted products. By September, American Eagle had launched an Egyptian website and followed H&M in promoting discounted products, something Zaki says she cannot do as it “devalues her product.”

In April, Zara started promoting a smartphone app on Android and iOS where buyers can order some of items. However, the vast majority of the collections remain unavailable for ordering with a “Coming Soon” message appearing when ordering them

“The pandemic accelerated the on-boarding of customers to shop online more frequently,” El Sakkout says. “Egyptian consumers found themselves forced to buy online to protect themselves, their families, and loved ones from the dangers of catching COVID-19 — which was a positive development that came out of it.”

The development of online shopping skills among Egyptians comes ahead of an expected doubling of internet speeds to 40 Mbps this year, according to the Ministry of Communications and Information Technology. That is significant because about half of users will leave a site or abandon their carts if the download time is longer than three seconds, according to Jumpseller, a website that helps people create their own online stores.

With more international brands setting up online outlets, Egyptians are faced with the dilemma of either going back to tried and trusted global fast-fashion names such as Zara or continuing to shop the local brands that helped them navigate the e-commerce process.

“At the end of the day,” says El Sakkout, “a brand’s story and product value are what really trigger the buying decision of the consumer.”