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Amazon today confirmed<\/a>\u00a0that it has acquired Souq.com<\/a>, an e-commerce marketplace serving the Middle East based out of Dubai, which was already commonly\u00a0described as \u201cthe Amazon of the Middle East.\u201d We had reported last week<\/a> that the companies had already reached an agreement and that \u201cthe ink [was] dry\u201d on a deal that was valued at around\u00a0$650 million. Amazon today did not disclose the price in a short statement announcing\u00a0the deal, although we are confident of our sources on the price we reported.<\/p>\n The announcement caps off several months of speculation about the fate of Souq. The company had originally<\/a> been in talks with Amazon to acquire a 30 percent stake that would have valued that company at $1 billion, before entering into negotiations for an outright sale. Others reportedly interested in the company included\u00a0eBay and Emirati retail group\u00a0Majid Al Futtaim<\/a>.<\/p>\n In the last couple of days, Bloomberg<\/a> also reported that Mohamed Alabbar \u2014 whose firm owns\u00a0The Dubai Mall and the Burj Khalifa; a stake<\/a> in logistics company Aramex<\/a>; and is trying to get<\/a> its own rival site Noon.com<\/a> off the ground\u00a0\u2014 was also interested in the company. However, it sounds like this was little more than smoke and mirrors, and perhaps a late realisation that it\u2019s actually super hard to get a marketplace off the ground. Our sources had told us the deal had already been done between Amazon and Souq.<\/p>\n Amazon\u2019s\u00a0acquisition of Souq marks the company\u2019s first move into serving the Middle East region, which covers a total of some\u00a050 million consumers across several countries, as well as a relatively untapped market: only about two percent of all retail spend today is made online, according to a report from McKinsey.<\/p>\n Souq gives Amazon an immediate leg up rather than building a new service from the ground up: the company includes both a payments and fulfilment infrastructure, along with a marketplace that already has some 4 million products and works with thousands of merchants to help sell their goods online.<\/p>\n \u201cAmazon and SOUQ.com share the same DNA \u2013 we\u2019re both driven by customers, invention, and long-term thinking,\u201d said Russ Grandinetti, Amazon Senior Vice President, International Consumer, in a statement. \u201cSOUQ.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We\u2019re looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we\u2019ll work hard to provide the best possible service for millions of customers in the Middle East.\u201d<\/p>\n Amazon is treating this as a bolt-on acquisition, bringing on management and other teams, along with the existing Souq.com business.<\/p>\n \u201cWe 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,\u201d aded\u00a0SOUQ.com CEO and Co-Founder Ronaldo Mouchawar. \u201cBy becoming part of the Amazon family, we\u2019ll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon\u2019s great track record of empowering sellers.\u201d<\/p>\n The deal represents\u00a0an interesting, if possibly predictable, landing for Souq, which was originally founded in 2005 but became what we know it as today\u00a0in 2009 when Yahoo acquired an internet portal founded by Mouchawar called Maktoob<\/a>, but was not interested in the its\u00a0existing e-commerce business.<\/p>\n Souq was valued at around $1 billion<\/a> in its last funding round, so a $650 million price tag is most certainly a step down from this. However, it still represents a return for investors, who collectively put some $425 million<\/a> into the company. Those investors included Ballie Gifford, IFC Venture Capital Group, Jabbar Internet Group, MENA Venture Investments, Naspers, Standard Chartered Bank and Tiger Global Management.<\/p>\n In the years between 2009 and now, Souq has been the largest of a handful of companies to tap into a growing class of consumers who are turning to the Internet and their mobile devices to buy goods and services. Other existing companies include\u00a0Wadi<\/a>, which last year raised $67 million, and Rocket Internet-backed Namshi<\/a>.<\/p>\n The acquisition of Souq is the latest move from Amazon to expand in the general region. Up to now, many of its moves in neighboring markets have been organic \u2014 that is, Amazon building its international operations from the ground up rather than through acquisitions.<\/p>\n Chief among them is India, where the company has invested billions<\/a> to build out its business in the country. Just as Amazon\u2019s move to buy Souq is made in part while keeping an eye out for competition in the Middle East, it\u2019s also up against would-be clones and rivals\u00a0in these other markets, too. In India, the main competition comes in the form of two businesses, Flipkart and Snapdeal \u2014 which are reportedly<\/a>\u00a0now talking about a merger, partly it seems in\u00a0response to the billions that Amazon is investing in its business there.\u00a0Flipkart is also being linked with the acquisition of eBay India<\/a>, although\u00a0eBay has\u00a0declined to comment on rumor and speculation when contacted for a comment.<\/p>\n One\u00a0question now is whether this move is a one-off or whether Amazon is showing us that it now has\u00a0the appetite to digest more regional giants, which are patiently waiting<\/a> in the wings<\/a> for what comes next.<\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/tctechcrunch2011.files.wordpress.com\/2016\/02\/souq-com.jpg?w=680\")
Amazon today confirmed\u00a0that it has acquired Souq.com, an e-commerce marketplace serving the Middle East based out of Dubai, which was already commonly\u00a0described as “the Amazon of the Middle East.” We had reported last week that the companies had already reached an agreement and that “the ink [was] dry” on a deal that was valued at around\u00a0$650 million. Amazon today… Read More<\/a><\/p>\n\n<\/img><\/a>
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