Apple and Amazon are in licensing discussions to enter Saudi Arabia, according to a report from Reuters. While both companies already sell products in Saudi Arabia via third parties, neither has a direct sales channel in the country.
The Middle East is still a largely untapped market for U.S.-based retailers, with even its biggest brands having only a small presence. E-Commerce is expected to represent only 2.2% of total retail sales in the Middle East by 2021, so any online player must think strategically when expanding into this market.
Amazon made its first big step earlier this year when it acquired Dubai-based e-Commerce giant Souq.com for $580 million.
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Apple already holds second place in the Saudi mobile phone market behind Samsung, according to Euromonitor. But by February 2018, the company is expected to enter a licensing agreement with SAGIA, Saudi Arabia’s foreign investment authority, with an initial retail store targeted for 2019.
Amazon’s discussions aren’t directly retail-related yet, according to the report. The move is more focused on spreading the reach of its cloud computing service AWS, which would introduce stiff competition in a market currently dominated by smaller local providers such as STC and Mobily.
Saudi Arabia’s Crown Prince Mohammed bin Salman has led the call for technology reform throughout the country, luring foreign investment broadly across various sectors. Government officials have courted Silicon Valley players strongly over the past two years to complement their high-tech ambitions, a further indication that U.S. retailers may have a new major market to sell in.
Nor are Apple and Amazon the only two major tech brands entering a region that has been largely untapped by North American brands. Google is exploring the idea of launching brick-and-mortar stores in India, according to the Economic Times. The report indicated that the Internet giant saw an encouraging consumer response to its 12+ pop-up stores in India that featured the Pixel 2 smartphone.
