E-commerce in Kuwait is significantly increasing every year. Kuwait which is the fifth richest country in terms of petroleum offers a wide range of products on e-commerce websites. Free and safe delivery in the country, English and Arabic customer services influence the e-commerce shopping preferences of online consumers. The trust and dependency on e-commerce sare increasing every day in the country. How to e-commerce with Kuwait? What are logistics and customs operations for e-commerce with Kuwait?
Demographic Structure of Kuwait
Kuwait which is located on the northeast of Arabian Peninsula dates back to 4th century BC. The official name is “Kuwait State”. The country is located on Basra Gulf coast and it is neighbours with Iraq on the north and Saudi Arabia on the south. “Kuwait” terms is derived from Arabian “akwat” meaning “tower next to water”. The surface area of the country is 17.818 km2. In 2020, the population is almost 3 million. Kuwait which has rich petroleum beds is the fifth richest country in terms of petroleum reserves. It is the seventh richest country in terms of GDP. The country is administrated with the parliamentary monarch. 95% of the exports in the country are petroleum products. These revenues are approximately 80% of the total revenue.
E-Commerce in Kuwait
The Middle East is a large retail market in general. But the region failed to achieve sufficient potential in terms of e-commerce. Shopping mall culture is still widespread in the region and there is a general lack of trust in online shopping. In 2019, e-commerce sales in the Middle East reached 70 billion Euro.
Current internet use of Kuwait people is 79.90% and this helps to make e-commerce stable in the country. E-commerce sales in Kuwait reached 670 million dollars in 2017 and e-commerce penetration was 53%. 240% increase in the smartphone penetration rate in the country is one of the main reasons for e-commerce growth in Kuwait.
Online Marketplace in Kuwait.
The most popular online marketplaces in Kuwait are Amazon.com, Opensooq.com, Ebay.com…
Amazon is an online marketplace with sales in every category. The daily price update and discount campaigns in certain periods make this marketplace advantageous. Additionally, Amazon has become the most popular marketplace in Kuwait with customer-friendly and reliable customer experience.
Opensooq.com was found by Libyan Salah Shared in 2008 to offer services in the Libya market. iMena invested to Opensooq in 2012 and Adet Salamin has become the partner and operation director. Since that date, Opensooq has 1.5 billion page view per month, Basic Performance Indicators increased 320 times and the app reached 15 billion downloads. Opensooq has products in almost all categories from home to car, fashion to electronic and it continues to be one of the most popular marketplaces in the country.
eBay is an online shopping website known for biding ad consumer-to-consumer sales. Additionally, it is a highly popular sales channel for online traders. eBay is a marketplace with operations from different countries. eBay has a wide range of products and it is possible to find products in all categories. eBay is popular in the Kuwait market and it continues to rank at the top among online consumers.
Popular Payment Methods in Kuwait
The popular payment methods in Kuwait are Visa, MasterCard, pre-paid credit cards (OneCard), PayPal, Knet account payment (a company designed for payment operations in Kuwait), American Express. Amazon uses Visa and MasterCard; Opensooq uses Visa and MasterCard, SMS or Knew system; eBay uses PayPal or Visa and MasterCard.
Customs Applications in Kuwait
Under the Gulf Cooperation Council (GCC), Kuwait customs tax rate is 5% within the framework of the unified customs law. Customs tax for 417 products which are mostly food is zero.
GAFTA which permits customs-free trade among Arabian Union countries economic community including Kuwait was accepted at the beginning of 2005. Within GAFTA, Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, Oman, Yemen, Syria, Egypt, Libya, Lebanon, Iraq, Sudan, Tunisia and Morocco have started to apply for customs exemptions on mutually agreed products. Due to restrictions applied by Kuwait to Israel, trading with this country and Israel-origin goods are forbidden. Additionally, the export of pork, pork products, alcohol and alcohol-based products are forbidden. Also, Kuwait can limit and restrict the export of goods with certain countries.
Kuwait follows a common customs tariff under the Customs Union created among Gulf Cooperation Council (GCC). 417 goods are exempt from customs tax which are mostly food and agricultural products. Customs tax to tobacco products is 100%. Customs tax for other goods except these goods is 5% (Source: The Ministry of Commerce of Turkey) Additionally, foreigners can only market their goods in Kuwait with a Kuwait agency. Similarly, only Kuwait citizens and Kuwait firms can import.
Logistics in Kuwait
There is two logistics plan for e-commerce in Kuwait. The first one is sending goods from warehouses in Turkey directly to Kuwait. To do that, you need to make agreements with operator firms such as PTT, DHL and UPS which has an Electronic Trade Customs Declaration (ETGB) and send the products. While this option is logical and affordable at the beginning, fulfillment service option is better for the long-run.
Kuwait has giant Amazon fulfillment warehouses. Firms that want to make e-commerce with Kuwait and cross-border e-commerce with Kuwait will not deal with any other operation when they send the goods to the warehouse. The entire e-commerce logistic operations are carried out by Amazon Fulfillment system for the firm. Amazon will store the product, pack and send the product to the customer for the firm. The product is delivered to the customer in a shorter time than sending the product from Turkey. Amazon Fulfillment has customer satisfaction service after product delivery. The only thing e-commerce firms need to do is send the goods collectively to Amazon Fulfillment warehouses.
Kuwait does not have eBay and Opensooq fulfillment service! eBay will introduce fulfilmment service in the US this year but there is no such attempt in Kuwait. When you sell on these two websites, a fulfillment service operating in Kuwait can solve this problem.