Since the onset of the COVID-19 pandemic, Kuwait’s legacy sectors, including oil and gas, commercial real estate and hospitality have witnessed a significant negative impact. However, the pandemic has also transformed various industries entirely and, in many cases, ignited a new wave of growth through digitalization.
E-commerce was already one of the fast-growing sectors in Kuwait but it received a further boost as the series of lockdowns forced a change in consumer buying patterns. The bricks-and-mortar model of operations was disrupted, and businesses relied on digital commerce to sell. From analysis conducted with KNET in October 2020, KPMG in Kuwait found that transactions completed through payment gateways increased significantly compared to point of sales and ATM transactions, during the lockdown period in 2020, clearly indicating the way ahead for payments in Kuwait.
Today, there are an estimated 150+ e-commerce companies in Kuwait, and most of them with less than two years of operations.
While these e-commerce businesses have disrupted the legacy way of doing business in various sectors, they are likely to be facing operational challenges and are required to comply with evolving, often complex, regulatory requirements. The risks of cyberattack and non-compliance with regulatory requirements are real and data security and data privacy should be among the top concerns for e-commerce firms. Reliable cybersecurity systems and strong compliance functions are essential from the beginning.
KPMG in Kuwait understands the key challenges for new and established e-commerce businesses, including their need to:
- understand the viability of their business concept,
- prepare for growth and raise funds,
- guard their business against fraud and threats, and
- comply with regulations.
Speaking on the launch of these services, Ankul Aggarwal, Partner — Deal Advisory, KPMG in Kuwait, said, "Based on our frequent discussions with promoters/owners we have created a specific set of solutions for businesses looking to establish or grow their e-commerce operations. The purpose of these services is to help businesses realize their digital ambitions and objectives, while complying with local regulations. Our team has developed customized solutions for businesses across all the stages of maturity.”
KPMG Kuwait’s services include e-commerce strategy, market assessments, feasibility studies, growth strategies, business plans and valuations, M&A advisory, accounting advisory, cybersecurity readiness, incident response, IT internal audits and cybersecurity audits.
Majid Makki, Head of IT Advisory, KPMG in Kuwait added “As businesses continue to sell online, they are increasingly vulnerable to cyber-attacks. These cyberattacks are coordinated and targeted towards any company which sells online or collects personal data.
While organizations such as banks often have a robustIT infrastructure to protect against these threats, an e-commerce startup may lack the adequate cybersecurity infrastructure, policies, or readiness.
Keeping this in view, we are offering a retainer service model for E-commerce companies. Under this retainer, we establish an incident response system, and in case of an attack, our advisors help resolve the threat and monitor the threat landscape and overall cyber needs for the future.”
With the Central Bank of Kuwait pushing for regulation and compliance in the payment sector, e-commerce businesses must think of more than just a disruptive idea to sustain and grow.
"Kuwait has most of the necessary building blocks for e-commerce businesses to succeed. A young population with high disposable income and high banking, mobile and internet penetration rates, bode well for Kuwait. With the government, banks and businesses pushing digital adoption for their services, Kuwait today is an ideal market for businesses that are focused on furthering digital adoption. We are intent on helping Kuwaiti entrepreneurs to tap into this potential market, to start and grow their e-commerce businesses while meeting their regulatory requirements," adds Harsha Prakash, Associate Director — Deal Advisory KPMG in Kuwait.