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Report: Amazon Planning Middle East Expansion After $580M Souq Investment

As it struggles to gain momentum in markets like China and India, Amazon reportedly has its sights set on something akin to a sure bet: expansion in the lucrative Middle East market.

CNBC reported that close to two years after purchasing Middle Eastern marketplace for $580 million, Amazon is advising sellers to disregard the 14-year-old e-commerce “pioneer” as it gears up to launch an official Amazon-branded online storefront in a greater push to strengthen its market share in the region.

At the time of the acquisition, Souq drew more than 45 monthly visits with more than 9.4 million products across 31 categories including fashion, baby, electronics, beauty, household and more. Amazon likely viewed Souq as a turnkey gateway into the Middle East and its concentration of wealthy, oil-rich, high-net-worth households, especially in countries like Saudi Arabia and the United Arab Emirates.

“Joining the Amazon family will enable us to drive further growth, benefit from their technological investment, offer an even wider product selection through worldwide sourcing, deliver an enhanced customer service experience, as well as continue Amazon’s great track record of empowering sellers locally and globally,” Souq CEO Ronaldo Mouchawar said at the time.

Now, CNBC cites anonymous Amazon sellers who claim that the e-commerce firm has been recruiting them for a new opportunity in the Middle East, offering low 3 percent commissions for its Fulfilled by Amazon service as well as “steep discounts” on logistics fees.

“The company is telling North American sellers not to sign up to sell on Souq because it plans to have all that inventory on Amazon’s own site,” CNBC reported.

It’s unclear whether Amazon intends to wind down the Souq website if it pushes forward with plans for its branded site, but such a move would not be without precedent. Amazon sank $545 million into and parent company Quidsi before closing it down in 2017.