How media reports on tech figures
Having recently written a descriptive report on the state of ecommerce in the Middle East, I decided to dig a little further and look at the potential discrepancies by the research company that the media had reported on. I was inspired to write this post and look at the effects of how media reports figures from the tech world thanks to an article written by Rocky Agrawal, a link to which can be found at the bottom of the article.
According to an article written in 2010, Euromonitor reported that UAE consumers spent about $19.6 million online in 2009. But by 2014, e-commerce in the UAE is was forecast to grow by 72% to about $33.7m. Using these two data points, I plotted an average growth rate on the graph below. I have highlighted the data points supplied by Euromonitor.
However, according to the most recent article written in January 2012, the same company reported that in 2011, UAE consumers had spent $226.8 million online in 2011 - a figure expected to grow to $270.9m in 2012. Once again I have performed a crude estimate of average growth rates given these two figures, retrospectively (looking back to 2009) and looking forward to 2014. I have highlighted the data points supplied by Euromonitor.
If we plot these two sets of figures next to each other, it becomes very clear that there is a monumental difference in figures.
Euromonitor stated that they excluded online sales coming from daily deal sites such as Groupon (in the 2012 article) – so where does this difference come from?
The 2012 article quotes Euromonitor as saying that online shoppers in the UAE, Saudi Arabia and Egypt spent $1.01bn on internet retail sites during 2011.
Online sales in the Arab world are forecast to reach $2.09bn by 2016, amid a boom in e-commerce in markets including the UAE and Egypt. Again, I have used the same methodology to represent this in a graph
If the UAE had $226.8 million worth of e commerce in 2011, this would represent 22.45% of the total (UAE, KSA and Egypt). I have equally split the share of the other two countries, however, Euromonitor predicts that Egypt will show fastest growth.
Interestingly, Mumzworld estimates the online market in Saudi to be worth $716 million – which would represent 70.8% of Euromonitor’s total of $1.01bn for the 3 regions in 2011. Extrapolating that over the next 5 years, using $716 as our fixed variable against Euromonitor’s predictions might look like this:
First we need to understand why the large discrepancy between the actual and estimated figures reported by Euromonitor for Ecommerce in the UAE over the assigned period.
Second, it’s important for journalists and media to be aware that the data can be mixed in several different ways; had I not gone through this exercise, I could have calculated that in the next 2 years, the ecommerce market in Saudi will be worth over $1bn.
We need to demonstrate the background workings, ie I have accepted that the absolute value for Saudi is correct at $716 million (from Mumzworld) but I’m looking at it in context of the OVERALL figure for 3 countries given by Euromonitor ($1.01bn) hence it represents a share of 70%. Saying the market is worth $1bn is very different to saying, we estimate that Saudi will represent 70% of the total ecommerce market.
It is these types of omissions that occur frequently in media reports, potentially discrediting the original research done. An example of just how extreme this phenomenon is can be found here – “This post on Google+ statistics is a billion* times better than any other post” written by @rakeshlobster