BEIRUT: Despite the country’s notoriously slow and insecure Internet, businesses in Lebanon have begun to tap into a demand for online shopping, fueled by social media networking and a newfound consumer confidence in the safety of credit card purchasing.

“We saw the wave, and we decided to ride it at the right moment,” says Haytham El-Khoja, the co-founder of Mizalla, a Lebanese website set up two months ago that advertises itself as the region’s first online mall.

While well-established international companies have been available in the country for some time, local businesses have remained wary of branching into the market, perhaps put off by consumers’ mistrust of online credit card security, the country’s poor Internet and its lackadaisical approach to formal addresses.

This has begun to change in the past couple of years with some Lebanese companies, including florist Exotica and sweet shop Hallab, establishing websites alongside their physical stores. Companies have adapted to the local market, with many that deliver in Lebanon, including Mizalla, offering payment on delivery, removing people’s key fear of online purchasing.

Nonetheless, Khoja reckons that the MENA region is still playing catching up on the e-commerce front, lagging about five years behind the U.S.

He believes that the rise in the popularity of social media, propelled by the social uprisings across the region, has helped shift attention online.

“What helped us was that at the beginning of the Arab Spring everyone was on Twitter and Facebook. Before, people would always say that online was the future. But then we realized it was now,” he says.

“There is definitely a lot of potential for e-commerce in our region, coupled with the symbiosis that social media and online marketing can bring to the table,” says Darine Sabbagh, marketing manager at software developer Integrated Digital Systems in Beirut.

She believes e-commerce has a lot more potential in the country. “Beyond the possibility for retailers who sell physical goods to go online and open online outlets, these is a huge need for service retailers online,” she says, “from delivery services to shopping services, beauty services, online consultancy, video-on-demand and many, many others.”

For Mizalla, an online “shopping mall” which sells products from local stores, e-commerce is likely to grow as the buzz around it increases.

Khoja says that prior to their company’s launching two months ago, while a computer programmer in Saudi Arabia, he went online to promote his and other similar businesses through blogs with the idea that this would create discussions about the market.

“I always liked websites that build a community around them,” he says at his small office in the residential neighborhood of Mar Elias, where he and his colleagues now promote and sell 60 different brands from 20 stores through the Mizalla.com website, currently focusing on electrical goods, but with plans to branch out into fashion and beauty. “I created a community and I listened to their needs. I also blogged about our competitors. I said: you can also buy from these websites. I knew that being alone and jealous would harm us.”

So far, the strategy has worked. As an increasing number of consumers became confident about their online security, the more they are getting into the habit of buying online on a regular basis.

According to a recent survey by group-buying website GoNabit, consumers are becoming increasingly comfortable with making online purchases in the Middle East.

Ninety-three percent of respondents said they had a positive view of e-commerce, despite known and perceived security problems and two-thirds said that if it is cheaper to buy online they would do so more often.

Indeed this is evidenced in the growing popularity of GoNabit and other group-buying websites, via which consumers can get substantial discounts on products provided by local businesses on deals that last around 48 hours. Lebanon now has several of these websites, including Groupon, Cobone and GoNabit, operating in the country.

An increasing level of trust and convenience are the two main factors that are bringing about more business. The new sites are doing the work of the businesses and the consumers: promoting products, making deliveries and transactions without requiring their customers’ full credit card information.

“The online word of mouth fuels local services and people are less worried about using their credit cards to make online purchases,” says Ayman Itani, a Beirut-based social media consultant who has helped several local online businesses launch their services.

“Banks in Lebanon have played an important role in helping with the security of online purchases,” he adds, “and they are playing a bigger role in raising awareness of online purchasing when people open their accounts.”

And once people get into the habit of online purchasing, they often find better deals than they would at physical stores.

Some economists have suggested that e-commerce could help curb inflation, with intense price competition and with the ability of customers to have at-hand information on various deals online, the most popular example being eBay, the consumer-to-consumer auction website, established in 1995.

Today, many online retail start-ups are following a similar model – giving consumers the power to buy at lowest bargains based on the availability of the products.

MarkaVIP.com is one example of a local company that has done this. An exclusive online shopping club, it runs “flash sales,” working on the forces of time and product urgency and scarcity, selling excess inventory of high-end brands at much lower prices than would normally be available. The pure click company was founded in Jordan by former eBay employee Ahmed Alkhatib, and has since expanded offices into the GCC and, in January 2011, Lebanon.

As the largest and fastest-growing online shopping company in the region, Alkhatib says they have “just scratched the surface.” Although he didn’t expect the growth to be so fast, he predicts that by 2015, MarkaVIP “will easily become a $500 million business.”

E-commerce, although nascent in the Middle East, is proving to be a cost-effective and viable business, starting as a niche market two years ago to become an increasingly normal way of doing business.

“On the technology end we are seeing increased demand from customers for developing e-commerce websites in Lebanon,” says Sabbagh, the IDS marketing manager. Still, she warns that “before venturing into that world, businesses should understand that their online outlets need as much consideration and research in design and development as their physical outlets as consumers have high expectations when comparing them to their international and multinational counterparts.”