- August 18, 2018
- Posted by: Waqas Siddiqui
- Category: Business & Economy, Others, Retail & Manufacturing
The Fastest Growing Sector in UAE – e-Commerce
The Middle East is witnessing a rapid growth in the e-Commerce sector due to the increased usage of internet and smart phones. The region’s internet penetration rate is estimated to be around 64 per cent with UAE leading at 98 per cent. The rise in internet usage has consequently led to the growth of e-Commerce sector in UAE which is now ranked 15th globally on e-Commerce spending by consumers, according to Euromonitor International Digital Index. UAE’s e-Commerce sector is further expected to grow in the forthcoming years as Online Shoppers nor represent 62 per cent of the population.
Dubai – The e-Commerce is among the fastest growing sectors in the UAE thanks to government initiatives, high internet and smart phone penetration rate, technological awareness and young demographics of the country. The sector is currently valued at at Dh 36.7 billion (US$ 10 B) and is expected to grow by 10 per cent annually. By 2022, the UAE’s e-Commerce sector value is expected to cross Dh 50 billion (US$ 13.6 B).
The recent acquisition of Souq.com by Amazon and the arrival of Noon.com (by Emaar Group) indicates the burgeoning demand of online shopping in UAE, as regional and global investors seek to capitalize from the fresh growth of e-Commerce sector in UAE.
UAE e-Commerce Sector – Key Statistics
In UAE, the online shoppers now represent 62 per cent of the population, which is an increase by 25 per cent from the previous year. The phenomenal switch to online shopping can be attributed to online promotions carried out on social media platforms which have been successful in digitally engaging the consumers. An estimated 48 per cent users engage in online promotions while nearly 52 per cent use social media to read product reviews or shop in UAE.
- UAE Online Shoppers – 62% (Total Population)
- Rise in Online Shopping – 25% (Up from 2017)
- Online Promotions – 48% (User digital engagements)
- Online Shopping or Reviews – 52% (Consumers checking product reviews or shopping)
UAE e-Commerce Sector – Growth Drivers
Demographics – The current population of UAE accounts for 9.6 million of which one third is youth under the age of 25. They are also the major users of internet and smart phones in UAE. Nearly 80 per cent of the UAE population are active on Facebook and You Tube while 53 per cent on Instagram spending nearly 3 hours using social media.
Growth of Internet & Mobile Usage – UAE has the highest internet (98%) and smart phone (74%) penetration rates entire Middle East region which has been a major contributing factor towards the growth of e-Commerce in the country.
Affluent Consumers – UAE residents to spend more than Dh 900 billion (US$ 245 B) in next five years driven by growth in disposable income (Dh 486,700 – US$ 132,615) which is the highest in the Middle East region. The high disposable income along with the surge in high-income population will be key drivers in e-Commerce sector growth in UAE.
Ease of Doing Business – UAE improved its ranking on the World’s Bank Doing Business 2018 Index (currently ranked 21st) as it continues to create a business friendly environment to facilitate the foreign direct investment in the country. The progressive government policies provide an ideal environment for e-Commerce businesses to grow and expand in UAE.
Fintech Based Companies – The establishment of Fintech based companies in UAE and the introduction of emPay (emcredit system for online cashless transactions) along with the incentives provided by the government to technology based companies provide an ideal platform for e-Commerce sector to further grow in UAE.
Dubai CommerCity – Dubai Airport Free Zone Authority (DAFZA) and Wasl Asset Management Group to form the first dedicated e-Commerce free zone (Dubai CommerCity) with an estimated budget of around Dh 2.7 billion. This is likely to further accelerate the growth in e-Commerce ecosystem.
UAE Consumer Shift to Online Shopping
There has been a paradigm shift in consumer behavior, as more number of UAE consumers are buying or planning to buy online. This has forced many retail giants in UAE to create their own e-Commerce platform to retain and facilitate the shopping needs of their consumers.
Investment Opportunities in UAE e-Commerce Sector
With UAE’s business friendly environment, young demographics and proliferation of internet and smartphones usage along with government initiatives to promote the sector makes it near-perfect conditions for e-Commerce growth and an idle platform for investment in the e-Commerce sector.
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