UAE fastest growing e-commerce market in Mena region

The UAE has retained its position as the most advanced e-commerce market in the Middle East and North Africa (Mena) region, with e-commerce transactions in the country estimated to hit Dh59 billion in 2019, new data has shown.

According to a joint study by Dubai Economy and Visa, e-commerce transactions will grow 23 per cent on average annually between 2018 and 2022, driven by tech-eager consumers, an ecosystem that promotes startup growth, and innovative initiatives such as Dubai Smart City.

While the Mena region remains the fastest growing e-commerce market globally, government adoption of e-commerce payments on platforms such as Dubai Smart City and exponential growth in categories such as quick service restaurants and transportation enable the UAE to maintain a clear edge in online payments within the region.

"Public-private partnerships to drive awareness and trust on the value, convenience and security of online shopping and expand the digital payment option are critical to sustaining the e-commerce momentum that Dubai and the UAE have gained through promoting cashless payments and providing secure payment platforms for businesses and the public," said Sami Al Qamzi, director general of Dubai Economy.

Global e-commerce leaders, such as Amazon, expanding to Dubai is a strong testament to the emirate's competitiveness as a digital innovation hub, Al Qamzi added. "Dubai has not only established an enabling e-commerce ecosystem for innovators, entrepreneurs and end-users but also continues to launch path-breaking e-commerce initiatives."

Deeper Internet penetration along with an advanced digital infrastructure and younger population eager to embrace technology-driven solutions available across smart phones and social media are at the core of the e-commerce growth in Dubai and the UAE. At 4.2 per cent of total sales, e-commerce penetration in the UAE is not only higher than the Mena region average of 1.9 per cent and GCC average of three per cent, but also highest in the region. The report also shows that while consumer preference for e-commerce channels in the UAE is nearly at par with mature benchmark markets, the country has a healthy lead in average transaction size. The average size of e-commerce transactions in the UAE in 2018-2019 is $144, while it is $79 in mature markets and $26 in emerging markets.

Marcello Baricordi, Visa's GM for Mena, said: "By growing the e-commerce sector in the UAE, there is a tremendous opportunity to drive economic growth and extend the benefits of digital payments to residents and businesses in the country. We will continue to work with our government and industry partners to promote a regulatory ecosystem wherein public and private partnerships can thrive and spur technological advancements and entrepreneurship, and stimulate foreign investment."

The e-commerce growth in the UAE largely owes to the retail sector and the thriving mall culture. Retailing in the UAE, which also comprises non-store sales, was valued at Dh202 billion in 2018 and is forecast to rise to Dh234 billion by 2023, with non-store sales including online shopping set to grow at 78 per cent.

First published in the Khaleej Times on 23 July 2019