UAE eCommerce sector marks fast pace growth among MidEast economic segments

By Amirtha P S, Desk Reporter
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The eCommerce sector in the UAE has turned to be the fastest-growing economic segment in the Middle East in terms of value sales which is mainly driven by the COVID-led digital transformation and technological advancements, a new report reveals.

The ‘eCommerce Sector in the UAE 2020 insights’ report was launched by EZDubai, the fully dedicated eCommerce zone in Dubai South, in partnership with Euromonitor International the world’s leading provider for global business intelligence, market analysis and consumer insights provider and Jones Lang LaSalle (JLL), a leading professional services firm that specializes in real estate and investment management.

The report found that the growth in the eCommerce sector in terms of value sales was supported by rising digital connectivity, infrastructure and substantial growth in consumer electronics, apparel and footwear.

Further, it examined the dynamic changes in the eCommerce market and presented a regional overview of the sector, evaluating its growth and future opportunities by considering the trends as well as key major growth drivers like digital transformation boosted by COVID-19 and technological advancements that are set to reshape the industry moving forward.

Mohsen Ahmad
Mohsen Ahmad
CEO – Logistics District
Dubai South

“eCommerce continues to be an upward trend in the UAE, and this is a great opportunity for logistics players to expand their operations and capture the untapped potential of cross-border eCommerce. The sector played a major role in boosting Dubai’s economy and that of the UAE, consolidating the emirate’s position as a regional hub for eCommerce by attracting leading movers and creating a sustainable ecosystem for a number of corporations. The transition to online payment and the transformation of technological capabilities into quicker, safer and personalized experiences are among the key trends affecting regional eCommerce.”

The findings also revealed that the eCommerce growth in the Middle East is mainly driven by the UAE and Saudi Arabia due to the high purchasing power, expanded usage of social media, and smartphone penetration rates compared to other regional countries.

According to the report, store-based retailing is expected to grow by a Compound Annual Growth Rate (CAGR) of 1 percent over the 2019-2024 period, while eCommerce is forecast to grow by a CAGR of 19 percent over the same period.

COVID-led digital transformation

Apart from the impact of COVID-19, online penetration in the Middle East is forecast to double to 6 percent by 2024, compared to 3 percent in 2019.

Hussein Doughan, General Manager of Euromonitor International in Dubai, said, “The digital revolution has been rewiring retail for years, leading to new business models, commerce ecosystems and channels for reaching and engaging consumers. The COVID-19 pandemic accelerated this transition, as eCommerce became the default option for many homebound consumers. Euromonitor International projects that half of the absolute value growth for the global retail sector over the 2020-2025 period will be digital. That equates to $1.4 trillion in absolute value growth as more goods are sold online.” 

Euromonitor International’s Digital Connectivity Index, measuring a country’s digital landscape over time, reveals that the UAE is outpacing its emerging market counterparts on the index given its well-developed eCommerce infrastructure, along with its tech-savvy population.

Since the outbreak of COVID-19, eCommerce penetration surged from 3 percent in 2019 to 5 percent in 2020 across the region. Retailers with eCommerce and digital platforms performed significantly better than brick-and-mortar outlets, which struggled during the lockdown periods.

According to the World Bank’s Logistics Performance Index (LPI) 2018, the UAE ranked 11th globally and the first regionally in terms of the efficiency of its customs, strong infrastructure, quality of logistics services, tracking and tracing and it has helped the country to position it as a leading logistics and eCommerce hub.

Related: Emirates Post opens new facility in EZDubai to support eCommerce growth in UAE