Online shopping clicks in the UAE

dubai - Popularity of e-commerce puts pressure on traditional brick-and-mortar retailers

E-commerce is the engine that will continue to drive growth in the UAE's retail industry over the next couple of years, experts say, pointing to the growing number of shoppers that are confident looking online for their next purchase.

This shift has put a lot of pressure on traditional brick-and-mortar retailers, who are swiftly opening online channels to cater to the growing number of online shoppers in the UAE and the region.

"We've seen a significant increase in product selection that is now available for consumers across the Middle East & North Africa region to purchase from online, especially in fashion, electronics, beauty and groceries," said Charbel Sarkis, head of retail, travel and hospitality at Google Mena.

He noted that e-commerce pure players have been offering more products on their platforms and launching new shopping categories. Brick-and-mortar retailers, on the other hand, have also entered the online space, launching more than 35 new e-commerce channels since 2017.

"We've also seen bigger interest from global e-commerce players, especially China-based players stepping up their investment in the region in the high street fashion category," Sarkis said. "Consumers in the region are digitally savvy and expect the best online shopping experience, regardless of what or where they buy. E-commerce players will need to provide the best customer experience with shorter delivery times, convenient return policies and a more personalised shopping journey in order to meet customers' expectations."

Sameer Bagul, executive vice-president and managing director at Cleartrip Middle East, explained that thanks to its evolving digital infrastructure and fast-growing young demographic, the UAE has emerged as a key growth market for e-commerce.

"The steady increase in smartphone and Internet penetration and the proliferation of online payment solutions has led to a sharp rise in the number of consumers who shop and book online," he said. "The UAE has developed an enabling ecosystem for digital businesses and this will lead to the e-commerce sector's explosion in the near future."

Consumers are becoming more at ease with making online bookings, especially tech-savvy millennials in the UAE.

Hosam Arab, co-founder and CEO of Namshi.com, agreed that there has been a marked and consistent growth in shoppers looking to make purchases online across the region. "Customers are becoming much more sophisticated as their preferences and expectations are constantly evolving where they now expect faster deliveries and returns, more engaging content and broader assortments on websites."

He also revealed that shoppers are always looking for deals online as there seems to be a perception that online retailers need to offer lower prices than brick-and-mortar retailers. This perception is partially driven by the fact that online shoppers can compare pricing with relative ease and therefore online retailers have a higher incentive to ensure that their prices are competitive.

Recent research by Google and Bain & Company revealed that with an average annual growth rate of 25 per cent, e-commerce in the Mena region has been growing slightly ahead of the global average. The UAE e-commerce market is predicted to grow at a rate of 31 per cent annually to reach $9 billion by 2022, with a share of total retail sales at 13 per cent. At $2.9 billion, electronics is the largest e-commerce category in the GCC and Egypt, growing 23 per cent annually over the past few years, while fashion e-commerce was valued at $1.1 billion, growing 20 per cent annually.

The results of the research showed that almost 56 per cent of consumers in the UAE, KSA and Egypt start their online shopping journey using search engines as opposed to retailers' websites. In the UAE and KSA, 20 per cent of consumers watch online videos when researching products and services. In addition, 55 per cent of shoppers in the UAE, KSA and Egypt prefer to use smartphones to shop online.

"Consumers are already shopping online - more than 60 per cent have already purchased something online at least once in the UAE and Saudi Arabia," said Sarkis.

He added: "On the payments front, cash on delivery remains the preferred payment method for consumers in the region unlike most other markets globally. Reducing the reliance on cash on delivery will make purchasing online a more seamless experience for consumers and would benefit the entire e-commerce ecosystem."

- rohma@khaleejtimes.com