The future of e-commerce in the UAE

It’s no secret that e-commerce is gaining immense popularity by the minute in the UAE and throughout the GCC, with the retail sector witnessing a steady shift from brick and mortar to online shopping.

Shopping online has come a long way from being just another new trend – it has grown to become a preferred medium of purchasing for a rising number of consumers in the region.

People are leading busier lives, and there is a growing demand for convenience; e-commerce caters to this requirement, making it the future of retail. Once e-commerce players are able to gain consumer trust, people will prefer shopping online driven by convenience.

Recent research conducted by Google reveals that the UAE leads global smartphone penetration at 73.8 per cent and the country’s internet usage statistics show that 91.9 per cent of the population has internet access. Robust internet and mobile penetration across the GCC has played an active role in enabling the growth of e-commerce in this region. A report on online shopping trends in the UAE released by AWOK.com last year indicated that 80 per cent of the online retailer’s customers shopped using mobile phones.

The International Data Corporation (IDC) predicts that, globally, the total number of people accessing the internet exclusively through mobile devices is estimated to grow by more than 25 per cent in the next five years.

As people spend more time on their devices, more daily activities are likely to be conducted online. Online retailers in the region and globally will have to focus on being mobile friendly to offer efficient, convenient and safe click and shop experiences to customers.

Although purchasing online is becoming the popular shopping culture, the percentage of online shopping in this part of the world is comparatively lower than what we see in developed markets like the United States, or emerging markets like India.

E-commerce will be a mega-trend for businesses in the UAE and the market is expected to be valued at $10bn (Dhs36.7bn) by 2018, according to Frost & Sullivan. As such, e-commerce is one of the fastest growing businesses in the UAE and the region, and will continue to expand as consumer behaviour evolves with the advancement of technology.

Another key factor that helps nurture online shopping culture is customer trust. Until recently, consumers in the region have been reluctant to buy and pay online. This lack of trust has been a reason for the slower growth of e-commerce here. However, this trend is changing. An increasing number of people in the region are getting used to trusting, and conducting online transactions. In 2016, 25 per cent of customers paid online for purchases made on AWOK.com, which is a significant figure for the online shopping channel in comparison to previous years.

Online shopping sites are becoming more innovative by keeping in mind consumer behaviour. One example from recent times is cash on delivery. In the UAE almost 85 per cent of shoppers prefer to pay with cash on delivery, while only 15 per cent prefer to pay online.

Here the trust factor often determines the payment method, as some shoppers do not trust swiping their credit cards online.

As the e-commerce sector grows, many new players will enter the market and some old players will leave. That is a part and parcel of every industry’s life cycle. New companies will introduce fresh demand and healthy competition, which is ideal for a growing industry in a dynamic country like the UAE.

In the emergent online retail space online retailers will have to offer more than just discounts to earn and keep loyal customers. Companies will have to be invested in making the shopping experience for each individual as customised as possible. Same day delivery, and virtual stores are trends that digital retailers in the region will have to be quick to offer.

Global e-commerce titans have an active interest in the UAE and adjacent markets, and these companies will be equipped to offer customers the comfort and convenience of international shopping experience, same day delivery, and other perks which the local players have to gear up to match.

This year will be a significant one for e-commerce developments and improvements in the UAE and wider GCC. Customer convenience and satisfaction will have to be put in the forefront for online businesses to achieve positive results.

Ulugbek Yuldashev is the founder and CEO of AWOK.com