UAE e-commerce market expected to touch $9.2bn by 2026: Dubai Chamber of Commerce

According to new findings published by the Dubai Chamber of Commerce, the value of the UAE e-commerce market could touch $9.2bn in 2026, with the sector’s share of total retail sales in the UAE expected to reach 12.6 per cent by the same year.

The study, based on data from Euromonitor, showcased several factors boosting e-commerce activity and growth opportunities in the UAE.

Total e-commerce sales in the UAE registered significant growth in 2021, reaching $4.8bn during the year, compared to $2.6bn in 2019.

Smartphones and tablets accounted for most e-commerce transactions last year, as the mobile retail market reached $2.6bn, accounting for 44 per cent of the total e-commerce market value.

Mobile retail sales are expected to record a compound annual growth rate of 15.6 per cent over the 2022-2026 period to reach $4.6bn.

The study showed that more than a third of consumers in the UAE purchased a product or service using their smartphone at least once a week, which is above the global average of weekly online purchases.

Key trends supporting the strong growth in mobile e-commerce transactions include the availability of apps, which has increased pricing transparency, the study said.

The growing number of loyalty rewards programmes offered by online retailers also drove up demand for online shopping in the UAE.

Shoppers in the UAE, according to the report, preferred local retail websites to overseas retailers. In 2021, domestic e-commerce websites accounted on average for 73 per cent of the total sales while foreign websites received only a 27 per cent share.

The study stated that between 2022 and 2026, foreign e-commerce platforms are expected to grow by 19.2 per cent, which would mark a 34 per cent gain in market share.

Investments in the e-commerce sector have significantly changed the dynamics of the UAE market, with the main impact being downward pressure on prices due to increased competition and supply.

The improvement and modernisation of payment systems and services were identified as another key factor that has boosted demand and business activity within the UAE’s e-commerce sector.

Consumer electronics in the UAE constituted the top-selling online products in 2021 with a 34 per cent share, consisting mainly of smartphones, phone accessories, computer accessories, tablets, computers and TVs.

Apparel and footwear accounted for 31 per cent, food and beverages 12 per cent, media products 8 per cent, personal accessories 5.8 per cent, and consumer appliances 3.3 per cent.

The relatively high shares of products purchased online indicate increased competition between online channels and traditional channels for electronics, apparel, accessories, cosmetics, as well as food and beverages.

Among the main product categories offering the most untapped potential include apparel and footwear, personal accessories, beauty and personal care, and home and gardening.

The increasing momentum of e-commerce activity in the country is expected to provide more business opportunities in payment systems, financial technology, electronic logistics and distribution centres.

Read: What’s driving the e-commerce industry: consumer behaviour or digital innovations?