How Big a Contributor is E-commerce to the economy in the UAE?
- In 2020, the retail e-commerce market witnessed $3.9 billion worth of sales. This was a 53% increase over the sales figures for the previous year.
- 8% of all retail in the United Arab Emirates was made up by e-commerce marketplaces.
- Data shows that apparel and footwear made up a third of the e-commerce market in the United Arab Emirates, totaling $1.3 billion worth of inventory. Comfortable clothing such as sweatshirts, T-shirts, and hoodies made up the bulk of the purchases.
- The second-most commonly purchased items through e-commerce platforms were consumer electronics. Demand for personal computers, laptops, and tablets are believed to have been spurred by the Work-From-Home model of employee work and online education. This made up 31% of all online purchases.
- The third-biggest segment in e-commerce purchases was food and beverage. A closer examination of the data shows that this is made up of ready-to-eat foods, staple foods, and healthy foods. This made up 11% of the e-commerce volume.
- Driven by a high internet penetration rate of 99% and more disposable income, the e-commerce market is expected to reach $8 billion in 2025. Modern digital payment systems and strong government support will aid the e-commerce sector, plus a youth population that is tech-savvy and a well-developed logistics network in the United Arab Emirates.
- The United Arab Emirates has the highest smartphone penetration rate in the Middle East-North Africa region, which has helped mobile e-commerce jump from 29% of the total e-commerce market in 2015 to 42% by the end of 2020.
- In 2020, mobile e-commerce accounted for $1.6 billion in sales, which is 56% higher than the figure for 2019.
- The mobile e-commerce market is expected to reach $3.9 billion in 2025, growing steadily at a Compounded Annual Growth Rate of 18.9% during 2020-25.
- The e-commerce sector saw the highest number of Business Licenses being issued in May 2020, attesting to the growing popularity of e-commerce platforms in the United Arab Emirates.
- Millennials report feeling more comfortable making purchases through a desktop, as opposed to a mobile app.
- The COVID-19 pandemic saw the food and beverage & the consumer electronics segments growing at triple-digit rates during 2019-20. Apparel and footwear, pet care products, beauty and personal care were segments that grew by more than 50% during the same period.
- On average, consumers in the United Arab Emirates spend $122 on every transaction.
- 90% of all items purchased through e-commerce platforms are shipped into the country from abroad.
The United Arab Emirates has a workforce of 7.38 million, out of which 7.21 million are employed. According to the latest figures published by the Federal Competitiveness and Statistics Authority, about 164,655 are unemployed. This clearly presents an opportunity for those seeking to bridge the gap between employers and the unemployed. So you can see why recruitment agency business setup in Dubai makes a lot of sense. What better place than Dubai, one of the leading commercial hubs of the world?
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Trends Driving the E-Commerce Sector Forward in 2022
It is estimated that by 2022, voice searches will play in increased role in e-commerce sales.
- Consumers will demand more of eco-friendly packaging, contactless delivery & focus more on the sustainability of e-commerce operations.
- Customers in the United Arab Emirates are willing to share their purchase history in return for a more personalized feed when browsing through online stores.
- Augmented Reality is slowly making its mark in the United Arab Emirates, allowing consumers to virtually try on pieces of apparel before purchasing them through e-commerce platforms.
It is interesting to note that 66% of customers in the Middle East-North Africa region purchase from online businesses that are not located in their country. This holds a lot of potential for an e-commerce company operating in Dubai – you could sell to the Middle East-North Africa region and an excellent logistics network in the region can mean happy smiles all around. Getting an e-commerce license in UAE is a greatly simplified affair for those looking to set up base in the United Arab Emirates.
E-commerce sales for the MENA region were estimated to be a massive $55.4 billion in 2020. Given that it was only $22.2 billion five years ago, this points to an increased adoption of e-commerce platforms across the region.
In fact, the average consumer in the Middle East spent $817.11 on online purchases in 2020. For the United Arab Emirates, this was higher at $3,104 for the same year. Qatar had an average annual spend of $1,488 on online purchases, while the corresponding amount was $1,181 for Israel.
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- 30% of online shoppers preferred Cash on Delivery as a payment mechanism in the Middle East-North Africa region in 2020.
- 44% of all online shoppers in the Middle East-North Africa region used cards to pay for their purchases in 2020. When it comes to the GCC region (United Arab Emirates, Oman, Saudi Arabia, Qatar, Bahrain, Kuwait), the figure is higher at 61%.
- In the Middle East-North Africa region, most new sellers are discovered through social media. About seven out of every ten sellers get discovered through Facebook, and six out of every ten new sellers are discovered through Instagram.
- 85% of online buyers in the United Arab Emirates use smartphones to find more information about a product they plan to purchase later. For Saudi Arabia, the figure stands at 80%.
- For 51% of consumers in the Middle East-North Africa region, quality is what they look for when making an online purchase. Health was cited as a reason by 44% of respondents, while Affordability found favour only with 39% of those who took part in the survey.
A&A Associate LLC is a best business setup consultant in dubai that has years of experience helping entrepreneurs establish their companies in the United Arab Emirates as well as offshore. We are routinely consulted on matters of Cayman Islands offshore company formation, British Virgin Islands offshore company formation, and Mauritius offshore company formation. We believe that there is a best-fit for every business model, and can lend our world-class expertise to your dream.
