Loyalty programmes by companies and online marketplaces emerged as the prime criteria for decision making for shoppers in the UAE, with just 30 percent of high-value loyalty programme members contributing about $5.5 billion, amounting to as much as 50 percent of the online retail revenues in the country, new research revealed.
Discounts led the list of reasons for 55 percent of loyalty programme members for increased online shopping, followed by the convenience of free delivery (52 percent), cash back (42 percent) and early access to sale (35 percent), said the market study by RedSeer Strategy Consultants, the leading global consultancy specialising in digital sectors.
The study also showed that as high as 75 percent of shoppers in the UAE – or 3-out-of-4 consumers – are subscribers to various loyalty programmes offered by online marketplaces and companies across sectors.
“As high as 76 percent of shoppers are currently members of UAE consumers’ loyalty programme memberships, while 20 percent remain outside of it and four percent exited,” RedSeer said.
“For 40 percent of the members, the loyalty programmes are most important for their purchase decisions,” it said.
Evolving digital ecosystem in UAE
Industry experts said the study findings point to the evolving of a mature digital ecosystem in the UAE where experience is increasingly becoming important, and loyalty programmes becoming an important lever for it.
“Historically, price has been the key element for online shoppers. Now, we are increasingly seeing experiential elements becoming increasingly important,” Sandeep Ganediwalla, Dubai-based Partner at RedSeer Strategy Consultants, told Arabian Business.
“The focus from players on loyalty and the widespread adoption is an illustration of this,” he said, adding that “this shows a maturing digital economy for the region”.
The RedSeer study said that loyalty behaviour is even more pronounced in e-commerce.
The study also showed that online loyalty programme adoption has doubled in just one year in the UAE – from 20 percent last year to 40 percent this year – across grocery, electronics and BPC (beauty and personal care products) segments.
However, for fashion products, the increase was less than 25 percent this year.
The study also revealed that discounts and free deliveries are the top two reasons for UAE shoppers for adopting loyalty programmes.
While discounts offered by companies and marketplaces lured 55 percent of loyalty programme members for increased online shopping, the convenience of free delivery acted as the catalyst for 52 percent of shoppers to opt for repeated online shopping.
Loyalty programmes thrive
Q-commerce players such as Careem, Talabat and Deliveroo Plus, and online horizontals such as Amazon Prime and Noon VIP are the prime drivers of the surge in the adoption of loyalty schemes, RedSeer said.
“These players have doubled down on their loyalty programmes to increase the share of wallet for consumers,” it said.
RedSeer said consumers have become comfortable with these platforms and trust them enough to shop regularly and thus signup, and on many occasions pay, for the loyalty programmes.
It also said a category-wise study based on average order value (AOV) and frequencies revealed major shifts in purchasing behaviour by UAE shoppers driven by loyalty programmes.
“Purchases are shifting online for select high-priced electronic items such as smartphones and home entertainment and high-value BPC products such as perfumes, lipsticks and facial creams with loyalty programmes offer attractive offers,” the study said.
The online shift accounts for more than 50 percent of loyalty programme members of electronic and BPC categories.
For grocery consumers, the free delivery that enables easy top-ups is the prime reason for shifting to online shopping, the study said.
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