The UAE e-commerce sector has continued to show growth in 2021, according to a recent report launched by EZDubai, the fully dedicated e-commerce zone in Dubai South, in partnership with Euromonitor International, the world’s leading provider for global business intelligence, market analysis, and consumer insights.
Total e-commerce in the UAE, reached just over $5 billion in 2021 and is anticipated to surpass $8 billion by 2025.
More consumers in the UAE made online purchases across all categories during 2021, compared to 2020, with three in four respondents typically purchasing online, according to the report.
The fastest-growing sectors by industry from 2021 – 2025 will be homewares and home furnishings; food and beverage; and media products.
Countries in the Middle East are in a strong position to enable further e-commerce development due to the high GDP-per-capita and internet penetration, the report stated.
The UAE and Qatar are in the strongest position, with GDP-per-capita above $40,000 and internet penetration above 90 percent.
Both countries have successfully implemented fiber access in homes and have the highest active mobile-broadband subscriptions in the region.
Online shopping in the MENA region is fast catching up with global powerhouses such as China, with many online retailers scaling up services during Covid-19.
By 2021, the total market size is expected to reach an estimate of $31.7 billion.
Factors behind the e-commerce boom in the MENA region
The expansion of e-commerce in the MENA region is mainly driven by strong internet penetration rates, high possession of digital devices, rising incomes, improving logistic advancements, and the increasing presence of global and recognised players that have brought variety and availability to local consumers amidst the pandemic.
While the MENA is mostly a cash-based economy, after the pandemic, consumers shifted quickly to adopt credit and debit cards, driven by increased trust and the improvement of company operations.
According to the report, in the UAE, credit/debit cards are the preferred method of payment.
UAE consumers purchase from cross-border retailers to access a wider range of products or search for lower prices or higher quality products not offered locally.
The UAE also has affordable shipping costs for consumers looking to purchase outside the region.
The leading countries, which UAE consumers purchase from include the USA, India, and China. These purchases are often related to apparel and footwear, as well as beauty and personal care.
Foreign e-commerce (UAE consumers purchasing outside of the country) is rising fast, from 23 percent of total e-commerce sales in 2019 to 26 percent in 2021. This is expected to rise to 32 percent in 2025.
The MENA is an active region for attracting local and international investments in e-commerce.
With the current pace of developments and growing consumer preference for online retail, the region will see e-commerce growth of over $18 billion in absolute value terms over 2021-2025 reaching over $49 billion in 2025.
Commenting on the report, the CEO of the Logistics District – Dubai South, Mohsen Ahmad, said: “We are pleased to launch the second e-commerce report in partnership with Euromonitor and share the latest insights on the sector with our stakeholders. The growth that is witnessed in the UAE and the MENA region encourages us to work harder and closer with our e-commerce players in order to boost the sector, so that the emirate’s e-commerce market becomes a global powerhouse.
“The relentless government support as well as the services and solutions that we tailor for our clients to fulfil their objectives, are key factors in the advancement of the sector. At EZDubai, we will continue to cater to the rising demand that comes in tandem to the growth of online buyers and internet penetration.”
The general manager of Euromonitor International in Dubai, Hussein Doughan, said: “The launch of the second such report in the MENA region, is due to several factors, among which is the growth of the e-commerce sector that reached over $31.7 billion in 2021.”
He added: “We are delighted to present the report in partnership with EZDubai, and to provide industry players with a strong understanding of the key opportunities in the e-commerce industry through market growth performance, key success factors and category analysis.”
EZDubai was designed to attract leading e-commerce companies and create a benchmark with its infrastructure.
The e-commerce zone – which was launched in January 2019 by Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE and Ruler of Dubai – aims to promote the emirate’s position as a hub for regional e-commerce.
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