Other BriefingsForeign Investment Opportunities In the UAE E-Commerce Market
Market value expected to hit US$9.2 Billion by 2026
Analysis from the Dubai Chamber of Commerce has stated that the value of the UAE e-commerce market is expected to reach US$9.2 billion by 2026, while the sector’s share of total retail sales in the UAE is projected to increase by 12.6% the same year. The study, based on data from Euromonitor highlighted several factors boosting e-commerce activity in the UAE, as well as high-potential growth opportunities. We highlight these market developments.
The Domestic Market
Total e-commerce sales in the UAE recorded remarkable growth in 2021, reaching US$4.8 billion during the year, compared to US$2.6 billion in 2019, the year prior to covid.
Mobile devices, such as Smartphones and tablets, accounted for a majority of e-commerce transactions last year as the mobile retail market reached US$2.6 billion, accounting for 44% of the total e-commerce market value. Mobile retail sales are expected to record a compound annual growth rate of 15.6% over the 2022-2026 period to reach US$4.6 billion.
The study shows that more than one third of consumers in the UAE bought a product or service using their smartphone at least once a week – above the global average of weekly online purchases.
Among the key trends supporting the strong growth in mobile e-commerce transactions is the availability of apps, which has increased pricing transparency, the study said, adding that 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% of the total sales while foreign websites received only a 27% share.
Foreign E-Commerce Platforms Expected To Increase Market Share
The report stated that despite the clear preference of buyers utilising domestic websites, increased competition from foreign e-retailers projected in the future. Between 2022 and 2026, foreign e-commerce platforms are expected to grow by 19.2%, which would mark a 34% gain in market share.
The UAE’s e-commerce landscape has evolved and grown considerably in recent years, through major investments, acquisitions and partnerships with global companies.
Investments in the sector have significantly changed the dynamics of the UAE e-commerce market, with the main impact being a downward pressure on prices due to increased competition and supply.
Consumer Trends
The improvement and modernisation of payment systems and services was 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% share, consisting mainly of smartphones, phone accessories, computer accessories, tablets, computers and TVs. Apparel and footwear accounted for 31%, food and beverages 12%, media products 8%, personal accessories 5.8%, and consumer appliances 3.3%.
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 in the e-commerce market in 2022 are:
- Apparel and Footwear,
- Personal Accessories,
- Beauty and Personal Care
- Home & Gardening.
Growth momentum within the UAE’s e-commerce sector is expected to continue, supported by rising demand for online shopping, and steady investment flows in the sector’s infrastructure.
Dezan Shira & Associates have a presence in Dubai and can assist foreign investors into the local UAE market. Please contact Maria Kotova at dubai@dezshira.com for assistance.
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About Us
Middle East Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Dubai (UAE), China, India, Vietnam, Singapore, Indonesia, Italy, Germany, and USA. We also have partner firms in Malaysia, Bangladesh, the Philippines, Thailand, and Australia.
For support with establishing a business in the Middle East, or for assistance in analyzing and entering markets elsewhere in Asia, please contact us at dubai@dezshira.com or visit us at www.dezshira.com. To subscribe for content products from the Middle East Briefing, please click here.
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