5 Reasons Why E-Commerce Market is booming in the UAE

by Zaara 03, Feb 2020

5 Reasons Why E-Commerce Market is booming in the UAE

In the recent news, the Emirate of Dubai and the UAE have been ranked first in the list fastest growing e-commerce markets in the Middle-East and North Africa region. Thanks to the government's advanced initiatives, such as the Dubai Smart City, tech-eager consumers and a favourable environment promoting start-up development as the chief factors that have placed the UAE and Dubai at the forefront of the e-commerce growth in the MENA region.

The E-Commerce transactions in the Emirates are forecast to total $16 billion (Dh 59 billion) in 2019 and grow 23 per cent yearly between 2018 and 2022. With these numbers, the UAE is making rapid strides as the fastest growing e-commerce market in the Middle East and North Africa, according to a joint study by Dubai Economy and global payments technology company Visa. The report also emphasised that the government promoting a cashless economy and greater transparency has boosted e-commerce in the country. The ‘emPay’ digital wallet, launched by Dubai Economy and the Dubai Commerce initiative has also been underlined as outstanding initiatives towards endorsing e-commerce and offering more convenient access to digital transaction platforms.

Let us now understand why e-commerce market is rapidly growing in the UAE.

1.High Digital Penetration

Digitisation is the future, and hence e-commerce has become the future of the UAE. According to the reports, mobile phone penetration is now at a world-record high of 210.9%. The residents of the UAE are among the top 10 worldwide when it comes to spending time on the internet and social media, be around seven hours and 54 minutes daily.

2.A rise in the Use of Mobile Wallets

Deep penetration of cell phones is the baseline for mobile wallet adoption, and this has been a reality for years in the UAE. The usage of mobile wallets in the UAE has increased with global giants like Samsung Pay, Google Pay, and Apple Pay entering the fray along with local players like Beam Wallet and Etisalat Wallet, as well as local banks. With just a smartphone you can pay bill anywhere, be it a petrol station, cinemas, or departmental stores.

3.Improved Logistics

The UAE has strong logistics support in the e-commerce market. Moreover, logistics can be a game-changer for any e-commerce business. Luckily, the Emirates is a central point for distribution, and its low cost on logistics and state-of-art infrastructure makes it an ideal place for e-commerce to thrive. It enjoys an advantage as a significant global trans-shipment hub with the port of Dubai International Airport (the sixth busiest cargo airport globally) and Jebel Ali providing a high standard of logistics, according to the Visa report.

4.Government Incentives

Pro-business initiatives of the government have been vital in building a digital culture in the UAE and eradicating many of the barriers to becoming a cashless society. Cashless payments and digital commerce were identified as top government priorities in the UAE Vision 2021. The authorities have also implemented several initiatives to support it, such as the wage protection system.

5.Digital Natives

The population of the Emirates consists of approximately 30% of digital-native millennials (born between 1981 and 1996) and a rising Gen Z (born between 1997 and 2012). These digital communities are always associated with and seek on-demand, near-instant clarifications. Their desire for convenient and fast shopping experiences is expected to quicken the acceptance of online shopping.

Through the years, e-commerce growth in the UAE largely owes to the retail sector and the thriving mall culture. Also, shortly, new e-commerce companies are expected to make a big splash in the UAE’s e-commerce market. The business-friendly environment of Dubai and other places in the UAE is attracting e-commerce companies from developed countries like the USA and UK.

Should you decide to start an e-commerce business in the UAE, then we at Commitbiz can help you with it. Our advisors have years of experience in this field and can make the process hassle-free. Contact us today for more information.