29 June, 2021
e-Commerce in UAE reaches $3.9 billion in 2020
In 2020, the UAE’s retail e-commerce market reached the milestone of $3.9 billion, a 53 percent YoY increase which was pushed by the COVID-19 induced digital shift, according to a new analysis from the Dubai Chamber of Commerce and Industry.
The analysis was based on recent data from Euromonitor, which forecasted the value of the market to grow by a compound annual growth rate (CAGR) to reach $8 billion by 2025. The CAGR from 2020-2025 is projected to be 18.9 percent.
This projection was supported by numerous crucial factors like high-income potential, high internet penetration rate, developed transport logistics network, modern digital payment systems, a growing tech-savvy youth population, and strong government backing.
The data from Euromonitor also showed that e-commerce made up 8 percent of the retail market in 2020. The percentage of m-commerce, or mobile commerce, also increased from 29 percent in 2015 to 42 percent in 2020 in the UAE. On top of that, the UAE m-commerce retail market value reached $1.6 billion in 2020, a massive 56 percent increase over the preceding year.
Euromonitor International projected that digital commerce will make up half of the absolute value growth for the global retail sector from 2020-2025. This equates to $1.4 trillion in absolute value growth as an increasing amount of goods are sold online. Similarly, the e-commerce sector is headed for growth in not just the UAE but the Middle East as a whole. In the region however, the UAE is by far the fastest growing market, thanks to its well-developed e-commerce infrastructure and tech-savvy population.
While cash on delivery remains a challenge for the e-commerce market, its use was significantly reduced because of hygiene concerns and has been largely replaced by the contactless payment method. An interesting statistic showed that customers return between 15-40 percent of their online purchases, compared to 5-10 percent for in-store shopping. These numbers are thought to go down as websites improve their customer support and visualization, and product details become more relevant.
In 2020, the highest share in e-commerce was held by the apparel and footwear category, with a market share of 33 percent, and raking in $1.3 billion. The second largest category in the UAE retail e-commerce market was consumer electronics, with a share of 31 percent and logging in $1.2 billion. A distant third place is the food and drink category, with 11 percent and $400 million in the UAE retail e-commerce market in 2020.
In light of the pandemic and ensuing lockdowns, several big retailers developed and enhanced their mobile apps to increase online sales and improve customers’ access to the products. As of now, in total there are 52 purchasing apps in the UAE that specialize in food, beverage, and pharmaceutical products.
To be a part of the growing e-Commerce boom in Dubai, reach out to us for a consultation and explore various opportunities in this sector.
Source : khaleejtimes