The UAE e-commerce sector continued to show growth in 2021 based on the 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.
According to the report’s findings, more consumers in the UAE made online purchases across all categories during 2021 compared to 2020, with an average 75% of respondents typically purchasing online. The fastest-growing sectors by industry from 2021 – 2025 will be homewares & home furnishings, food & beverage, and media products.
Countries in the Middle East are in a strong position to enable further e-commerce development thanks to high GDP per capita and internet penetration. The UAE and Qatar are in the strongest position, with GDP per capita above $40,000 and internet penetration above 90%. Both countries have successfully implemented fiber access in homes and have the highest active mobile-broadband subscriptions in the region.
E-commerce 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 was estimated at $31.7 billion. 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 recognized 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 and 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% of total e-commerce sales in 2019 to 26% in 2021; this is expected to rise to 32% 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.
In his comments, Mohsen Ahmad, CEO of the Logistics District – Dubai South, 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 of e-commerce 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.”
Hussein Doughan, General Manager of Euromonitor International in Dubai, said: “The launch of the second e-commerce 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. 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 HH Sheikh Mohammed bin Rashid Al Maktoum, 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.