E-commerce clicks in the UAE

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DUBAI -- It's a virtual trend that is fast catching on in the UAE. E-commerce is here to stay in the country as a chunk of the population now turn to the Internet to buy and sell things, using websites such as Dealbay.ae and Souq.com.

Saleeh Dela Cruz, a 23-year-old resident, dabbles in what she terms 'amateur e-commerce' as a hobby. She has an active account on Souq.com that she uses to buy and sell things. "One man's trash is another man's treasure," she quotes the popular phrase to describe her experience so far.

"You can find very good bargains online. Someone might list a branded outfit for half the price after wearing it a few times because she doesn't want it. When people want to throw their things out but think they can get some money out of it, they let it go at low prices. You can find stuff you normally can't afford to buy from the store or can't find in stores at all. There's no disgrace in buying second-hand things. You save money and get something good," she says, while adding that she herself uses the site to get rid of her own things that were otherwise destined for the bin because they no longer held value to her.

Mastercard Worldwide reported that about eight in 10 respondents of UAE Internet users evaluated this year noted they were satisfied with online shopping. Satisfaction was based on convenience, value of the items received and the security of transaction.

Privacy is another factor that attracts buyers online, according to
Reem Taleb, a dedicated online shopper. "Because I am conservative, I feel embarrassed walking around a store for lingerie. I feel more comfortable buying them online and have it delivered to me at home. Size is not a problem because they (sellers) post a size chart in their auctions and they follow a no-return policy for hygiene reasons,"
she explains.

Dela Cruz and Taleb are among 1.5 million users on the five-year-old market portal that operates online in Saudi Arabia, Egypt and Jordan, with headquarters in the UAE. Apart from individuals clearing out their closets, some entrepreneurs have set up virtual stores on the site too offering brand new items ranging from cosmetics, clothing and electronics to automotive parts and furniture, and delivery is assisted by a local courier service.

Salma Ahmad, CEO of MARHABAA, an organisation that is based in the UK but has been operating an online store on Souq.com since August 2006, says, "Online shopping in the UAE is advancing, perhaps not in leaps and bounds but at a slower and more cautious rate. The lifestyle and culture of the UAE, however, does mean that online shopping cannot compare to the exuberance of the luxurious abundant malls here.

"Shopping in the UAE is an activity not always undertaken out of necessity. Online shopping needs to provide something different and at competitive rates in order to encourage more users," she notes.

MARHABAA offers a vast array of handbags, cosmetics, jewellery, gifts, household items, clothing and accessories among other items with goods sourced primarily from the UK, designer cosmetics from the US
and jewellery from Italy.

Ultimate variety
"We aim primarily to provide items that would otherwise not be available in the UAE so as to give the consumer ultimate variety," she says.

A survey released in 2008 by Symantec Corporation had reported that around 75 per cent of Internet users in the UAE avoid shopping online.

Mehak Manwani, a 39-year-old stay-home-mom, is among those skeptical of the trend and prefers to stick to traditional retail shopping.

"What if you pay and don't get your item? And if you actually get your order, what if it's not like the one in the photos? I'm sure returning or exchanging it would be problematic and you won't get all your money back," she wonders.

Maurizio Valentini, GCC General Manager for Souq.com, notes that Manwani is not alone and there are many others who strongly avoid buying things on the Internet.

Credit card fraud
"The main issue that people bring up as to why they are hesitant to shop online is credit card fraud," he explains, while adding that secure transaction protocols are now strictly enforced by website owners and authorities to
combat fraud and raise browsers' confidence levels.

He also adds that the recent economic crisis has added zest to online shopping as both consumers and sellers now flock to the Internet.

"The recession actually boosted the number of sellers and buyers in general as businesses are looking for extra channels to reach out to their customers efficiently and buyers are looking for convenience and value for money," he points out.

The UAE has been declared one of the top 10 optimistic nations in consumerism despite the recession as reported in a Consumer Confident Survey conducted in March this year by global information and measurement firm, The Nielsen Company. The study involved approximately 27,000 Internet users representing consumers in 55 countries throughout Asia Pacific, Europe, Latin America, the Middle East and North America and noted their economic outlook and confidence levels.

"UAE consumers are spending an insignificant amount of their income on online shopping compared to total spend. Globally, the online retail market continues to mature with online retail becoming more and more prominent. Retailing online has become very competitive and it's really all about the benefit you can offer to customers," says Sevil Ermin, Managing Director in the UAE for The Nielsen Company.

Ermin says the most commonly intended online purchase are airline tickets and reservations.

"Airlines have had to develop a competitive online shopping environment and retail experience to enable them to compete with their global counterparts, especially given the fact that many of their customers are based in markets where the expectation and demands for this level of differentiated online service is very high.
Online customers also save on up to  five per cent in agency fees that would be incurred if they make their purchase offline. These reasons have combined to result in a more developed offering that provides convenience (from selecting seats to meal types, etc), easy 24-hour access, and the ability for people traveling to compare prices for different routes, timings and airlines easily than going to a travel counter.

"Airlines websites have also made more investments in making online purchasing more secure than retailers have made in their online sales operations," he explains. Ermin believes that the UAE has high potential in spinning a vast web market once retailers choose to opt for an online approach.

Scope for growth
"Globally,  there remains tremendous room for growth for online shopping. About 52 per cent of online consumers in the UAE say they spend less than five per cent of their monthly spending online, and 30 per cent say they spend between six and 10 per cent. This is due to the fact that UAE stores and retailers have not yet fully embraced the online approach as an alternative," he says, while explaining that shoppers are not offered incentives to go online and that has resulted in a poor rating compared to the rest of the world.

"Businesses in the UAE have not really embraced the opportunities offered by online shopping and have not taken advantage of the global trend where we see the common thread of online shopping offering bargains to provide more value over the bricks-and-mortar offerings. Globally, online shopping sites are getting consumers the best possible price (i.e. Underlying offer from eBay), and if you go to any of these sites you'll probably get a better deal than a physical store," he concludes.

Did You Know?
66 per cent of UAE consumers say they are not likely to share a negative product experience online
43 per cent of online consumers in UAE are influenced through social media networks
56 per cent of UAE residents research online before buying a car while 46 per cent base their decision to buy one only after reading online reviews
33 per cent have never shopped online while 31 per cent go for sites that offer products unavailable in physical stores

Friends (28.9 per cent) and family (28.1 per cent) are most trusted sources followed by online product reviews (9.8 per cent) in UAE

(Statistics provided by The Nielsen Company)

The Growing Souq
Souq has 1.5 million unique users every month

Top categories with most listings on the site are: cosmetic and beauty, electronics and mobiles, and fashion

On Souq.com, one item is sold every 30 seconds

One lifestyle item is sold every minute

One tech item is sold every minute

One perfume is sold every four minutes

One mobile is sold every five minutes

One laptop is sold every seven minutes

By Farhana Chowdhury

© Khaleej Times 2010