· Multi-stakeholder approach and public-private partnerships critical to sustaining eCommerce advantage of Dubai and UAE, says HE Sami Al Qamzi
Dubai: The UAE is the most advanced eCommerce market in the Middle East and North Africa, according to a joint study by Dubai Economy and digital payment solutions leader Visa, which also estimates eCommerce transactions in the country to hit US$16 billion (AED 59 billion) in 2019 and grow 23% on average annually between 2018 and 2022. The ‘UAE eCommerce Landscape’ study underlines innovative initiatives, such as the Dubai Smart City, tech-eager consumers and a favourable ecosystem promoting startup growth as the chief factors that have positioned Dubai and the UAE in the forefront of the eCommerce growth in MENA.
The report traces the growth of eCommerce activity in MENA establishing that the UAE is the fastest growing eCommerce market in the region, with maturity on both the consumer and merchant sides, and identifies key drivers and challenges of eCommerce with the purpose of creating an action plan to support the Dubai Economy’s objective of expanding the eCommerce sector in Dubai and the UAE.
While MENA remains the fastest growing eCommerce market globally, government adoption of eCommerce payments on platforms such as Dubai Smart City and exponential growth in categories such
as quick service restaurants and transportation enable the UAE to maintain a clear edge in online payments within the region.
The report compares the UAE to emerging and mature benchmark markets based on the latest transaction data from Visa to identify pointers that help guide the wider eCommerce ecosystem comprising the government, investors, entrepreneurs, retailers and other stakeholders towards a multi-faceted action plan. The mature benchmark markets covered in the study include the US, Canada, UK, Sweden, Australia and Singapore while the emerging markets compared were Brazil, South Africa and Malaysia.
His Excellency Sami Al Qamzi, Director General of Dubai Economy, commented that the ‘UAE eCommerce Landscape’ report offers valuable insights on consumer preferences and investments in tech entrepreneurship that will accelerate the smart transformation of Dubai and the UAE.
“Public-private partnerships to drive awareness and trust on the value, convenience and security of online shopping and expand the digital payment option are critical to sustaining the eCommerce momentum that Dubai and the UAE have gained through promoting cashless payments and providing secure payment platforms for businesses and the public. We are delighted to continue our partnership with Visa as their global payment solutions will enable reliable market research and provide accurate data and insights on eCommerce trends and consumer behaviour critical to Dubai’s evolution as a Smart City,” said Al Qamzi.
Global eCommerce leaders, such as Amazon, expanding to Dubai is a strong testament to the emirate’s competitiveness as a digital innovation hub, Al Qamzi added. “Dubai has not only established an enabling eCommerce ecosystem for innovators, entrepreneurs and end-users but also continues to launch path-breaking eCommerce initiatives. Dubai Economy encourages retailers to go online and enables e-retailing on social media while also protecting the rights of consumers as well as merchants across both online and in-store retailing to promote trust and transparency.”
Marcello Baricordi, Visa’s General Manager for Middle East and North Africa, said: “Through our partnership with Dubai Economy, Visa has constantly strived to lead efforts in driving growth of digital payment through raising awareness of all stakeholders on the value, convenience, and security of cashless payments, including eCommerce. The ‘UAE eCommerce Landscape’ report is the latest in our efforts to share knowledge with our partner, motivated by our commitment to help accelerate the adoption of digital payments across all areas, reduce the dependency on cash and open up new avenues for the further development of the eCommerce sector.”
He added: “By growing the eCommerce sector in the UAE, there is a tremendous opportunity to drive economic growth and extend the benefits of digital payments to residents and businesses in the country. We will continue to work with our government and industry partners to promote a regulatory ecosystem wherein public and private partnerships can thrive and spur technological advancements and entrepreneurship, and stimulate foreign investment. We are particularly buoyed by the policies of the government that encourage innovation on a level playing field and through open dialogue. In addition to eCommerce, we are also working with our government partners on growing mobile and contactless payments. As a trusted partner of the government, Visa remains committed to collaborating with the UAE Central Bank and Dubai Economy in supporting the UAE’s vision of becoming one the world’s most digitally innovative and technologically advanced economies.”
Deeper internet penetration along with an advanced digital infrastructure and younger population eager to embrace technology-driven solutions available across smart phones and social media are at the core of the eCommerce growth in Dubai and the UAE. At 4.2% of total sales, eCommerce penetration in the UAE is not only higher than the MENA average of 1.9% and GCC average of 3%, but also highest in the region.
The report shows that while consumer preference for eCommerce channels in the UAE is nearly at par with mature benchmark markets, the country has a healthy lead in average transaction size compared to both emerging and mature markets. The average size of eCommerce transactions in the UAE in 2018-2019 is US$ 144 (AED 528) while it is US$ 79 in mature markets and US$ 26 in emerging markets.
Government payments dominate eCommerce in the UAE with 60% of government transactions at Visa falling under eCommerce between March 2018 and February 2019. Government initiatives for cashless transactions including the seamless electronic management of transport via the Nol Smart Card have played a major role in promoting familiarity with ePayments in the country.
Education and government payments accounted for 38% of the eCommerce transactions in the UAE between March 2018 and February 2019, growing from 25% during the same period in 2016-2017.
Increasing consumer reliance on food delivery apps and ride-hailing apps helped both quick service restaurants and transport sector raise their eCommerce share from 1% to 2% during the same period.
The outstanding eCommerce growth in the UAE largely owes to the retail sector and the thriving mall culture. Retailing in the UAE, which also comprises non-store sales, was valued at AED 202 billion (US$55 billion) in 2018 and is forecast to rise to AED 234 billion (US$ 63,8 billion) by 2023, with non-store sales including online shopping set to grow at 78%. Online retailers and mall operators in the UAE offering a multi-channel shopping experience and payment options is also helping eCommerce grow.
A survey on consumer perceptions of eCommerce in the UAE conducted jointly by Dubai Economy and Visa earlier this year revealed that 66% of the respondents trusted online shopping and 70% trusted online payments. As eCommerce transactions increased, card payments in the UAE grew 70% in 2018, compared to 68% in 2017, while cash-on-delivery dropped 15% and 22 % in 2018 and 2017, respectively.
Quoting recent studies on online purchases in the UAE the report says that 81% of adults in the UAE shopped online in 2017, up from 68% in 2016. The increase in online shopping is forecast to continue as online adults look forward to increasing their online spending over the next 12 months, largely motivated by the convenience factor and a rising number of online stores.
The UAE’s rapidly expanding start-up ecosystem that continues to attract VC (Venture Capital) funding and M&A (Mergers & Acquisition) activity are major attractions for global eCommerce giants and industry innovators, the report, says, pointing to the acquisition of Souq.com by Amazon and Uber taking over Careem. The transshipment advantage of Dubai will also contribute to eCommerce growth in the UAE.
The report emphasises that the government promoting a cashless economy and greater transparency have boosted eCommerce in the UAE. The Dubai Internet City (DIC) has established a favourable environment for entrepreneurs and startups to nurture the next big wave of ICT innovation. The emPay digital wallet, launched by Dubai Economy, and the Dubai CommerCity initiative are also highlighted as outstanding initiatives towards promoting eCommerce and offering easier access to digital transaction platforms.
To read the full ‘UAE eCommerce Landscape’ report click: https://ae.visamiddleeast.com/dam/VCOM/regional/cemea/unitedarabemirates/home-page/documents/visa-white-paper.pdf.
About Dubai Economy
Dubai Economy (Department of Economic Development – Government of Dubai) is the government body entrusted to set and drive the economic agenda of the emirate of Dubai, UAE. Dubai Economy supports the structural transformation of Dubai into a diversified, innovative service-based economy that aims to improve the business environment and accelerate productivity growth. Dubai Economy and its agencies develop economic plans and policies, identify and support the growth of strategic sectors, and provide services to domestic and international investors and businesses.
For further information on Dubai Economy, please contact: Faisal Shamsudheen, Phone: +971 4 445 5927, firstname.lastname@example.org
About Visa Inc.
Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit www.visamiddleeast.com, www.visanewsmena.tumblr.com or follow us on Twitter @Visamiddleeast.
© Press Release 2019