Unless retailers come up with discounts, freebies and other incentives that are more attractive than e-retailers, they will not be able to evince much interest and woo a large number of consumers as free deliveries and economical rates offered by e-retailers could pose a major challenge to them.
Besides this, e-retailers are also trying to cash in on special occasions and festivals such as Eid, New Year and White Friday.
"The e-commerce market is witnessing changes when it comes to logistics and marketing. Players like Souq.com are starting to offer free shipping on their products. A situation that lowers the end price for users. Also, the company is increasingly focusing on launching marketing campaigns and online shopping festivals, which in turn have a great effect on demand. In fact, some of the e-commerce campaigns run during the same time span of offline shopping exhibitions such as Gitex. With that being said, e-commerce is starting to become a visible threat on offline channels," says Rabia Yasmeen, research analyst at Euromonitor.
E-commerce continues to register the fastest growth among all channels for electronics in the UAE. With value growth expected to reach 18 per cent in 2017, the e-commerce market for electronics is expected to cross the Dh1.5 billion mark by the end of the year. E-commerce players in the country are continuously putting more effort into gaining consumer trust and building higher demand through attractive pricing, she added.
According to Euromonitor figures, the overall e-commerce market in the UAE is projected to expand 38 per cent year on year to reach $1.8 billion (Dh6.6 billion) by end of 2017; while in the GCC, it is forecasted to grow at a slower pace of 29 per cent to $4.6 billion (Dh16.88 billion) by the end of this year.
In terms of contribution of each segment in online sales, wearable electronics make up 10.8 per cent of online sales of overall volumes, followed by portable players at 10.2 per cent, mobile phones at 5.02 per cent, imaging devices at five per cent and home video at 4.8 per cent, the data showed.
Nilesh Khalkho, CEO of Sharaf DG, said brick-and-mortar stores are facing challenges because the market is slow in addition to the growing share of online stores.
"Many of the retailers are facing tough times and have reduced the number of outlets because of growing competition amid a slower market. An additional challenge is coming from the e-commerce platform as well," he said.
According to Go-Gulf data, more than 60 per cent of UAE shoppers have shopped online from other countries, with travel and transportation making up the largest portion of purchases at 43 per cent, followed by clothing, footwear and accessories (40 per cent), consumer electronics (35 per cent), jewellery and watches (33 per cent), event tickets (30 per cent) and cosmetic and beauty products (24 per cent).
Among electronics, desktop/laptop are the top purchases at 55 per cent followed by smartphones at 31 per cent and tablets at nine per cent.
Top countries for cross border purchases are the US, the UK, India and inter-Mena region.
The e-commerce segment in the Gulf has recently witnessed increased activity with mergers and acquisitions taking place regionally and globally.
Global e-retail giant Amazon recently acquired UAE's Souq.com for $580 million while Emaar Malls bought a 51 per cent stake in online fashion retailer Namshi for an estimated $151 million from Global Fashion Group. Dubai-based master developer Emaar's chairman Mohamed Alabbar is foraying into e-commerce with the launch of Noon.com with an investment to the tune of $1 billion.
Global consultancy AT Kearney had said in a note that with opportunities galore, it is prime time for the GCC to take the plunge and drive growth in its e-commerce sector. As consumers become more tech-savvy and embrace e-commerce, e-retailers will have the first-mover advantage. Traditional retailers that took a wait-and-see-approach will need to act now to reserve a share of this fast-growing market.
Euromonitor's Yasmeen pointed out that consumer behaviour is rapidly changing with the growth of Internet retailing and their first-hand access to market information is driven by mobile platforms. Internet retailers remain at an advantage by staying at the consumers' fingertips and providing free home delivery, but electronics exhibitions such as Gitex Shopper can offer customers greater insights into products and technologies.
"Electronics exhibitions attract a certain customer profile, prominently tech lovers, however customers are expected to remain vigilant regarding offers on both platforms and compare products before making a purchase. Two main aspects can give Gitex an upper hand, complimentary offers and discounts, free add-ons on devices and greater product coverage with certified warranty from exhibitors," she added.
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