A vast majority of consumers who took part in a survey in the GCC region are optimistic about their economic futures.
The study by the Boston Consulting Group (BCG) has found that 90 per cent of respondents in the survey are upbeat about the overall economic outlook with more than a quarter (27 per cent) planning to increase expenditure on products and services in the next 12 months.
A study by A.T. Kearney predicted that the value of the GCC e-commerce market would reach $20 billion by 2020. The GCC e-commerce market is set to see an unprecedented expansion as the number of online shoppers increase across the Mena region.
Over the past decade, e-commerce across the Middle East surged by as much as 1,500 per cent, the report said, indicating that this growth is mainly due to the growing number of young people with high income, as well as the increased visits to e-shopping websites.
According to a study initiated by Google and Bain & Company, e-commerce is a $2.2 trillion market at present, and it is expanding at an annual growth rate of 24 per cent, four times faster than the global retail sector as a whole.
In Mena, the e-commerce penetration of total retail sales averaged 1.9 per cent in 2017, with the GCC at three per cent. The UAE is the most advanced e-commerce market in the region, with a penetration rate of 4.2 per cent, similar to that of Turkey and Brazil. Saudi Arabia at 3.8 per cent closely follows the UAE.
E-commerce has had a slow start in the GCC. Although more than 70 per cent of consumers have made at least one online purchase in the last 12 months, and half plan to increase their online purchases in the next year, e-commerce makes up a small fraction of overall sales in the GCC. For example, the UAE is the most active e-commerce country, yet e-commerce only accounts for around 4 per cent of all retail sales.
"There are opportunities for e-retailers to expand their footprint as the sector eyes a potential boom period," said Markus Massi, managing director and senior partner at BCG Middle East. "To capitalise on this, e-retailers will need to influence consumers' to build trust for online payment methods, enhance the end- to-end e-commerce experience, and persuade people who have never shopped online."
Despite the slow uptake of e-commerce, consumer resistance to online purchases isn't apparent when it comes to travel planning. In the GCC as a whole, 54 per cent of all consumers book their trips online, with bookings made through travel agencies only representing 25 per cent. This trend coincides with leisure travel being a key area of spending, with people taking one trip per year on average.
"Global and local companies are becoming aware of the fact that the tourism sector is poised for avid growth in the face of rising economic confidence," said Pablo Mart?nez, managing director and partner at BCG Middle East. "This is aligned with significant calendar events for many GCC countries as they open their doors to a new era of tourism, business and leisure experiences."
Rami Rafih, managing director and partner at BCG Middle East, said GCC countries have a strong cohort of wealth, with consumer sentiment and optimism levels ranking very high by most world standards. "Tapping into the region's vast potential will become a priority for many e-commerce and tourism companies in the future."
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