The fu­ture of e-com­merce in the UAE

Gulf Business - - CONTENTS - ULUGBEK YULDASHEV

Ulugbek Yuldashev out­lines the changes on the hori­zon for the UAE’s on­line shop­ping mar­ket It’s no se­cret that e-com­merce is gain­ing im­mense pop­u­lar­ity by the minute in the UAE and through­out the GCC, with the re­tail sec­tor wit­ness­ing a steady shift from brick and mor­tar to on­line shop­ping.

Shop­ping on­line has come a long way from be­ing just another new trend – it has grown to be­come a pre­ferred medium of pur­chas­ing for a ris­ing num­ber of con­sumers in the re­gion.

Peo­ple are lead­ing busier lives, and there is a grow­ing de­mand for con­ve­nience; e-com­merce caters to this re­quire­ment, mak­ing it the fu­ture of re­tail. Once e-com­merce play­ers are able to gain con­sumer trust, peo­ple will pre­fer shop­ping on­line driven by con­ve­nience.

Re­cent re­search con­ducted by Google re­veals that the UAE leads global smart­phone pen­e­tra­tion at 73.8 per cent and the coun­try’s in­ter­net us­age sta­tis­tics show that 91.9 per cent of the pop­u­la­tion has in­ter­net ac­cess. Ro­bust in­ter­net and mo­bile pen­e­tra­tion across the GCC has played an ac­tive role in en­abling the growth of e-com­merce in this re­gion. A re­port on on­line shop­ping trends in the UAE re­leased by AWOK.com last year in­di­cated that 80 per cent of the on­line re­tailer’s cus­tomers shopped us­ing mo­bile phones.

The In­ter­na­tional Data Cor­po­ra­tion (IDC) pre­dicts that, glob­ally, the to­tal num­ber of peo­ple ac­cess­ing the in­ter­net ex­clu­sively through mo­bile de­vices is es­ti­mated to grow by more than 25 per cent in the next five years.

As peo­ple spend more time on their de­vices, more daily ac­tiv­i­ties are likely to be con­ducted on­line. On­line re­tail­ers in the re­gion and glob­ally will have to fo­cus on be­ing mo­bile friendly to of­fer ef­fi­cient, con­ve­nient and safe click and shop ex­pe­ri­ences to cus­tomers.

Al­though pur­chas­ing on­line is be­com­ing the pop­u­lar shop­ping cul­ture, the per­cent­age of on­line shop­ping in this part of the world is com­par­a­tively lower than what we see in de­vel­oped mar­kets like the United States, or emerg­ing mar­kets like In­dia.

E-com­merce will be a mega-trend for busi­nesses in the UAE and the mar­ket is ex­pected to be val­ued at $10bn (Dhs36.7bn) by 2018, ac­cord­ing to Frost & Sul­li­van. As such, e-com­merce is one of the fastest grow­ing busi­nesses in the UAE and the re­gion, and will con­tinue to ex­pand as con­sumer be­hav­iour evolves with the ad­vance­ment of tech­nol­ogy.

Another key fac­tor that helps nur­ture on­line shop­ping cul­ture is cus­tomer trust. Un­til re­cently, con­sumers in the re­gion have been re­luc­tant to buy and pay on­line. This lack of trust has been a rea­son for the slower growth of e-com­merce here. How­ever, this trend is chang­ing. An in­creas­ing num­ber of peo­ple in the re­gion are get­ting used to trust­ing, and con­duct­ing on­line trans­ac­tions. In 2016, 25 per cent of cus­tomers paid on­line for pur­chases made on AWOK.com, which is a sig­nif­i­cant fig­ure for the on­line shop­ping chan­nel in com­par­i­son to pre­vi­ous years.

On­line shop­ping sites are be­com­ing more in­no­va­tive by keep­ing in mind con­sumer be­hav­iour. One ex­am­ple from re­cent times is cash on de­liv­ery. In the UAE al­most 85 per cent of shop­pers pre­fer to pay with cash on de­liv­ery, while only 15 per cent pre­fer to pay on­line.

Here the trust fac­tor of­ten de­ter­mines the pay­ment method, as some shop­pers do not trust swip­ing their credit cards on­line.

As the e-com­merce sec­tor grows, many new play­ers will en­ter the mar­ket and some old play­ers will leave. That is a part and par­cel of ev­ery in­dus­try’s life cy­cle. New com­pa­nies will in­tro­duce fresh de­mand and healthy com­pe­ti­tion, which is ideal for a grow­ing in­dus­try in a dy­namic coun­try like the UAE.

In the emer­gent on­line re­tail space on­line re­tail­ers will have to of­fer more than just dis­counts to earn and keep loyal cus­tomers. Com­pa­nies will have to be in­vested in mak­ing the shop­ping ex­pe­ri­ence for each in­di­vid­ual as customised as pos­si­ble. Same day de­liv­ery, and vir­tual stores are trends that dig­i­tal re­tail­ers in the re­gion will have to be quick to of­fer.

Global e-com­merce ti­tans have an ac­tive in­ter­est in the UAE and ad­ja­cent mar­kets, and these com­pa­nies will be equipped to of­fer cus­tomers the com­fort and con­ve­nience of in­ter­na­tional shop­ping ex­pe­ri­ence, same day de­liv­ery, and other perks which the lo­cal play­ers have to gear up to match.

This year will be a sig­nif­i­cant one for e-com­merce de­vel­op­ments and im­prove­ments in the UAE and wider GCC. Cus­tomer con­ve­nience and sat­is­fac­tion will have to be put in the fore­front for on­line busi­nesses to achieve pos­i­tive re­sults.

PEO­PLE ARE LEAD­ING BUSIER LIVES, AND THERE IS A GROW­ING DE­MAND FOR CON­VE­NIENCE; E-COM­MERCE CATERS TO THIS RE­QUIRE­MENT, MAK­ING IT THE FU­TURE OF RE­TAIL.

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