Overall online spending continues to grow in the UAE and is forecast to reach AED 36 billion ($9.8 billion) by the end of 2018, according to a joint report issued by PayPal and Ipsos.
The Fourth Annual Cross-border Commerce report, which tracks online domestic and cross-border shopping habits of approximately 34,000 consumers in 31 countries, also revealed that 81% of adults in UAE shopped online in the past 12 months, up from 68% in 2016.
The Future Of Online Spending – Why We Will Shop More
According to the report, the increase in online spending is also forecast to continue, with almost half of online adults surveyed stating they will increase their online spending in the next 12 months, citing convenience of shopping online (selected by 65% of those who predict an increase in their online spend), and the rise in available platforms to shop from as the key reasons for the expected increase.
The report also revealed that cross-border online shopping is on the rise in the UAE with 61% of UAE online shoppers stating that they shopped online from websites in another country in the past 12 months – a growth of 33% from the previous year. In fact, 12% of online shoppers surveyed stated that they only shop online in stores and marketplaces located outside the UAE. Cross-border shopping has grown by an estimated AED 1.6 billion ($440 million) since 2016, accounting for an estimated AED 12.5 billion ($3.4 billion) of all online spending in 2017.
Online marketplaces are driving the UAE’s e-commerce growth, with 37% of adults surveyed indicating that they intend to increase or start shopping on marketplace sites.
“The UAE’s commerce revolution is well underway and, backed by the country’s diverse and truly global population plus improving logistics services, consumers are increasingly looking internationally to source their favorite products and services,” commented Efi Dahan, General Manager, Eastern Europe, Middle East, and Africa at PayPal.
“In today’s global society, consumer spending behavior is increasingly being dictated by convenience and value. Our findings showcase this, with just over half of the online shoppers surveyed stating that it was not important to them if the retailer was based overseas.”
The Rise Of Mobile Commerce In The UAE
With high rates of mobile penetration in the UAE, online shoppers are increasingly opting to make purchases on their mobile devices. Mobile spending is forecast to grow 26% between 2018 and 2019 to reach close to AED 20 billion ($5.44 billion), with momentum expected to continue into 2020 with a further 25% growth.
UAE shoppers making cross-border online transactions in the past 12 months indicated that on average 49% of their cross-border purchases were made on mobile devices, either a smartphone or tablet. 84% of cross-border shoppers had made at least one purchase cross-border using a mobile device. When asked about the devices they have used in the past 12 months, 81% of cross-border shoppers said they had used smartphones to make cross-border purchases online, up from 76% in 2016, while 29% have used other devices such as Smart TV and consoles, up from 18% in 2016, mirroring the habits seen in overall online spending.
“With some of the highest levels of smartphone penetration globally, it is unsurprising that the smartphone is the device of choice for online shopping in the UAE,” commented Mr. Dahan. “As a digital payments leader, PayPal is committed to enabling consumers to pay quickly and securely from almost any device with fewer screens and fewer clicks, optimizing the online commerce experience for both our users and our merchant partners, and we see mCommerce as the driving force in online transactions as people increasingly want to make a transaction, wherever and whenever they choose, through their mobile device.”
What, Where, And Why Consumers Are Buying
Clothing, footwear, and apparel was the most common cross-border purchase category in the UAE in the past 12 months, with 64% of cross-border shoppers having bought from this category, an increase of 60% from 2016. While almost half of cross-border shoppers purchased cosmetics and beauty products, making this the fastest growing category, more than doubling incidence for this category from 2016 with an increase of 158%. Toys and hobbies and health products were also key growth categories for cross-border commerce.
When considering where to buy from, 47% of online shoppers agreed that they trust online stores from other countries as much as stores from the country they live in.
The research has shown that current UAE cross-border shoppers are looking for a good deal, with better prices selected as one of the top reasons for shopping on websites from the U.S. (56% of those who shop from U.S. give ‘better prices’ as a reason for doing so), India, and China. Almost two-thirds of online shoppers surveyed stated that they do not mind where items are shipped from provided the total price is competitive. Gaining access to higher quality items and items not available in their own country were also found to be popular reasons for having made purchases in the USA.
Affordability of shipping was cited as another key reason for cross-border shopping, with just under a third of people shopping on websites from India and just over a quarter of people shopping on sites from China selecting more affordable shipping as a reason for doing so. Free shipping was also picked as one of the top drivers for cross-border commerce among online shoppers, with 37% citing this as a reason for shopping overseas.
Security And Convenience Drive Choice Of Payment Method
Key factors for choosing a preferred payment method for cross-border shopping included security (just under a third of UAE cross-border shoppers with a preferred cross-border payment method selected ‘a secure way to pay’ as a reason for their preference), convenience, and speed of payment processing. Among the UAE cross-border shoppers who cite PayPal as their preferred cross-border payment method, almost a third say one of their reasons for Preferring PayPal is that it is a secure way to pay, and 28% choose it because it is a well-known and trusted brand.
“Security is a key priority for all online commerce, particularly when shopping cross-border. Amongst the top reasons stated for choosing PayPal as their method of payment were the ability to make a purchase without having to input credit card details and the excellent buyer protection for eligible transactions where buyers can receive a refund for the purchase price and original shipping offered by PayPal. Furthermore, our Seller Protection Program also provides protection for merchants when they qualify, to be able to trade online with greater confidence, empowering them to capitalize on the increasing demand for online purchasing in the region and drive cross-border trade,” Mr. Dahan concluded.
For the past four years, PayPal has revealed this extensive cross-border commerce research to understand the online shopping behaviors of the global consumers. This year, the research has revealed strong e-commerce growth in the UAE, placing the country as one of the top 2 countries for the proportion of cross border purchases going through mobile devices, showing the high adaption in mobile usage in the region. U.S., India, and China have continued to be the top three cross-border shopping destinations for the UAE consumers, just like last year. The future of online spending for UAE has great potential for growth and estimated to increase for the upcoming years.
Paypal is currently ranked #98 in Forbes’ list of the World’s Most Valuable Brands.
Source: https://www.forbesmiddleeast.com/en/uae-online-spending-to-hit-9-8-billion-in-2018/