As the e-commerce market gains momentum regionally and globally, the UAE is making strides and the Emirates is rated the most advanced country for online shopping in the Mena and is ranked fourth among the top 10 developing economies, according to the United Nations Conference on Trade and Development's (Unctad) B2C E-Commerce Index 2018.
The UAE does well in Internet usage and accounts, with room to improve for secure servers and postal reliability in order to emerge as a top-ranked nation in B2C e-commerce readiness, the Unctad's latest report on e-commerce said.
"The UAE is positioned first in the Gulf and is leveraging this to become a regional hub. One sign is the purchase of the UAE's online retailer Souq.com by Amazon in May 2017 for $583 million. Another is the $735 million Dubai CommerCity, the first dedicated e-commerce park in Mena," it said.
Analysts say the online shopping trend among UAE residents is growing due to secured Internet platforms, growing consumer confidence in conducting online transaction, flex-payment solutions by banks, educated consumers, stronger infrastructure such as quick deliveries and more options with the emergence of new players.
According to Euromonitor International figures, the UAE's e-commerce landscape is worth Dh44.2 billion during 2018, with bill payments, transport and retailing being the key segments for online commerce in the country.
Internet retailing in the UAE is valued at Dh7.4 billion - exclusive of VAT - in 2018, growing by 18.8 per cent over the previous year. The channel is expected to grow by a CAGR 13 per cent over the forecast period to reach Dh15.5billion in value during 2023, experiencing the largest value growth across all business segments, Euromonitor said.
Among the 10 developing economies in the Unctad index Singapore leads followed by Hong Kong, Korea, UAE, Malaysia, Thailand, Turkey, Iran, Chile and Saudi Arabia. The UAE leads the pack in terms of use of internet with 95 per cent, while over 88 per cent of UAE residents aged 15-plus have an account.
In the Mena region, the UAE is followed by Turkey, Saudi Arabia, Iran, Bahrain, Lebanon, Kuwait, Oman, Jordan and Tunisia. Globally, the Netherlands leads followed by Singapore, Switzerland, the UK, Norway, Iceland, Ireland, Sweden, New Zealand and Australia. But globally, the UAE's ranking dropped 10 places to 33rd in 2018 as compared to last year, according to the report.
Adel Belcaid, senior principal at AT Kearney, said since taking off in 2017, and with annual growth reaching 35 per cent, e-commerce has indeed become the name of the retail game in the UAE and the wider region, and it is here to stay.
"It is no surprise that the UAE is leading this game, amongst several others. The UAE has a significant retail sector, accounting for more than 11 per cent of GDP, and historically, even before the e-commerce boom, the UAE has always been a hub through which goods and people transit and exchange," Belcaid said.
Rabia Yasmeen, senior analyst for services and payments at Euromonitor International, said with 99.6 per cent of the population having access to 4G and having the highest penetration of the mobile internet, the UAE is the highest on mobile connectivity globally. Additionally, city governments are focusing on digitisation and connectivity to have a digital economy in a broader framework.
"Secure Internet servers and payment platforms additionally support the online shopping readiness of the country, which is reflected in increased consumer confidence in conducting transactions and sharing information online. Another key aspect is readiness and active participation from the banking sector which are providing secure payments and flexi-payment solutions online," she said.
Yasmeen attributed better online shopping experience as compared to other regional countries to early adoption of technologies, educated consumers and stronger infrastructure.
Additionally, with the emergence of new players, the sector has become competitive leading benefits for the consumer. "Still, the online shopping experience has a significant room of improvement in terms of better delivery times and after-sales services which can be tailored through personalised services. Online platforms have a room for loyalty platforms and membership models to provide premium services."
AT Kearney's Belcaid advised retailers to enhance their warehousing and distribution footprint, with the aim of locating stock as close as possible to demand to minimise lead times.
He said UAE consumers want an omni-channel shopping experience, combined physical with digital, where they can see a product at the mall and buy it at home, or vice-versa, or of course get it delivered all the way to their door-step in a matter of hours, and not weeks or even days.
"With consumers setting the rules in a highly-competitive industry, retail players in the UAE should change the way they approach retail, and build or buy capabilities in supply chain, digital payments, mobile applications, digital, cybersecurity and demand analytics," Belcaid said.
Ziad Nasrallah, principal at Booz Allen Hamilton, said in the UAE, the rise in e-commerce is heavily driven by mobile-first habits and one of the world's highest smartphone penetration rates.
"Given increases in mobile shopping throughout UAE and wider Gulf region, cybercriminal networks will continue to increase their operations given the target-rich environment. It is imperative for retailers and consumers to protect themselves from attacks that could cause tremendous financial or reputational damage," he said.