UAE e-commerce market valued at over $5bn in 2021

Total e-commerce in the UAE reached just over $5bn in 2021 and is projected to cross $8bn by 2025, according to a new report launched by EZDubai, the e-commerce zone located in Dubai South, and Euromonitor International.

The report found that more consumers in the UAE made online purchases across all categories during 2021 compared to 2020, with an average 75 per cent of respondents typically purchasing online.

The fastest-growing sectors by industry from 2021-2025 will be homewares and home furnishings, food and beverage, and media products.

Countries in the Middle East are expected to grow their e-commerce business owing to high GDP per capita and internet penetration rates. The UAE and Qatar are in the strongest position, with GDP per capita above $40,000 and internet penetration above 90 per cent.

In 2021, the total market size of e-commerce in the MENA region was estimated at $31.7bn. The MENA region is expected to see e-commerce growth of over $18bn in absolute value terms over 2021-2025 reaching over $49bn by 2025.

While the MENA is mostly a cash-based economy, after the pandemic, consumers shifted quickly to adopt credit and debit cards. The report noted that in the UAE, credit and debit cards are the preferred method of payment.

UAE consumers purchase from cross-border retailers to access a wider range of products or search for lower prices or higher quality products not offered locally. The leading countries which UAE consumers purchase from include the USA, India and China and are often related to apparel and footwear as well as beauty and personal care. Foreign e-commerce (UAE consumers purchasing outside of the country) is rising fast, from 23 per cent of total e-commerce sales in 2019 to 26 per cent in 2021 and it is expected to rise to 32 per cent by 2025.

“The launch of the second e-commerce report in the MENA region, is due to several factors, among which is the growth of the e-commerce sector that reached over $31.7bn in 2021…[it] provides industry players with a strong understanding of the key opportunities in the e-commerce industry through market growth performance, key success factors and category analysis,” said Hussein Doughan, general Manager of Euromonitor International in Dubai.

The UAE retail e-commerce market reached $3.9bn in 2020, a 53 per cent year-on-year increase, according to a report from Dubai Chamber of Commerce and Industry. Also, e-commerce accounted for an 8 per cent share of the retail market in 2020.

Read: UAE retail e-commerce market reaches $3.9bn in 2020

In a separate study carried out last year, Sitecore said that that since the pandemic, 89 per cent of customers in the UAE and 91 per cent of customers in the Middle East and North Africa became digital converts and intend to continue buying everything online. The research, conducted by YouGov MENA, surveyed more than 650 IT decision-makers across 12 countries in the Gulf Cooperation Council, the Levant, and Egypt.

Read also: Nearly 90% of UAE customers are digital converts to e-commerce

Apart from EZDubai was designed to attract e-commerce companies and was launched in January 2019, a new e-commerce freezone Dubai CommerCity (DCC) facility spread across 2.1 million sq ft in Dubai’s Umm Ramool area, opened last year as the first dedicated e-commerce freezone in the Middle East, North Africa and South Asia (MENASA) region.

Read more: E-commerce freezone Dubai CommerCity opens new facilities as part of first phase launch