A new report has revealed that the MENA region’s total e-commerce market size reached $37bn in 2022, reflecting a double-digit growth rate from 2021 and a 32 per cent compound annual growth rate over the 2018 – 2022 period.
The figures were shared in the third edition of EZDubai’s E-commerce Report in the MENA region.
EZDubai was launched in January 2019 to promote the emirate’s position as a hub for regional e-commerce. The dedicated e-commerce free zone in Dubai South relayed the results in collaboration with Euromonitor International, the world’s leading provider for global business intelligence, market analysis and consumer insights.
E-commerce growth is fuelled by several factors
According to the report, the MENA’s double-digit growth is due to robust internet usage, a well-developed infrastructure, and supportive policies.
Trends that contributed include the:
- Increasing popularity of digital payment platforms
- Rise of online grocery shopping, and expanding tech initiatives
- Economic stability
- Technology investment
- A young, tech-savvy population fuelling the strong development of the digital landscape in the MENA region
The UAE, Saudi Arabia and Israel accounted for 72.1 per cent of the total market size, with the growth in these countries attributed to factors including their technologically advanced populations, high-internet usage rates, and strong government finances.
Specifically, Israel’s innovative economy and the rising demand for speedy delivery services propelled it to the forefront of the market.
The report also shared that companies in the UAE are making use of dark stores to streamline inventory management and provide delivery.
Meanwhile, Saudi Arabia’s rapidly growing population, technological advancements, and development of secure payment systems contributed to its strong performance in the e-commerce sector.
Unlock the power of #ecommerce in the #MENA region with our latest report!
Discover the fastest-growing sectors, trends, industry outlook, and more in our third edition of the E-commerce Sector report.
— @EZDubai.ae (@ezdubai_ae) March 27, 2023
The MENA e-commerce market size is expected to reach $57bn in 2026, with a compounded annual growth rate of 11 per cent over the 2022-2026 period.
Although countries like the UAE, Saudi Arabia, and Israel are expected to remain leaders in e-commerce market share, countries like Algeria are expected to see strong growth.
Mohsen Ahmad, CEO of Dubai South Logistics District, said: “The MENA region’s e-commerce industry has experienced rapid growth in recent years, driven by a combination of factors, such as increasing internet and mobile penetration, rising consumer demand for convenience and value, and the emergence of innovative business models.
“It is worth noting that government initiatives have also played a vital role in supporting this growth, with several regional governments implementing policies to support digital transformation and encourage entrepreneurship and investing in the necessary infrastructure and technology to facilitate e-commerce operations.”
Saudi Arabia and UAE
Engy Naguib, senior engagement manager, Public Sector MENA region at Euromonitor International, said: “The demand for online shopping services in the MENA region is expected to continue growing. In particular, consumer electronics are expected to have a penetration rate of 29 per cent in Saudi Arabia and 50 per cent in Egypt within total e-commerce by 2026.
“Meanwhile, the food and drink industry in the UAE is projected to experience strong growth, with penetration rates reaching 13 per cent by 2026. Additionally, Saudi Arabia’s average order size is expected to increase by 50 per cent in 2026.
“To sustain growth, e-commerce players should prioritise personalisation of the online experience, adopt an omni-channel approach, and improve last-mile delivery services.”
In other news, Majid Al Futtaim’s latest State of the UAE Retail Economy Q4 report revealed that consumers in the UAE spent over 19 per cent more in 2022 compared to the previous year.