Watch: As UAE’s e-commerce market booms, here’s how operators can remain profitable

The UAE’s retail e-commerce market reached $3.9bn in 2020, a 53 per cent year-on-year increase, recent analysis from Dubai Chamber of Commerce and Industry revealed.

In all, e-commerce accounted for 8 per cent share of the retail market last year.

Looking ahead, the study projected the value of the market to reach $8bn by 2025 driven by key factors including high-income potential, high internet penetration rate (99 per cent), developed transport logistics network, modern digital payment systems, growing tech-savvy youth population, and strong government support within the UAE.

The entire region’s e-commerce market is expected to witness strong growth between 2019 and 2022 – much higher than the global average, affirmed DeVere Forster, COO of Dubai CommerCity.

He was speaking during the webinar How to build and grow a profitable e-commerce business in Dubai, organised by Gulf Business in partnership with Dubai CommerCity – the 2.1m sqft freezone dedicated exclusively to e-commerce.

“Much of this growth has been driven by changes in consumer behaviour due to the Covid pandemic. What I have seen as the impact of the pandemic on operations is the accelerated need for retailers and brands that didn’t already have e-commerce abilities to build and launch a digital platform. Its also stretched the physical operations aspects of e-commerce,” he said.

According to Deepak Chandran, senior vice-president and head of Cards at Emirates NBD – who was one of panelists – the pandemic has certainly accelerated the shift into e-commerce, with the lockdown period heightening its importance and convenience.

“The good thing about the UAE market over the past few years is that e-commerce has also grown due to the government’s efforts towards the cashless drive – everything has moved to the digital front,” he said.

“For e-commerce players, the cost of acquisition [per customer] has also dropped dramatically.

“From a banking perspective, another trend that we are seeing a lot is more people now using their debit cards online,” he added.

Discussing the market for e-commerce businesses – primarily startups – Ben Mclean, head of e-commerce UAE, DHL Express – the third panelist – stressed that customers have high expectations from them.

“Companies now have to reach a level of profitability very quickly. And it takes a lot of investment to mobilise the e-commerce business. So using other people’s expertise will help support growth and build loyalty among customers,” he opined.

Pankaj Aasthana, VP – digital payments & labs, Mastercard MENA and the four panelist at the webinar, also acknowledged that while SMEs were hard hit, it is important that they receive support.

“As part of the digital payments fraternity, our focus has been on how we can support businesses startups to be omni-channel from the beginning,” he explained.

To listen to more insights about the e-commerce sector in the UAE and where it is headed, click here: