United Arab Emirates E-commerce Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

United Arab Emirates E-commerce Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The United Arab Emirates E-commerce industry is growing exponentially as more e-commerce businesses are emerging. The digital economy is significantly developing while reaching every corner of the world with internet access. Various e-commerce market vendors are expanding their business in the United Arab Emirates to influence the growing demand for online retailing.

Key Highlights

• The COVID-19 pandemic has given an advantage to e-commerce in the country. The social distancing restrictions during the pandemic have driven the online mode of essential services like food, consumer electronics, and others. The pandemic has also encouraged many micros, small and medium enterprises (MSMEs) to switch to digital platforms. For instance, In 2021, the United Arab Emirates government introduced Operation 300bn. This operation aims to develop the UAE's industrial sector and enhance its role in stimulating the national economy.
• The e-commerce market of the United Arab Emirates is primarily driven by the rising need for online shopping among buyers. This has led e-commerce market vendors from across the globe to invest in the country. For instance, in May 2022, INC announced the launch of its parent company, INC Group, an interior design and fit-out firm in Dubai.
• Various key players and startups have emerged in the United Arab Emirates E-commerce Market. For instance, in December 2021, Nutshell, a natural peanut butter startup based out of Lebanon, expanded its e-commerce business to the United Arab Emirates to increase its footprint and tap into the emerging e-commerce market of the country.
• Many factors have contributed to significant growth in the e-commerce market in the United Arab Emirates. The increase in smartphone and internet penetration are among the primary drivers of its e-commerce growth.
• By looking at the customer's behavior, retailers found that localization and language are significantly essential aspects to consider when entering the UAE e-commerce market. Many Luxury brands have launched their site in Arabic to attract local buyers who have sidestepped e-shopping due to language issues.

Key Market TrendsSignificant Growth in E-Commerce is Expected due to Digital Transformation

• Digital transformation has taken over since the Covid - 19 pandemic. Various organizations switched to online business by eliminating the need to come out of the home during the pandemic. Factors like increased demand for the internet and smartphones have boosted the e-commerce market.
• According to Digital Transformation Summit 2022, Dubai is one of the most technologically advanced cities in the world. Dubai's government has significantly invested in emerging technologies such as artificial intelligence, autonomous vehicles, and 3D printing. These significant investments in advanced technologies have helped the United Arab Emirates create a digital transformation blueprint by making Dubai one of the most innovative cities globally.
• United Arab Emirates government has been introducing various strategies for further growth and expansion of digitalization in the country. For instance, Abu Dhabi Economic Vision 2030 aims to adopt and invest in ICT infrastructure. This will further help the government to increase internet penetration and will also boost the digital infrastructure.
• The country has gained several recognitions in the field of digital transformation. For instance, according to the WorldBank's GovTech Maturity Index 2021, which measures the maturity levels of digital transformation, the UAE has been ranked among the world's best countries in digital government transformation.
• Many organizations are joining forces to accelerate digitalization in the UAE. In June 2021, Etisalat announced the partnership with Ericsson to deploy a 5G millimeter wave (mmWave) across its commercial network. TDRA (Telecommunications and Digital Government Regulatory Authority) is the first to allocate 5G millimeter-wave across the country. Such strides in digital transformation are expected to bring e-commerce companies closer to their targeted audience. Thus, digital transformation is expected to give the common public higher access driving the growth of the studied market.

Fashion is Expected to Hold a Major Share

• Despite the covid - 19 outbreak, when many industries suffered a loss, meanwhile, the fashion industry in the UAE market recorded a boom due to a shift towards e-commerce shopping. Many factors, such as the increased use of social media platforms such as Facebook, Instagram, and others, have contributed to a major growth of online e-commerce platforms. These platforms serve their customers with the ease of buying products just by sitting at their homes.
• Many social media platforms are coming up with different strategies to capture the opportunity in the online shopping market. For instance, in August 2021, TikTok announced the introduction of in-app shopping features that will enable its users to buy products directly from vendors, which will, in turn, help the platform to grow by taking advantage of the rise in e-commerce. Following it, ByteDance Ltd, its parent company, invested in Dubai-based iMile Delivery, which points to the company's increasing interest in the e-commerce market of the country.
• Several startups are entering the UAE e-commerce market, which is further expected to drive the e-commerce market in the region. For instance, in February 2022, a Dubai-based entrepreneur launched an online activewear brand, F5's website. The online shop will provide organic, sustainable, and vegan streetwear. The collection will include joggers, hoodies, tees, and other related products.
• Similarly, various market leaders are expanding their business in this region so as to derive profit from the customer's shopping preferences. For instance, in November 2021, a Dubai-based quick-commerce startup, YallaMarket, announced a plan for expansion in the United Arab Emirates and will be stepping into Saudi Arabia and Qatar in the coming year to scale its grocery shopping.
• In September 2021, Majid Al Futtaim, an Emirati holding company, launched its checkout-free convenience store in Dubai, UAE. The store sells more than 1,300 items, including beverages, snacks, packaged food, ready meals, and other necessities.

Competitive Landscape

The United Arab Emirates E-commerce market is witnessing a rise in competitiveness among companies. The market consists of various major players, such as Amazon, Namshi, Noon, and others. In terms of market share, these significant players are presently dominating the e-commerce market in U.A.E. However, with increasing innovations in e-commerce, many companies are increasing their market presence by securing new contracts and tapping new markets.

• February 2021 - Namshi, an online shopping store, has launched its online store in Qatar, U.A.E. market. The online store will help meet the customer's demands by making it easier for them to buy from their home. Namshi is the first e-commerce market to launch its store in Qatar.
• September 2021 - The East India Company announced the launch of its first store in the United Arab Emirates market in collaboration with local U.A.E. partner Binhendi Enterprises L.L.P. This store would provide Fine dining, including fine teas and coffees; savory biscuits and artisan sweets; an exquisite chocolate range; and flavourful jams and marmalades.

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