UAE e-commerce sector leads global markets with its premier ranking on the Digital Connectivity Index
The UAE e-commerce sector emerged as the fastest-growing economic segment in the Middle East in terms of value sales, supported by rising digital connectivity, infrastructure and substantial growth in consumer electronics, apparel and footwear, based on the findings of the ‘E-Commerce Sector in the UAE 2020 insights’ report. The report, launched by EZDubai, in partnership with Euromonitor International and Jones Lang LaSalle (JLL), examined the dynamic changes in the e-commerce market and presented a regional overview of the sector, evaluating its growth and future opportunities, taking trends as well as key major growth drivers into consideration, including COVID-led digital transformation and technological advancements that are set to reshape the industry moving forward.
The findings revealed that the e-commerce growth in the Middle East is mainly driven by the UAE and KSA (accounting for 75 per cent of total e-commerce sales in 2020) due to the high purchasing power, expanded usage of social media, and smartphone penetration rates compared to other regional countries.
According to the report, store-based retailing is expected to grow by a CAGR of 1 per cent over the 2019-2024 period, while e-commerce is forecast to grow by a CAGR of 19 per cent over the same period. Apart from the impact of COVID-19, online penetration in the Middle East is forecast to double to 6 per cent by 2024, compared to 3 per cent in 2019.
In his comments, Mohsen Ahmad, CEO of the Logistics District - Dubai South, said: “E-commerce continues to be an upward trend in the UAE, and this is a great opportunity for logistics players to expand their operations and capture the untapped potential of cross-border e-commerce. The sector played a major role in boosting Dubai’s economy and that of the UAE, consolidating the emirate’s position as a regional hub for e-commerce by attracting leading movers and creating a sustainable ecosystem for a number of corporations. The transition to online payment and the transformation of technological capabilities into quicker, safer and personalised experiences are among the key trends affecting regional e-commerce.”
In line with its continuous effort to present insightful facts about the impact of e-commerce on the retail logistics sector, JLL found that since the outbreak of COVID-19, e-commerce penetration doubled, increasing from 3 percent in 2019 to 5 percent in 2020 across the region. Retailers with established e-commerce and digital platforms performed significantly better than brick-and-mortar outlets, which faced pressure during the lockdown periods. Also, it was reported that the region benefited from a solid and well-established infrastructure.
According to the World Bank’s Logistics Performance Index (LPI) 2018, the UAE ranked 11th globally and the first regionally in terms of the efficiency of its customs, strong infrastructure, quality of logistics services, tracking and tracing. This has supported the country’s position as a leading logistics and e-commerce hub.