United Arab Emirates - eCommerceUAE - eCommerce
The UAE is the e-commerce leader among GCC states. The global B2C (business to consumer) e-commerce spending topped $3.8 trillion in 2017. The UAE’s e-commerce market was expected to hit $10 billion in 2018, a substantial increased from the 2014 value of $2.5 billion. According to the Middle East B2C e-commerce market 2018 report, the combined e-commerce sales could reach $20 billion by 2020. The UAE Ministry of Economy has estimated that e-commerce constitutes 10 percent of total sales in the UAE. Official sources indicate 90 percent of the UAE population has internet and/or a mobile phone which has played an active role in enabling the growth of e-commerce in the region. Amazon.com acquired Souq.com, the largest domestic online merchant, in March 2017, giving the global operator a large share of sales in the UAE. Traditional store based retailers are rising to the challenge of Amazon's domination by improving the online shopping experience for their customers. The product categories that produce the most revenue in online sales in the region are consumer electronics, computers, fashion accessories, women’s apparel, cosmetics and perfumers. The most important factors for online shoppers in the UAE were price, customer service, and ease of use. Other major in-country purchases include travel related expenses for cabs, airline tickets and hotels. Noon.com was launched in October 2017 as a regional competitor to Amazon, founded by Mohamed Alabbar, Chairman of Emaar. In June 2018, Noon announced its partnership with eBay to bring U.S. products to the region.
According to Forbes Middle East, online sales in the Middle East are estimated to account for only 2 percent of the overall retail sales making the untapped potential for e-commerce players huge. Traditional brick-and-mortar retailers are now focusing on providing their customers with an additional online retail platform to augment their revenues. For instance, Carrefour and Lulu Group, two of the largest retailers in the Middle East, launched online shopping portals in the UAE this year.
Growth in e-commerce is not solely driven by the private sector. An important factor in building trust in online commerce over the last few years has come from e-government initiatives where the process of integrating paper-based information services like utility billing/payments, traffic services, licensing, visa issuance, etc. are migrating to the online platform, where they are integrated with standardized or universal online payment platforms to provide citizens and residents faster and more effective public services. The Dubai Free Zones Council (DFZC) announced new e-commerce regulations for free zones that will enable greater foreign direct investment (FDI) in the e-commerce sector in Dubai. DFZC’s initiative will primarily focus on establishing e-commerce conditions and controls by cooperating with Dubai Government authorities. This will come in the form of joint teams and workshops that will support the adaptation to procedures and generate proposals. It will also examine mechanisms for adopting blockchain technology to enhance transparency and speed up the completion and automation of procedures.
Retailers realize that language and localization are extremely important factors to be considered when entering the UAE e-commerce market. Luxury brands have launched Arabic language sites to attract local customers who have avoided e-shopping due to language barriers. A large number of online shoppers in the Middle East now accept cross-border products. Online shoppers in the UAE made 58 percent of their online purchases from overseas vendors due to the gateway security, along with reliable and free shipping methods. Products/brands reviews on social media platforms influence e-shopping behavior. E-commerce players can leverage this platform to increase sales.
Although e-commerce in the Middle East is lucrative, in part because of the region’s young and tech-savvy population, there are a number of barriers that prohibit additional activity in the UAE’s e-commerce market. These include the prevalence of cash on delivery over other electronic payment methods, consumer wariness of the safety of e-commerce system, security concerns, inadequate logistics, a lack of a unified address system which creates challenges for last-mile delivery, and the inability to touch and test products before purchasing them.
The Telecommunications Regulatory Authority (TRA) is the primary regulatory body responsible for regulating electronic transactions and commerce in the UAE. More information is available at the TRA website.
In addition, Intellectual Property Rights and ownership are key considerations for the e-commerce market. Please contact our Intellectual Property Rights Attaché (Peter.Mehravari@trade.gov) for guidance.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
According to Forbes Middle East, online sales in the Middle East are estimated to account for only 2 percent of the overall retail sales making the untapped potential for e-commerce players huge. Traditional brick-and-mortar retailers are now focusing on providing their customers with an additional online retail platform to augment their revenues. For instance, Carrefour and Lulu Group, two of the largest retailers in the Middle East, launched online shopping portals in the UAE this year.
Growth in e-commerce is not solely driven by the private sector. An important factor in building trust in online commerce over the last few years has come from e-government initiatives where the process of integrating paper-based information services like utility billing/payments, traffic services, licensing, visa issuance, etc. are migrating to the online platform, where they are integrated with standardized or universal online payment platforms to provide citizens and residents faster and more effective public services. The Dubai Free Zones Council (DFZC) announced new e-commerce regulations for free zones that will enable greater foreign direct investment (FDI) in the e-commerce sector in Dubai. DFZC’s initiative will primarily focus on establishing e-commerce conditions and controls by cooperating with Dubai Government authorities. This will come in the form of joint teams and workshops that will support the adaptation to procedures and generate proposals. It will also examine mechanisms for adopting blockchain technology to enhance transparency and speed up the completion and automation of procedures.
Retailers realize that language and localization are extremely important factors to be considered when entering the UAE e-commerce market. Luxury brands have launched Arabic language sites to attract local customers who have avoided e-shopping due to language barriers. A large number of online shoppers in the Middle East now accept cross-border products. Online shoppers in the UAE made 58 percent of their online purchases from overseas vendors due to the gateway security, along with reliable and free shipping methods. Products/brands reviews on social media platforms influence e-shopping behavior. E-commerce players can leverage this platform to increase sales.
Although e-commerce in the Middle East is lucrative, in part because of the region’s young and tech-savvy population, there are a number of barriers that prohibit additional activity in the UAE’s e-commerce market. These include the prevalence of cash on delivery over other electronic payment methods, consumer wariness of the safety of e-commerce system, security concerns, inadequate logistics, a lack of a unified address system which creates challenges for last-mile delivery, and the inability to touch and test products before purchasing them.
The Telecommunications Regulatory Authority (TRA) is the primary regulatory body responsible for regulating electronic transactions and commerce in the UAE. More information is available at the TRA website.
In addition, Intellectual Property Rights and ownership are key considerations for the e-commerce market. Please contact our Intellectual Property Rights Attaché (Peter.Mehravari@trade.gov) for guidance.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.