Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
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.