UAE e-commerce market to touch $9.2-bn by 2026

The UAE e-commerce market is expected to reach $9.2 billion in 2026, indicates a new report by Dubai Chamber of Commerce based on data from Euromonitor. E-commerce will account for 12.6% of total retail sales in the UAE by the same year.

Total e-commerce sales in the UAE recorded remarkable growth in 2021, reaching $4.8 billion during the year, compared to $2.6 billion in 2019.

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Factors driving growth

The UAE’s e-commerce landscape has evolved and grown considerably in recent years, through major investments, acquisitions and partnerships with global companies.

Investments in the sector have significantly changed the dynamics of the UAE e-commerce market, with the main impact being a downward pressure on prices due to increased competition and supply.

The improvement and modernisation of payment systems and services was identified as another key factor that has boosted demand and business activity within the UAE’s e-commerce sector.

What’s more growth momentum within the UAE’s e-commerce sector is expected to continue, supported by rising demand for online shopping, coupled with steady investment flows in the sector’s infrastructure. The increasing momentum of e-commerce activity in the country is expected to provide more business opportunities in payment systems, financial technology, electronic logistics and distribution centres.

What’s driving online sales?

Consumer electronics in the UAE constituted the top selling online products in 2021 with a 34% share, consisting mainly of smartphones, phone accessories, computer accessories, tablets, computers and TVs. Apparel and footwear accounted for 31%, food and beverages 12%, media products 8%, personal accessories 5.8% and consumer appliances 3.3%.

The relatively high shares of products purchased online indicate increased competition between online channels and traditional channels for electronics, apparel, accessories, cosmetics, as well as food and beverages.

Among the main product categories offering the most untapped potential in the e-commerce market in 2022 are apparel and footwear, personal accessories, beauty and personal care and home and gardening.

Mobile retail to reach $4.6 billion

Unsurprisingly mobile devices, such as smartphones and tablets, accounted for a majority of e-commerce transactions last year as the mobile retail market reached $2.6 billion, accounting for 44% of the total e-commerce market value. Mobile retail sales are expected to record a CAGR of 15.6% over the 2022-26 period to reach $4.6 billion.

The study shows that more than one-third of consumers in the UAE bought a product or service using their smartphone at least once a week, which is above the global average of weekly online purchases.

Among key trends supporting the strong growth in mobile e-commerce transactions is the availability of apps, which has increased pricing transparency. The growing number of loyalty rewards programmes offered by online retailers also drove up demand for online shopping in the UAE.

Shoppers in the UAE, according to the report, preferred local retail websites to overseas retailers. In 2021, domestic e-commerce websites accounted on average for 73% of the total sales while foreign websites received only a 27% share.

However, the report stated that despite clear preference of buyers for domestic websites, increased competition from foreign e-retailers is projected in the future. Between 2022 and 2026, foreign e-commerce platforms are expected to grow by 19.2%, which would mark a 34% gain in market share.