UAE e-commerce market forecast to reach $9.2 billion by 2026 

The value of the UAE e-commerce market is expected to reach $9.2 billion in 2026, while the sector’s share of total retail sales in the UAE is projected to reach 12.6 per cent by the same year, a new analysis from the Dubai Chamber of Commerce has revealed.

The study, based on data from Euromonitor and released ahead of GITEX Global 2022, highlighted several factors boosting e-commerce activity in the UAE, as well as high-potential growth opportunities.

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. 

Market trends

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 per cent of the total e-commerce market value. Mobile retail sales are expected to record a compound annual growth rate of 15.6 per cent over the 2022-2026 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 the key trends supporting the strong growth in mobile e-commerce transactions is the availability of apps, which has increased pricing transparency, the study said, adding that 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 per cent of the total sales while foreign websites received only a 27 per cent share. 

The report stated that despite the clear preference of buyers utilising 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 per cent, which would mark a 34 per cent gain in market share. 

Evolving landscape

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 downward pressure on prices due to increased competition and supply. 

The improvement and modernisation of payment systems and services were identified as other key factors that have boosted demand and business activity within the UAE’s e-commerce sector. 

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

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. 

Sustained momentum

Growth momentum within the UAE’s e-commerce sector is expected to continue, supported by rising demand for online shopping, and 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.

Source: Dubai Chambers Economic Research based on Euromonitor