E-commerce delivers the goods for region’s retailers

Unsplash/Simon Bak

• Dubai Multi-Commodities Centre platform to boost online shopping
• E-commerce set to grow from 2% of retail market to 12.6% in 2026 
• Clothing makes up 46% of online purchases
• Over half of Mena consumers purchased food online in past year

A Dubai free zone has set up an e-commerce platform to help drive growth in the Mena market, as new data reveals 91 percent of regional consumers bought products online in the past year.

One in five shoppers said they purchased more online in the past 12 months compared to the year before, with fashion and clothing making up 46 percent of all online purchases, according to Checkout.com.

Remo Giovanni Abbondandolo, vice president of commercial, Mena at Checkout.com, described the Middle East and North Africa as becoming “increasingly important on the global stage”, prompting e-commerce giants to expand operations locally.

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• Amazon tips Saudi Arabia to deliver sales growth
• Noon to build UAE’s largest e-commerce fulfilment centre

Dubai Multi-Commodities Centre (DMCC) said its new platform aims to capitalise on “burgeoning demand” in the sector and will allow e-commerce companies to access workspaces, order fulfilment services and delivery options. 

DMCC is currently home to over 290 companies in the e-commerce space, including Deliveroo, Instashop, Cafu and Class Pass.

In the Middle East, e-commerce accounts for only around 2 percent of the retail market, representing an opportunity for rapid growth.

In the UAE alone the value of the 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 percent by the same year, according to analysis from Dubai Chamber of Commerce.

Paul Carey, executive vice president of cards and payments, Al-Futtaim Group, said the region has a rapidly developing digital ecosystem that allows government agencies, established companies and startups to flourish. 

“This is particularly evident in payments, where governments have set up regulatory sandbox infrastructure and made it easier for businesses in the region with more flexible visa options and commercial licensing,” Carey said.

Khalifa Economic Zones Abu Dhabi (Kezad) and e-commerce major Noon.com broke ground in November on the UAE’s largest fulfilment centre in Abu Dhabi, which will form part of an anchor investment by the online retailers.

The 252,000 square metre facility is scheduled for delivery in 2024 and aims to enable rapid delivery of products to millions of Noon customers throughout the UAE while also creating several thousand new jobs.

While Noon already has a facility with Kezad, it is expanding its operations to a larger area, backed by both financial and non-financial incentives from Abu Dhabi Investment Office.

Noon founder Mohamed Alabbar said that it was “probably one of the highest growing companies in the world”, adding: “What is important is our growth, the quality of our merchandise, the customers we have and the best people in the industry who work for Noon.”

Rival Amazon has also announced the signing of an agreement with retail major Lulu Group, which aims to deliver an elevated online grocery offering for customers in the UAE.

“We are always looking for ways to improve the service we deliver to our customers, and we are confident they will enjoy shopping for groceries through this new offering as we launch it across the UAE,” Ronaldo Mouchawar, vice president for Amazon Middle East and North Africa, said.

According to Checkout.com, food delivery is one of the fastest online retail sectors in the Mena region. Its data showed that in 2022, local consumers ordered meals online more frequently than ever.

Over half (53 percent) of Mena consumers purchased food online in the past year, with 42 percent saying they are buying food online more than in 2021.

“Collaboration allows us to innovate effectively and to reach and serve society in its most inclusive sense,” Ramzi Alqrainy, chief technology officer at The Chefz, a Saudi-based food delivery app, said.

“These days one provider doesn’t need to manage all aspects of a consumer experience from A to Z. We all need to work together. This is the death of ownership.” 

While a drop in travel and live entertainment sales was inevitable in 2020 due to lockdowns, the research showed that the sector is recovering.

One in five Mena consumers purchased entertainment services online in the past year, with 14 percent reporting they purchased them more frequently now than in 2021. At the same time, 32 percent shopped for travel services online in the past year, with 21 percent increasing the frequency of purchases.

“Mena has become a priority market for many of the world’s tourism boards as it’s a reliable source of long-stay visitors with excellent spending power,” Alexandre Morin, director of payments – risk and fintec at Wego, said.

Checkout.com’s research also revealed that remittance apps remain the most widely used form of fintech in Mena, with 82 percent of consumers using some form of fintech app in 2022, up from 76 percent in 2021.

“The secure, reliable and fast movement of digital money between individuals, businesses and governments is the engine powering today’s global economy”, said Dr Saeeda Jaffar, senior vice president and group country manager for GCC, Visa.

The data also showed that half of consumers in markets such as Saudi Arabia and the UAE used buy-now-pay-later (BNPL) options this year and as many as 67 percent across Mena indicated they may use it in 2023. 

“Previously retailers viewed BNPL as just another payment method and often compared BNPL services to other payment providers, resulting in downward pressure on rates,” Sargun Bawa, VP of growth at Tamara, the BNPL platform, said.

“However, we see retailers increasingly focusing on overall growth, including marketing, customer experience and product maturity. As a result, we see a win-win, sustainable partnership model.”