Online shopping surges 32% in UAE

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• Spending online grew at twice the rate of transactions in stores
• E-commerce still only 9 percent of total sales
• Consumers using cards more to buy everyday necessities online

The total number of debit and credit cards used for online transactions in the United Arab Emirates (UAE) increased by nearly a third during the first quarter of this year.

Consumers continue to embrace the e-commerce sector despite travel and shopping restrictions returning to normal following the coronavirus pandemic.

Network International, a payment processing firm operating across the Middle East and Africa, reported that spending on debit and credit cards online grew at twice the rate of point of sale (POS) physical transactions in stores.

The biggest increase in card usage online was for government payments, showing the popularity of the UAE government’s strategy to shift services online.

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“During the last two years Eros has worked continuously to revamp its e-commerce platform to ensure its customers are getting the same premium experience of shopping online as they would get at the store,” Rajat Asthana, head of sales at electronic retailer Eros Group, told AGBI.

“We have witnessed a huge growth in our online sales and our e-commerce now contributes to 20 percent of our total retail sales and continues to grow in 2022.”

Network International’s research also highlighted two other trends in the online shopping sector.

It saw significantly more growth in low value and mid-value spending, demonstrating that consumers were using their cards to buy everyday necessities, as opposed to big ticket items during annual celebrations.

The normalisation of online payments, a direct result of the pandemic, when many retail outlets were closed and were only accessible through their digital platforms, is also evident in the fact that debit cards grew at one and half times that seen in the credit card sector.

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“As e-commerce sales continue to rise, it’s evident that the growth in spending is coming not just from buyers shifting from physical outlets to online shopping, but rather from buyers shifting more of their spending from cash to digital,” Ian Jiggens, group head, advisory and information services, Network International, said.

A report published in March by Dubai-based e-commerce hub EZDubai and global research firm Euromonitor International forecast that the UAE’s e-commerce market will be valued at $8 billion by 2025, up from $5 billion in 2021 and $2.7 billion in 2020.

The report also found that e-commerce users in the UAE spend more per person, with transactions amounting to an average of $122, compared to just $22 in emerging markets, and $76 in more mature e-commerce markets. 

The research also found that usage was higher in the UAE, with 75 percent of consumers purchasing online, compared to the global average of 55 percent.

When it comes to online shopping, the three biggest retail sectors are consumer electronics, apparel and footwear and food and beverage, which together accounted for 70 percent of all online retail sales online in the UAE in 2021.

The popularity of online clothes shopping has been witnessed by Wear That, a Dubai-based, female-focused luxury clothes website set up by founder Heidi Shara in 2018. 

“We have experienced triple-digit growth year-over-year (2022 vs 2021), by focusing on personalisation at scale, which is our unique value proposition and what distinguishes us from the other players in the market,” a Wear That spokesperson said.

However, the e-commerce market still has a long way to go to dominate the retail ecosystem in the UAE.

The Euromonitor International research found that e-commerce accounts for 9 percent of total sales and this is forecast to rise to 11 percent by 2025.

“We also see a massive jump in our sales at our physical retail outlets as consumers have returned to the malls and shops to buy, especially when it comes to high involvement, high value purchases like electronics where consumers want to see, touch, feel and experience the products they want to buy,” said Eros Group’s Asthana.