The online retail industry has consistently experienced false starts in the Middle East, although many experts predict that this year will be the biggest yet for persuading store shoppers to buy on the Web. Stephen Leeds, the e-commerce business leader for Visa Middle East, explains how he sees the market dynamics shifting.
Where is the big growth in e-commerce at the moment?
We are seeing a mass adoption in the government and utility space. There's a consumer behaviour change from paying your utility bills in cash to going online, which is being driven by convenience.
What might be an example of that trend?
Dubai eGov has had tremendous results. It has seen a 49 per cent increase in payments online for 2011 compared to the year before.
Are people less bothered about security issues now?
We now offer a "verified by Visa" facility for transactions. The beauty of these types of facilities is that it's like entering a PIN number online, like you would in a normal offline environment. There's been a little negativity in the press about security and online adoption, but we think consumer behaviour is not mirroring negative articles of late.
How much is the e-commerce market worth in the UAE?
In partnership with IMRG, an independent researcher, we estimate that consumers in the UAE purchased US$2.8 billion [Dh10.28bn of goods and services] through e-commerce in 2011. There's a lot of data around from different reports and not a lot of inconsistency. We feel fairly confident in the information IMRG has given us.
Will that spending increase this year?
We think it will increase 40 per cent in 2012.
What is driving that growth?
A lot of it is just organic. For example, consumers realise it saves time and effort to a pay a Dewa bill online. A lot of the growth [comes from] changing consumer behaviour, and there's a little more confidence in the system.
Which sector within e-commerce is going to have a good year?
Airlines and travel. People are getting access to deals and made aware of more information. Airlines are adamant that converting people from cash to e-commerce is a priority.
But we are still unlikely to see the explosion of online retailing of traditional products found in malls?
Right now we are seeing some fairly interesting trends, with Apple launching their site in the UAE and specialist sites. Exclusivity is highly valued in the UAE, so sites that can provide a unique product might do well. Websites have to have their own value proposition and understand their organisation.
* Rory Jones