The Abu Dhabi Investment Office and Dubai-based online marketplace Noon have signed an agreement to build the UAE's biggest fulfilment centre to cater to the nation's fast-growing e-commerce industry.
The 252,000-square-metre complex, which will be built at Khalifa Economic Zones Abu Dhabi (Kezad), is scheduled to open in 2024. It is set to create 6,000 jobs, which in turn, will support the Emirates' digital economy programme, Adio said in a statement on Thursday.
The mega fulfilment centre, which will comply with Estidama 2 Pearl sustainability standards, will also reinforce Abu Dhabi’s position as an emerging major player in e-commerce and logistics.
The UAE capital already hosts the largest delivery centre of Amazon, the world's largest e-commerce platform, which was opened in June.
However, Noon's hub will top Amazon's in terms of size. Amazon's fulfilment centre is being built on a 175,000-square-metre site.
“Abu Dhabi is delivering for the global e-commerce sector by creating an environment where innovative, ambitious companies can thrive,” said Abdulla Alshamsi, acting director general of Adio.
“Noon’s partnerships with Adio and Kezad Group are significant in both scale and impact, creating thousands of jobs and new opportunities for the private sector to plug into an e-commerce platform and the emirate’s innovation ecosystem.”
Adjacent industries such as transportation and warehousing, both key to the e-commerce supply chain, also stand to benefit from the Adio-Noon partnership, Mr Alshamsi said.
The UAE presents a big opportunity for e-commerce companies. The sector in the country is projected to grow by 60 per cent from 2021 to more than $8 billion by 2025, as consumers across the region continue to shift towards online retail, according to Euromonitor International.
Noon, the portal backed by Emaar founder Mohamed Alabbar and Saudi Arabia's Public Investment Fund, was the third biggest e-commerce player in the UAE last year, with net sales of about $169 million last year, data from ecommerceDB shows.
Amazon — which is also building the Middle East's most technologically advanced fulfilment centre in Abu Dhabi, also planned for a 2024 opening — was the largest, with net sales of $500m last year, while Namshi, the e-commerce unit of Dubai's Emaar Malls that was bought by Noon in August for $335.2m, was second with $249m.
Fulfilment centres have been central to the operations of e-commerce companies. Unlike ordinary warehouses that simply store products that will be distributed at a later time, fulfilment centres temporarily hold items that are meant to be packed and delivered to customers faster.
The global e-commerce fulfilment services market is projected to grow at a compound annual rate of 9.5 per cent to hit around $195bn by 2030, from $86.4bn in 2021, according to Grand View Research.
Noon's fulfilment centre, which will feature new automation technology for storage, material movement and sorting, aims to speed up the delivery of products across the UAE, and will also act as a hub to service Noon's other smaller units, the statement said.
“The new e-commerce hub in Abu Dhabi will unite millions of customers and thousands of businesses to fuel the UAE's digital economy's next phase of growth. As a local technology company, it is our duty to innovate, invent and provide the optimal infrastructure for a digital-first future,” Mr Alabbar said.
The centre will accelerate the development of the Middle East's e-commerce infrastructure by introducing new automation technologies, Noon said.
The centre also aims to enable entrepreneurs, start-ups and small and medium enterprises to capitalise on Noon’s platform.
“The Noon fulfilment centre will enable businesses, both home-grown and international, to reach new customers across the Middle East, Africa, Asia and Europe,” said Abdullah Al Hameli, chief executive of economic cities and free zones at AD Ports Group, the operator of Kezad.