Lulu enters online sales, but no groceries for now

The supermarket chain will launch its online shopping portal next year by offering non-food items first.

Virtual shopping aisles in the UAE are becoming more commonplace as Lulu Hypermarkets plans to launch its online shopping portal next year.

The retailer will start offering its non-food items over the web but may sell groceries online in the longer term, said Saleem VI, the group general manager for Emke Group, which owns Lulu Hypermarkets.

"The new era is in e-commerce," he said. "So we are in the planning stage."

Online retail has long been adopted in North America and Europe but has just started to boom in the GCC region.

At least eight e-shopping sites have launched in the past year, predominantly online-only shops such as Nahel.com and 3abaya.com.

But this is changing, as more traditional bricks-and-mortar retailers aim to tap the growing online demand.

In September, Carrefour, the second largest retailer in the world, became one of the first multinational brands to launch a shopping website in the region. Since then, Al Futtaim, whose brands include Marks & Spencer and Toys R Us, and Jumbo Electronics have announced plans to follow suit.

Still, Lulu is one of the few retailers that is considering selling food online. While sites such as Netgrocer.com and Waitrose.com in the UK are popular, there is yet to be an equivalent in the UAE.

Mr Saleem said a complicating factor when transporting food in the Emirates was the arid climate.

"We cannot move the food easily because it will be spoiled very soon," he said. "We need to be prepared with the infrastructure and the proper vehicles. But non-food items won't be a problem."

Another barrier to internet retail in the region has been security concerns over using credit cards online. The bulk of purchases made online in the Emirates are paid by cash on delivery.

But, as more reputable retail players sell their goods on the web, consumers will become more comfortable, analysts say.

The lack of street names and numbers in the region also makes deliveries difficult.

Sajid Sayed, the general manager in the UAE for Giordano Fashions, which is launching an online portal for the Emirates next year, said local delivery companies had the geographical knowledge to get the goods to their customers without an address system.

"If you tie up with a delivery company I'm sure they'll be able to make the deliveries," he said.

Internet penetration in the Emirates is relatively high, with 1.47 million internet subscribers at the end of May, which is about 68users per 100 inhabitants, according to the Telecommunications Regulatory Authority. But the actual number of UAE residents who use the web to shop is unclear.

A recent survey conducted by the research firm Nielsen showed one-third of web users in the Emirates - twice the global average - say they have never bought anything online.

Online shopping in the UAE represents only a small portion of the total retail market. Last year, consumers spent about US$19.6 million (Dh71.9m) online compared with an estimated total of $10.9 billion of non-grocery retail spending, data from the research company Euromonitor shows. But by 2014, e-commerce in the UAE is expected to have grown by 72 per cent to about $33.7m, Euromonitor said.