Online sales forecast to reach $2bn in region

The Arab e-commerce industry is forecast to be worth more than $2 billion by 2016, with strong growth reported in the UAE, Saudi Arabia and Egypt.

Online shoppers in the UAE, Saudi Arabia and Egypt spent $1.01bn on internet retail sites last year, according to the research firm Euromonitor International. istockphoto.com

Online sales in the Arab world are forecast to top US$2 billion (Dh7.34bn) by 2016, amid a boom in e-commerce in markets including the UAE and Egypt.

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Several regional websites report they doubled revenues last year as shoppers turned to the Web in search of bargains with the convenience of buying from home.

Online shoppers in the UAE, Saudi Arabia and Egypt spent $1.01bn on internet retail sites last year, according to the research firm Euromonitor International.

That is expected to more than double to $2.09bn by 2016, Euromonitor said. Saudi Arabia is forecast to remain the biggest market, but the rate of growth is predicted to be strongest in Egypt.

"People are looking for convenience," said Sana Toukan, the research manager for the Middle East at Euromonitor. "More people are in employment because the economy is doing better, so they have less time on their hands to actually go and shop."

Consumers in the UAE spent $226.8 million online last year - a figure expected to grow to $270.9m this year, Ms Toukan said. She attributed this to more people signing up for credit cards and to a slight increase in home-computer use in the Emirates.

Euromonitor's figures account for spending on local and international sites but exclude daily-deal services such as Groupon.

While international sites such as Amazon.com are still the most popular, Ms Toukan said brands such as Carrefour were leading the way among e-commerce sites in the UAE.

"Carrefour ended with a 20 per cent share of internet retailing in 2011. It's really pushing the whole trend," she said.

Julien Pascual, the chief executive of EmiratesAvenue.com, an online shopping portal based in Dubai, said his sales had grown almost 100 per cent last year compared with 2010.

"We finished the year with a little bit more than $3m," he said. "2010 was really the beginning in terms of e-commerce here. I think 2012 will be even crazier than 2011."

Sheriff Rizwan, the founder and chief executive of the Dubai online store Alshop.com, said his sales last year topped $1m for the first time. "We have crossed the seven-digit mark," he said. "We are looking at somewhere around 25 to 28 per cent growth in sales in 2011 compared to 2010."

He said Alshop.com offered a minimum 15 per cent discount on prices at brick-and-mortar stores and that it could deliver goods in three to four hours in Dubai.

"We will see sales growth in 2012 of 30 to 35 per cent. We have to push ourselves to get that figure," he said.

Sanjay Amarnani, the chief executive of AIDO.com, an online retailer of DVDs, books and electronics, said revenue for the business, which is also based in Dubai, had "doubled" last year. He declined to provide specific figures.

"I expect very similar growth in 2012," he said. "E-commerce is a growing business here. It's getting more awareness now."

Despite retailers' rosy outlook, a new survey cited consumers' fear of fraud as the biggest stumbling block to the growth of online shopping.

According to Onecard, an online payments company headquartered in Riyadh, 56 per cent of internet users in the region said fraud was their main worry when buying online.

It was by far the biggest concern cited in the survey of 1,000 internet users in the GCC, North Africa and the Levant.

Onecard provides a service similar to PayPal, offering users online payment accounts that can be topped up using prepaid cards or regular credit cards.

Ahmed Fahmy, the general manager of Onecard, said use of the service increased last year.

"The number of transactions on Onecard saw 50 per cent growth in 2011. The value has increased by almost 70 per cent," he said. "People are not just comparing products online, they are starting to purchase also."

He declined to give the total value of transactions but said it was "millions of dollars each month".

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