UAE e-commerce market to reach $8bn by 2025

Fastest-growing divisions will be homewares and furnishings, food and beverage and media products, EZDubai says

E-commerce in the Mena region is fast catching up with global powerhouses such as China, the report said. Photo: istockphoto.com

The UAE's e-commerce market is forecast to increase 60 per cent to more than $8 billion by 2025 from 2021, as consumers across the region continue to shift towards online retail, according to a new report.

More consumers in the Emirates made online purchases last year compared to 2020, the report by EZDubai, an e-commerce zone in Dubai South, and Euromonitor International found.

About 75 per cent of those surveyed said they shopped online in 2021.​

“The growth of e-commerce that is witnessed in the UAE and the Mena [Middle East and North Africa] region encourages us to work harder and closer with our e-commerce players in order to boost the sector,” said Mohsen Ahmad, chief executive of the logistics district at Dubai South.

Government support is a key factor in supporting the advancement of the sector, he added.

Mohsen Ahmad, chief executive of logistics district at Dubai South. Photo: EZDubai

The Covid-19 pandemic, which led to lockdowns around the world, hastened the move to digital services as consumers switched to cashless payments and online shopping. Globally, digital payments are expected to grow to $8.26 trillion by 2024, from $4.4tn in 2020, Statista said.

E-commerce in the Mena region is fast catching up with global powerhouses such as China, with many online retailers scaling up their services to avoid Covid-induced disruptions, the EZDubai report said.

The total e-commerce market size in the region is expected to reach $49bn in 2025, surging from $31.7bn last year.

The expansion of e-commerce in the region is being driven by strong internet penetration rates, high possession of digital devices, rising incomes, improving logistic advancements and the presence of global players in the market, the report said.

The fastest-growing sectors in the e-commerce industry over the next three years will be homewares and home furnishings, food and beverage and media products.

Foreign e-commerce — UAE consumers purchasing outside of the country — is also rising and is expected to reach 32 per cent of total e-commerce sales in 2025, from 23 per cent in 2019 to 26 per cent last year.

The report surveyed an undisclosed number of respondents in 13 countries, including the UAE, Algeria, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia and Tunisia.

EZDubai, which was launched in January 2019, aims to attract online retailers and promote the emirate’s position as a hub for regional e-commerce.