A decade ago, the UAE’s online presence was barely a whisper. Expats arriving from countries where online services were already firmly established got a shock when they realised that little could be done over the internet and most services, government or otherwise, still required face-to-face interaction.
Today the outlook is very different.
“The UAE now outranks the UK in percentage terms for connected devices, which along with other factors such as the presence of brands such as Amazon, signals a time for companies to take the next step,” says Jason Stokes, the chief executive of Eastside Co, a digital website agency.
Backed by government initiatives to encourage a much greater use of online, the UAE has undergone a digital revolution in a short space of time. According to figures by BMI Research, the e-commerce market in the UAE in 2015 saw sales reaching US$5 billion. BMI predicts this will have risen to $17.8bn by 2020, which translates to 45.6 per cent of the total Middle East market. For those who can harness this wave of digital consumerism, there are serious opportunities to be had.
2017 was a pivotal year in terms of e-commerce in the UAE and wider Arabian Gulf region. With the launch of Noon.com by Emaar Properties' chairman Mohamed Alabbar and the purchase of Souq.com by Amazon for $580 million, experts believe that the UAE has now the potential to be a serious contender in the global online shopping world.
Eastside Co builds e-commerce websites utilising the Shopify platform and opened an office in Dubai in 2017, sensing the market was ready to embrace e-commerce more widely. The level of smartphone penetration is currently at 81 per cent in the UAE, according to Newzoo’s Global Market Report. Mr Stokes says this is “one of the key metrics for e-commerce" and points out that this connectedness helps to facilitate the growth of e-commerce in general.
"We will definitely see an increase in online trading in the coming year due to companies built to ease the fulfilment of deliveries, such as Fetchr and Mara Xpress,” he says.
In the UAE alone, online shoppers now represent 62 per cent of the population, a 25 per cent increase from the previous year, said the organisers of Digitalks, the Middle East’s first digitally-focused conference series held in Dubai this week. According to PwC Middle East’s 2017 report, social media is vastly becoming the most attractive tool for online engagement. Social media is, in fact, driving customer behaviour with 48% engaging in online promotions and more than 52% using social media channels to check product reviews or shop.
“Here in the Middle East we are avid social media users with more than 88 per cent of the online population uses social media platforms daily. Moreover, with the fast rise of social media usage in the region we’re now witnessing a new phenomenon – social selling,” says Heba Al Samt, the digital media director of TV and radio at Dubai Media and one of the keynote speakers at Digitalks who addressed the state of social for e-commerce in the Mena region.
“Social media has of course been utilised by brands since inception, but this year we are seeing an increase in attention as more and more budget is being placed on these channels with the aim to connect better with customers,” said Ms Al Samt.
The purchase of Souq.com by Amazon in March was seen by many as a watershed moment in the growth of e-commerce in the region. Ronaldo Mouchawar, the chief executive and co-founder of Souq.com says Amazon's interest was unsurprising: “The region is emerging as one of the fastest growing e-commerce markets globally and we have seen a significant shift from cash on delivery [COD] to electronic payments.
“While cash on delivery has traditionally been the most popular payment method things are changing rapidly. Almost half of payments [during the 'White Friday' sales in November 2017] were made through e-payment methods instead of cash, the highest Souq.com has seen in the region to date."
This surge, he says, is testament to customers’ rising confidence in online shopping and online payments.
Hand in hand with the growth in e-commerce has been the take up of online banking services. Banks in the region have traditionally been slow to modernise their services but some in the UAE, such as Emirates NBD, now feel they are at the forefront of the digital revolution.
“Overall, we believe we are leading the curve of retail banking innovation in the region," says Suvo Sarkar, the senior executive vice president and group head for retail banking and wealth management at Emirates NBD.
"Our innovations embrace a ‘tech plus touch’ philosophy that leverages digital expertise and technology to offer more sophisticated and personalised services.”
The emphasis on digital will only increase, predicts Mr Sarkar, pointing out that the bank recently announced a Dh1 billion investment in digital transformation of its front and back-end systems over the next three years as it strives to to make customers' lives simpler.
Away from banking, though, some consumers say they are still struggling with certain online services in the UAE.
Chirag Desai, 34, an Indian expatriate who has lived in Dubai for 11 years, says reliability has been a big issue for him with sites not always working and shipping often slow.
"It can sometimes take longer for an item to move across Dubai than it does to arrive from the US,” says Mr Desai, an IT professional.
He says that in his home country, India, shipping is often much faster as such services are mostly automated.
Still, others find online services in the UAE a refreshing change from at home. Emily Horsford, 32, is originally from Australia but has been in Dubai for 10 years. “I recently tried to do online shopping in Australia for the family for Christmas and found it very limited. Some sites would not accept my card because it was international and there was less choice than we have in Dubai,” she says.
Fatima, 25, an Emirati research and policy specialist from Abu Dhabi, points out that choice is sometimes an issue locally. She prefers to shop online from international sites, saying most of what she wants is not available here.
"Also I’d like entrepreneurs on Instagram to develop and have online shops where I can view the prices of the items and purchase them as well,” she adds.
While 2017 was a pivotal year for online services and e-commerce, there remains some way to go for those UAE-based companies that are not up to speed on the importance of online operations.
“A majority of local businesses are still unaware of the significance of digital marketing strategies and search-engine optimisation,” says Khushal Khan, SEO manager at RBBi, a digital marketing agency. He says some local businesses are overlooking even simple tactics that can impact visibility online. He highlights the fact that failing to claim ownership of a Google MyBusiness location, for instance, "lowers visibility in public search, which can result in higher dropout rates and even a reduction in the number of customers”.
Overall, though, the UAE has made huge advances in embracing the digital world, not only catching up with more established countries but overtaking them completely in many instances.
Certainly, there are areas such as online logistics and digital payments that still need to be refined in order to meet increased demand from consumers and boost competitiveness but there is little doubt the stage is set for sustained growth in 2018 and beyond. Entrepreneurs should take note: the time for online is now.