UAE missing out on billion-dollar e-commerce trading

There is a "very low" takeup of e-commerce among UAE businesses, according to the local telecoms regulator, but daily deal websites are helping to boost acceptance.
Mario Garica pushes a box of diapers along a conveyor belt at the Amazon.com Phoenix Fulfillment Center in Goodyear, Arizona. Seattle-based Amazon.com, which started as a book seller, has expanded to products such as food and motor parts as it tries to become a general merchandiser. Bloomberg
Mario Garica pushes a box of diapers along a conveyor belt at the Amazon.com Phoenix Fulfillment Center in Goodyear, Arizona. Seattle-based Amazon.com, which started as a book seller, has expanded to products such as food and motor parts as it tries to become a general merchandiser. Bloomberg

The UAE is missing out on the US$680 billion (Dh2.49bn) global e-commerce industry, with just 5 per cent of businesses transacting online.

The majority of businesses in the Emirates do not sell products on the internet, and only 11 per cent make purchases via the Web, according to a survey by the Telecommunications Regulatory Authority (TRA).

That comes despite 44 per cent of UAE employees routinely using a computer at work, according to the survey.

"What is very low is take-up of e-commerce - online trading, buying and selling," said Fintan Healy, the executive director of regulatory affairs at the TRA.

"A high degree of employees use computers at work," he added. "There seems to be a bit of a disconnect there."

The TRA's survey, conducted earlier this year, found that 95 per cent of businesses did not use the web to sell products or services. Low uptake of internet commerce means that UAE businesses are losing out on a multibillion global industry.

According to JP Morgan, global e-commerce revenues are forecast to grow to $680 billion this year, up 18.9 per cent from 2010.

The retail ecommerce industry is valued at more than $150bn a year in the US alone, according to the digital-data provider comScore. Sites belonging to the retailer Amazon received visits from more than 282 million visitors in June - or 20.4 per cent of the world's internet population, comScore said.

Mr Healy said the low uptake of e-commerce among UAE businesses was out of line with both the Government's 2021 development plan, and Abu Dhabi's Economic Vision 2030.

"Both focus very heavily on a knowledge-based economy with these services," he said. "That's something we have to consider very carefully: What is the role of the TRA going forward as a facilitator and enabler."

Despite UAE businesses having failed to embrace e-commerce, more and more consumers are making purchases online.

According to the media agency Omnicom Media Group (OMG), 49 per cent of UAE internet users have already made purchases online. That compares to 41 per cent in Saudi Arabia and 35 per cent in Qatar. In the GCC, the most popular purchases on the web are airline tickets, electronic devices and computer software.

Dimitri Metaxas, the regional executive director for digital at OMG for the Middle East and North Africa, said he forecast greater uptake of e-commerce in the future.

"Roughly half of the UAE internet users are saying that they have purchased online, which is a big jump from two or three years ago, when it was 20 to 25 per cent," said Mr Metaxas.

"I'd say that in the next coming two to three years, we could see that jumping up to 70 per cent."

While UAE consumers may be using e-commerce sites more, these are mainly global sites such as Amazon.com, rather than local players.

Mr Metaxas expects "a dramatic increase" in local ecommercestart-ups, such as the Middle East and North Africa travel site Joob.com, and the online store Nahel.com.

Historical barriers to greater uptake of e-commerce in the GCC has been the reluctance to use credit cards and an unclear postal-address system, Mr Metaxas said.

Yousef Tuqan Tuqan, the chief executive of the digital agency Flip Media, based in Dubai, said that online marketplaces such as Souq.com work well because they were tailored to the local market. "The creation of relevant, vocal e-commerce businesses is a big part of it. If you look at something like Souq it's not an Arabic eBay - it's a very uniquely Arabic company, in terms of how they offer their products."

The growth of "daily deals" sites such as Groupon, GoNabit and Cobone in the Arab world had also acted to boost acceptance of e-commerce, Mr Tuqan said.

"They are actually helping make Middle Eastern consumers more sensitive to e-commerce, and less fearful of it."

bflanagan@thenational.ae

Published: August 20, 2011 04:00 AM

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