Despite people turning to the internet to spend more than US$10 billion last year in the UAE, businesses and consumers battle structural and technological constraints.
A report released yesterday by Payfort, the online payment provider, said that regional e-commerce grew by 23 per cent, with the UAE representing the largest growth market, followed by Saudi Arabia and Egypt.
Payfort’s research focused on seven Arab countries: the UAE, Saudi Arabia, Egypt, Kuwait, Lebanon, Jordan and Qatar.
It says Expo 2020 will drive growth in UAE’s online transactions, which are set to nearly triple to $27.13bn over four years.
“As competition grows and online consumers become more sophisticated, understanding the unique demographics and habits of Middle East consumers becomes all the more important for online businesses,” said Omar Soudodi, the managing director of Payfort.
Airlines and e-commerce propelled the UAE’s internet transactions, making up more than 86 per cent of total spending. But the strongest growth market is entertainment, so much so that the UAE’s volume of transactions was about 10 times that of Saudi Arabia, the second highest.
Ahmed Al Majed, 37, pays his bills online every month – more than Dh1,200 – including electricity and phone, as well as random purchases such as film tickets. “I make online purchases regularly, both on local and international websites, because it’s convenient,” he said.
“It’s a way to avoid lines but there are also online-only deals available.”
The UAE continues to lead the region in terms of adoption, with 71 per cent of the country shopping online, but the region still lags behind others.
Online purchases are gaining greater acceptance across the region, but cash on delivery is still king in countries such as Egypt.
“Despite the enormous growth in the number of consumers buying online, there are still many challenges for Middle East businesses,” said Mr Soudodi.
A fear of new technology and payment methods remain significant obstacles for consumer marketing in the region.
Rebecca Silverwood, 39, spends about 30 per cent less in online transactions in the UAE than she did in her native country, the UK.
She blames the decrease on an insufficient postal system as UAE residents must have a post office box to receive mail, unlike postal services in the UK and US.
“One shopping delivery was sent back to the UK, so I’m more wary of buying things not through a ‘shop and ship’ platform where I’m familiar with the couriers,” she said. “If they try normal post here, it’s a nightmare to collect.”
lgraves@thenational.ae
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