The GCC ecommerce market has grown rapidly in recent years — it is expected to reach $52 billion a year by 2025 — as businesses strive to improve their digital presence to meet changing consumer demands and stay relevant in today’s tech-driven world.
Like in other sectors, this growth will be led by two major economic powerhouses of the region: Saudi Arabia and the UAE.
GCC ecommerce market
A meager $5.3 billion, or 0.4 percent of the GCC’s GDP, was generated by e-commerce in 2015. By 2020, revenue had quadrupled to $21.6 billion. According to the Kearney Global Consultancy Firm, GCC ecommerce sales are expected to surge to $52 billion annually by 2025.
One of the key factors that would lead to this surge is a rise in the number of technologically knowledgeable customers, particularly millennials (aged 25 to 40), who represent nearly 45 percent of the population. Moreover, 60 percent of GCC millennials shop online.
At present, however, GCC’s ecommerce market is still minor compared to the leading nations. According to eMarketer, worldwide ecommerce sales are expected to exceed $4.9 trillion by 2021. With 57 percent of the global ecommerce market, China continues to be the leader.
Regional leaders
Saudi Arabia and UAE are the top markets in e-commerce. According to a Boston Consulting Group and Meta report, Saudi e-Sales grew 30 percent annually.
The report found that the market value of e-commerce increased from $1.6 billion in 2016 to $3.2 billion in 2019. Moreover, during the Covid-19 pandemic, the market grew by over 100 percent in 2020 and 2021, reaching $6.7 billion.
Despite its rapid growth, Saudi Arabian e-commerce is still in its infancy. In 2020, it accounted for only 6 percent of total retail sales, while leading e-commerce markets accounted for 18 percent.
According to a report by “E-commerce DB,” UAE is the 24th largest market for e-commerce, with a revenue of $9 billion in 2021, placing it ahead of Vietnam and behind Austria.
The Emarati ecommerce market contributed 36 percent to the global growth rate of 29 percent in 2021. E-commerce revenue continues to grow. As a result, new markets are emerging, and existing markets can expand.
Amazon.ae is the market leader in Emirati ecommerce. In 2021, the store made $446 million. It is followed by namshi.com ($249 million) and noon.com ($169 million). The top three stores account for 10 percent of online revenue in the UAE.
Benefits of ecommerce
According to the Boston Consulting Group and Meta report, ecommerce can help customers by addressing some of the drawbacks of traditional retail. Benefits include:
- Online retailers can showcase their entire product range because they are not constrained by physical space.
- Customized and personalized products: Consumers can quickly find products and information using advanced search engines and product reviews.
- Pricing transparency: Customers can easily compare prices online. Transparency leads to lower prices.
- Online Payments: Paying online has never been easier or safer.
- Advanced distribution systems deliver purchases to customers in hours or minutes.
- Convenient after-sales services: Customers can test products and return them to the seller for free.