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This was a 53% year-over-year increase, driven by the digital shift accelerated by the Covid-19 pandemic
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E-commerce accounted for 8% of the country’s entire retail market during the same year
The Dubai Chamber of Commerce and Industry was quoted by local reports as saying that the UAE’s retail e-commerce market reached a record $3.9 billion in 2020, a 53% year-over-year increase that was driven by the digital shift accelerated by the Covid-19 pandemic.
It reportedly added that e-commerce accounted for 8% of the entire retail market during the same year.
The study said the market may be expected to expand by a compound annual growth rate to $8 billion by 2025, supported by factors like high income potential, high Internet penetration rate (99%), developed transport logistics network, modern digital payment systems, and a growing tech-savvy youth population.
The UAE has the highest smartphone penetration rate in the Middle East and North Africa region, which influenced the growth of mobile-commerce or m-commerce from 29% in 2015 to 42% in 2020.
Meanwhile, in 2020, the UAE’s retail m-commerce retail market value reached $1.6 billion, 56% higher than the previous year. That market is projected to reach $3.9 billion by 2025, expanding by a CAGR of 18.9% from 2020.
The reports quoted Euromonitor data to explain that the apparel and footwear e-commerce categories had the highest share of 33% ($1.3 billion) in 2020 in the UAE. The online share of this category slightly increased in 2020 due to the growing demand for comfortable style clothing, and despite some lockdown measures.
The next biggest category was consumer electronics with a share of 31% ($1.2 billion). The demand was high, especially for laptops, personal computers, and tablets, due to remote working and online education. Food and drinks was the third largest category (11% or $400 million).
As for retailers, they faced hurdles like packing and delivery cost and high returns of products. Experts reportedly found that people return 15-40% of what they buy online, compared to 5-10% for in-store shopping.
Many big retailers developed and enhanced mobile apps to increase online sales and to improve customer’s access to the products. According to the latest data of the Telecommunications Regulatory Authority of UAE, there are in total 52 purchasing apps in the UAE that specialized in food, beverage, and pharmaceutical products.