The quality of e-commerce in the UAE has yet to come

September 30th, 2014 by Azur Digital

More an Offer than a Demand issue

The lack of credible digital commerce offering in the UAE remains an ever true fact with only 15% of its population shopping online. Given the country has an Internet penetration of 80% and one of the world’s highest smartphone penetration (78%), the paradox is striking.

Any analyst of mature online markets would regard this as nothing but pure heresy, since the more connected consumers a brand has, the more additional revenue it can draw from them. The reality is somewhat more complex and the relatively weak development of e-commerce in the UAE has reasons beyond lack of trust and payment security concerns, as often raised by vendors in their pitches.

UAE connected consumers are increasingly relying on web and mobile services to communicate and facilitate aspects of their day-to-day life. The development of e-services and mobile apps in the region, heavily pushed by the government, is increasingly generalizing electronic payments. Online payment has actually been a common practice in the Emirates for traveling purposes for some time. UAE consumers are now ready for more relevant and actionable online content and services, which local retailers are yet to provide them.

Retailers’ offline success withholds the development of a sense of urgency

The UAE have been for over a decade a high-pace multicultural and transient place of discovery, experimentation and achievement where expatriates, tourists and travelers cross paths. Retail has become one of the nation’s pillars. Dubai, in particular has outpaced any place in the world in extravaganza and also sheer numbers, becoming a top global shopping destination.

Retail spending in the emirate itself is estimated to reach $41b in 2014, a 22% increase from 2013. Mall projects across the country are relentless. Yas Mall is set to open in Abu Dhabi in November, offering a total space of 2.35 million square meters to 400 retailers next door to the iconic Yas Marina Formula One circuit.

Dubai Holding will start the first phase of its titanic Mall of the World project in January 2015, the world’s first temperature-controlled city.

With more expatriates and visitors landing in the Emirates every year, the retail recipe simply keeps on proving right. Why change it by venturing into a project as complex as adding an online channel to the mix, one could be tempted to wonder?

Deceiving e-commerce experiences will have brand image implications

In this flourishing sales context, many UAE retailers have been postponing their e-commerce projects, some for several years already. Others have deployed what resembles more e-commerce “initiatives” than actual online stores, often to dip in the water. A singularity of most of these e-commerce trials, is the lack of integration into the overall retailers’ offering and operations.

At best, they only offer a limited number of categories and products, often from separate stocks and with separate supply chain processes. Such online stores essentially are standalone branded boutiques, sometimes even managed by third-parties through white-labeling arrangements. While some categories, such as consumer electronics, are more generously covered than others, the little effort put into merchandizing on these websites is quite apparent. Similarly, due to a frequent use of template customizing, the User Experience and marketing functionalities available are generaly fairly basic.

Example of limited product offering on Sharaf DG’s e-commerce website (powered by Martjack). Navigation menu does not reflect actual product catalogue content.

Others, in spite of their appearances, actually do not offer e-commerce back-office functionality, forcing online orders to be completed offline. A phone call with a customer center agent is required to secure credit card payment and agree on delivery arrangements.

Instructions for the (offline) payment process as found on Ikea’s UAE “How to shop online” Guide

The consumer implications of the lack of overall integration are limited product information (sometimes even inaccurate such as when reusing the same imagery for several products of the same category) and limited services (for instance order collection in store not possible). More importantly, the disconnect with the store experience inevitably affects the brand perception, as customers would expect to be able to browse the entire retailer’s product range when visiting the online store and purchase items with the convenience that belongs to online shopping.

UAE retailers that will deliver multichannel experiences will gain first mover advantage

Fortunately for most UAE retailers, this negative impact doesn’t necessarily translate (yet) from a turnover perspective and, so far, they have been able to get away with limited, or no e-commerce initiatives at all. This is mainly because of the absence of real competitor offerings, and also because the UAE e-tailer market is still structuring, despite newcomers and initiatives such as Aramex Shop and Ship.

There is, as a result, a tremendous opportunity for those who will deploy a rewarding multichannel shopping experience, as they will tap into a massive reservoir of customers, ready and equipped to consume over and over again.


Middle East b2c E-Commerce report 2014 –
Mobile majority: Smartphone penetration hits 78 percent in the UAE –
Retail Market Snapshot MENA 2013 – Colliers International
Top 10 shopping malls under construction in the MENA –
Dubai plans to build the world’s first temperature-controlled city –
How to shop online –
Sharaf DG website