Even though e-commerce is ready to become an integral part of everyday life in the UAE, online shopping is yet to reach the levels witnessed in other countries across the globe. One of the most telling factors about a country’s technological infrastructure is the penetration of smartphones. Gups Jutla, head of business development at CyberSource Middle East, a wholly-owned subsidiary of Visa, commented by saying, “Smart phone penetration rate in the UAE is among the highest in the world at 73.8 per cent. This means, there has never been a more important time for merchants to expand into e-shopping to meet the rapidly changing lifestyles and needs of their customers.”
The e-shopper population in the UAE is estimated at around 3 million people, which is almost 30% of the total population. Even at these levels, which would be relatively average at best, the UAE accounts for 55% of total GCC e-commerce spending. Dubai puts a lot of emphasis on shopping through events such as the famous Dubai Shopping Festival, which attracts many tourists to the city. For the 2012 calendar year, retail sales in the UAE were estimated to have reached USD 160 billion. E-commerce spending was estimated to have been around USD 2.8 billion of the total amount, with the average internet shopper spending USD 950 online last year. Jutla commented on these figures saying, “These numbers point to the huge scope for drawing more customers on to ecommerce platforms.” However, it must be noted that Dubai is a shopping destination for tourists, and the overall retail sales figure reflects non-domestic demand as well.
There are some serious challenges to e-commerce in the UAE. The retail shopping environment in the UAE is fed by a culture that enjoys the shopping mall experience. Browsing the stores, shopping for deals and enjoying the atmosphere are all important factors in the overall shopping experience. Jutla agrees with this, noting that “although the UAE has excellent basic ecommerce infrastructure, factors such as security fears, the mall culture cash driven retail shopping and relatively under developed delivery logistics are hampering the growth in ecommerce.”
The security issue is an important one as recently a gang that preyed on credit card users was foiled in the UAE. E-payment platforms have been trying to address security issues, but many believe that more must be done in order to see better results. Ayaz Maqbool, the managing director of Tejuri.com, the region’s first online shopping mall, elaborated by saying, “Online shopping malls can address a lot of these challenges, especially concerns relating to quality of products, delivery mechanisms and payment security.”