The Impact of E-commerce on Retail in the UAE
Gone are the days when only 1% of the world’s population was on the internet. Today, the digital landscape is booming, and a rise in e-commerce is an outcome of that. Besides, the pandemic of 2020 has also contributed to the dependency on online shopping.
Regardless of the factors responsible, e-commerce offers a promising picture everywhere, including the UAE. In fact, the United Arab Emirates is one of the leading e-commerce markets in the Middle East. With most customers shopping online, the figures are rising rapidly. The number of e-commerce shoppers is expected to reach 5.7 million by 2029. (Source) With an average revenue of US$1590 per user, the spending on e-commerce is nowhere turning low.
The shift in the e-commerce industry has facilitated online shopping and international transactions more than expected. The retail sector has also witnessed a major impact. Let us dedicate this post to learning about the influence and future possibilities after e-commerce’s advent in the retail sector.
Factors That Contributed To The Growth of E-Commerce
E-commerce is witnessing rapid growth in the UAE, and the following factors can be held responsible for that:
The Rise of the Internet
The rise of the internet and smartphone usage can be associated with the surge of e-commerce. 99% of UAE citizens are internet users. Among them, 58.01% of the usage is via mobile devices. This ease of online shopping is promoting e-commerce.
The COVID-19
When the COVID-19 pandemic forced the world to stay indoors, it also directed them toward easy and convenient solutions, like online shopping. Many retail businesses understood the shift and adapted to e-commerce to stay afloat.
Digital Payment Solutions
Mobile wallets are prioritized, bringing solutions like Apple Pay, Samsung Pay, and Etisalat Wallets. Digital cards, BNPL, and biometric payments have directed the UAE to such payment methods. This has also facilitated online shopping, promoting e-commerce.
Innovation and Modernisation
The United Arab Emirates understands how the digital revolution can contribute to the nation’s economic diversification and future growth. Innovations like open banking and virtual asset regulation to promote tech firms have supported the rise in e-commerce.
Improved Logistics and Security
The United Arab Emirates is the centre for improved logistic infrastructure, distribution, and lower logistic costs. This has created an ideal space for e-commerce to grow. Similarly, the UAE’s payment providers are redefining the security of digital payments. This is garnering the user’s trust in these payment modes and supporting online transactions.
The Influence of E-Commerce on Retail in the UAE
While there are many merits to e-commerce in the UAE, its impact on the retail industry can be seen, too. Let us learn about the influence of e-commerce on retail here:
Shift in Consumer Behavior
The rise in e-commerce has impacted the way consumers shop. Today, there has been a fall in the number of shoppers reaching brick-and-mortar stores. They prefer the ease and convenience of working and shopping from home. This behaviour can be observed among youth, who opt for fast and straightforward processing.
Risen Competition
Traditional retailers have observed a rise in the competition. Earlier, they had to compete among themselves, but the landscapes have changed. They have to compete with the e-commerce providers after facing a depletion in their users. Businesses must embrace innovative methods and offer the best prices to keep up with the clientele.
Technological Development
The next generation of technologies has been a game changer. Customers now prefer AI-assisted technology, data analytics, chatbots for response, and more. Like online stores, even retail businesses must adapt to these innovative measures to meet customer’s demands and expectations.
Marketing Techniques
Like technological status, even marketing techniques are advancing, mandating an online presence for every industry. There are many measures, including targeting advertising, influencers, and social media marketing. While adapting to these methods seems necessary, embracing e-commerce is a better solution for everyone.
Possibilities E-Commerce Brings to the Retail Sector
By now, it’s safe to say that e-commerce is changing how people shop. It’s also changing the manner a business is operated. Take a look at the scope it opens:
Cross-Border E-Commerce
Businesses that have dwelled in e-commerce are able to cater to an extensive audience globally. This cross-border commerce has opened possibilities for businesses to explore new markets. This eventually shows the rising opportunities for businesses.
Niche Markets
E-commerce offers far more than regular items. Many customers are instead adapting to organic products, luxury goods, and decor items. A rise in demand for these niches has resulted from the need for unique collectables and luxury amongst users.
Regulatory Framework
The rise in e-commerce has also mandated the government to craft a regulatory framework to cater to the customer’s trust. The regulatory bodies are already taking action to support fair practices, consumer protection, and data security, supporting e-commerce.
Business Possibilities
The rise in digitalisation and e-commerce has opened opportunities for businesses to grow. Besides, low operational costs and entry barriers are other benefits of e-commerce. This encourages multiple businesses to shift towards digital mediums.
Conclusion
The UAE has witnessed rapid growth in e-commerce. This can be seen after its young population can be seen choosing digital solutions for their shopping needs. As a result, its e-commerce market is rapidly growing, making billions of dollars worth of revenue. This transition has impacted the retail industry by increasing the competition and directing them towards technological advancements. Many savvy minds have identified the right opportunity in the present scenario.
The nation supports the growth of the e-commerce industry. Many businesses can take advantage of this setup. The fashion niche is taking a major share, followed by electronics, furniture, personal care, and grooming. Choosing the finest niche is mandatory and can impact tax needs, the costs of operations, and who the organization will trade with. With that, it is safe to say that embracing e-commerce following the rising digitalisation scenarios is an investment for a promising future. Besides, it is always smart to take advantage of and adapt to more opportunity-driven spaces.