UAE e-commerce market hits record $3.9b in 2020

The UAE’s retail e-commerce market reached a record $3.9 billion in 2020, a 53 per cent year-over-year increase which was driven by the Covid-19-led digital shift, new analysis from the Dubai Chamber of Commerce and Industry revealed on Wednesday.

Analysis of UAE e-commerce market

The analysis, based on recent data from Euromonitor, projected the value of the market to grow by a compound annual growth rate (CAGR) to reach $8 billion by 2025, supported by several key factors such as high-income potential, a high Internet penetration rate, developed transport logistics network, modern digital payment systems, a growing tech-savvy youth population, and strong government support.

Euromonitor’s data showed that e-commerce accounted, for an eight per cent share of the retail market during 2020. The share of mobile-commerce, or m-commerce, in the UAE e-commerce market increased from 29 per cent in 2015 to 42 per cent in 2020, Khaleej times reported.

Moreover, in 2020, UAE the retail m-commerce retail market value reached $1.6 billion, 56 per cent higher than the previous year. The retail m-commerce market of UAE is projected to reach $3.9 billion by 2025, and grow with a CAGR of 18.9 per cent between 2020 and 2025.

Hussein Doughan, GM of Euromonitor International in Dubai, said that the digital revolution has been rewiring retail for years, leading to new business models, commerce ecosystems and channels for reaching and engaging consumers. The Covid-19 pandemic, he said, has accelerated this transition, as e-commerce became the default option for many home bound consumers.

“Euromonitor International projects that half of the absolute value growth for the global retail sector over the 2020-2025 period will be digital,” he said. “That equates to $1.4 trillion in absolute value growth as more goods are sold online. To put that projected e-commerce growth in context, that would be roughly the size of the total value of products sold across all retail channels just five years ago. 

Likewise, the e-commerce sector in the UAE and broader Middle East region is poised for growth. 

Euromonitor International’s Digital Connectivity Index reveals that the UAE is outpacing its emerging market counterparts on the index given its well-developed e-commerce infrastructure, coupled with its tech-savvy population.”

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