COVID-19 Propels the UAE’s E-Commerce Growth

AFZ

COVID-19 Propels the UAE’s E-Commerce Growth

COVID-19 Propels the UAE’s E-Commerce Growth Is now a good time to launch an e-commerce business? Many countries affected by the coronavirus disease (COVID-19) pandemic, including the UAE, have already begun their recovery phase — gradually reopening their economies and slowly lifting restrictions under strict precautionary safety and health measures. With the still limited mobility, people’s use of digital platforms for communication, entertainment and their everyday needs has not let-up. With increased customer use of various online channels, vertical and horizontal e-commerce platforms across certain categories – pharmacies, groceries, essentials, and many more – have witnessed a significant surge in sales. The region’s biggest online baby shop, Mumzworld, for instance, reported an 800% growth in demand from January to March alone. Other e-commerce platforms such as Amazon and Noon have also reported a considerable rise in e-commerce sales. This is not the first time unprecedented events have led to business growth and innovation. The SARS pandemic of early 2000s catalysed the growth of then small e-commerce platform Alibaba into the USD 470 billion retail giant it is today. Its acceleration was fueled by consumers’ anxiety over physical contact as well, like the situation COVID-19 has created. Here in the UAE, while supply remains consistently forthcoming, the demand has risen to the point where several retailers have had to turn to third-party companies to meet delivery, going as far as co-opting taxi fleets. The increase was further supported by the Department of Economic Development’s decision to exempt the e-commerce supply chain from the restrictions placed on commercial activity during Dubai’s three-week lockdown, leading to a 176% rise in pure e-commerce reported in April 2020 in comparison to April 2019. The increase was also catalysed due to the UAE’s pre-existing presence in the e-commerce market when, in December 2019 alone, the country’s e-commerce penetration was at 4.2% - the highest in the MENA region in comparison to Saudi Arabia which stood at 3.8% and Egypt at 2.5%. The market has also been growing by 23% annually for the past three years and, according to market research company Ipsos, the MENA region is expected to hit USD 200 billion by 2022. This presence was further solidified by the government’s 2021 vision of prioritising digital commerce. Moreover, according to a joint study by Dubai Economy and Visa, these rapid strides are also because the e-commerce space allows for ease of shopping and varied purchases. There is also an increasing amount of trust in digital payments (read: mobile wallets) due to their ever-tightening security which is further accented by the fact that 30% of the country’s population is made of digitally native millennials and Gen Z. Globally, the e-commerce sector grew 19% in the past year and online retail sales were expected to climb to USD 6.5 billion by 2023. This was pre-pandemic, now it is anticipated that the e-commerce segment will multiply further as robust online activities are expected to be sustained post-COVID-19 crisis. The public health pandemic, undoubtedly, has impacted the way business was traditionally done, and is forcing business owners to rethink their work models and digitise as consumers themselves reconsider where to go, where to buy, and even what to buy, resulting in a considerable shift in product category preferences. Retail intelligence firm Stackline has determined that sanitisation products, medicines, bread machines, weights and other workout equipment, as well as packaged foods and long-lasting foods are the most popular purchases. There is a clear shift in the market and e-commerce shows no sign of slowing down. The platform’s exposure to a larger volume of consumers guarantees some form of retention post-pandemic due to its myriad benefits. Businesses that established supply chains to support their e-commerce offerings will also have experienced its benefits – overcoming location limitations, lower costs, targeted communications, and more. In a population of 7.6 billion, 4.3 billion are online, and this number will keep growing, bringing more and more consumers onto e-commerce platforms. Setting up an e-commerce business has never been as easy as it is today or at its current level of penetration in the UAE either. Consequently, these are opportune times to capitalise on the burgeoning and flourishing markets and turn your concept into reality. Set up your own e-commerce business today for AED 10,000 and take full advantage of Ajman Free Zone’s plethora of digitised services including a dedicated customer portal. With easy set-ups and cost-effective payments, the Free Zone has introduced a fiscal relief package as well to encourage business growth during these times. Click here to read about our licenses and email us at info@afz.ae or call 800 AFZA for more information. -Ends-

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