The United Arab Emirates (UAE) is far more than a holiday destination. It’s the de facto eCommerce leader among the Gulf Cooperation Council (GCC) states and an enticing target destination for cross-border retailers.
If you’re thinking about entering this market, we’ve got the information to make your expansion successful. You’ll learn about the size of the market, which products are most popular, and popular e-commerce trends. By the end, you’ll have everything you need to sell cross-border in the Persian Gulf.
How big is the UAE eCommerce market?
The UAE market is large and rapidly growing. It’s the 45th largest in the world, ahead of Colombia, with revenue projected to reach $6.98bn by the end of 2024 and $10.18bn by 2029. Each of the market’s consumers spends an average of $1,590 each year.
Amazon is the biggest eCommerce player in the UAE. The American eCommerce giant bought Souk.com for $580 million in 2017 and had sales of $644.1 million in 2023.
Cross-border commerce is a major part of the UAE economy.
Over half (58%) of all purchases are made from overseas vendors, showing the huge demand for products that aren’t available in local markets.
Better prices, quality and variety are some of the leading reasons shoppers choose cross-border retailers. Quality is the biggest issue for younger consumers aged 16-34, with 48% saying it's the main reason they purchase from foreign brands.
Chinese sites like JD.com and AliExpress are proving particularly popular among consumers. American brands like Apple and Sephora are also popular.
Why the sudden growth in eCommerce?
What’s behind the sudden growth in the market? Researchers put it down to high internet penetration, a young and technically savvy population and excellent infrastructure.
The UAE government has played a role, too, launching several initiatives to increase eCommerce. This includes the "Digital Silk Road" program that has strengthened the country's status as an eCommerce hub. The government has also passed laws that safeguard digital transactions and protect consumers' rights — thus increasing consumer trust.
Dubai’s reputation as a global business hub also helps. The city’s infrastructure, logistic capabilities and business-friendly attitude mean it’s attracting corporations from around the world keen to enter the Middle Eastern market. They don’t just bring a cohort of high-earning consumers with them, but also underlying infrastructure and services that help online stores thrive.
The city’s logistics infrastructure, in particular, is exceptional. Dubai Logistics City is one of the world’s largest logistics hubs and provides advanced services and facilities to help global companies access the region.
Private businesses are also investing in the area. Both Amazon and Dubai-based eCommerce giant Noon have invested heavily in fulfilment centres. In 2022, Amazon opened what was then the biggest fulfilment centre in the country to accelerate its growth. Noon is about to exceed this by opening a 252,000-square-metre facility in 2024.
Which product categories are most popular?
Like any developed country, UAE consumers buy across various categories, including consumer electronics, fashion and cosmetics.
Electronics is the largest market in the country, accounting for one-third of all revenue. That’s followed by fashion (30.2%), groceries (17%) and hobby and leisure (8.4%).
What about delivery expectations?
In what is a highly advanced but geographically tiny market, it’s no surprise that UAE consumers demand fast and convenient delivery options, as well as a seamless returns process.
Making a success of last-mile delivery is relatively straightforward in urban areas like Dubai and Abu Dhabi, but harder in remote areas without supporting infrastructure.
Home delivery is the most popular choice for consumers, but the Pick Up Drop Off (PuDo) market is growing. FODEL, a Dubai-based company, is leading the charge with an extensive pick-up and drop-off network. It partnered with DHL in 2021, and counts Amazon as a customer.
4 trends eCommerce stores need to know before expanding
Are you eager to enter the market? Before you start, make sure you’re aware of these four UAE eCommerce trends.
Localise your offering
You wouldn’t be able to operate in many European countries without a localised version of your English website. But that’s not the case in the UAE. English is so widely spoken and English eCommerce stores are so common that it’s not necessary to translate your website to make sales.
But that doesn’t mean you shouldn’t try to localise the experience at all. The Middle East is a vastly different culture from the UK, and UAE consumers appreciate it when businesses try to incorporate local nuances into their marketing and sales efforts. You may not have the budget or ability to translate your site into Arabic, but that doesn’t mean you can’t tailor your marketing images to feature Emiratis or localise things like prices, dates and measurements.
Sell on social media
Selling through multiple channels is key in the UAE. Almost everyone has internet access and an exceptionally high proportion of the population is active on social media.
Social commerce is essential. In fact, over half of UAE social media users made a purchase after finding a brand on social channels. Consider creating new profiles for UAE consumers and assess how Instagram, TikTok, and Facebook can help give you direct access to the market.
Facilitate digital payments
Payment preferences are rapidly evolving. Where once cash on delivery was the most prevalent payment option, credit and debit cards are now preferred. Even mobile wallets like Apple Pay and Google Pay are common.
In fact, the UAE could be one of the first societies to go cashless. Research by Visa finds 52% of UAE consumers plan to be cashless by 2024, compared to the global average of 41%.
To accept payments from UAE consumers, you’ll need to use a payment gateway that’s approved by the UAE Central and complies with local regulations. Options include 2Checkout, Checkout.com, and Telr.
Make the most of mobile commerce
Mobile is a core driver of eCommerce in the UAE. Of all online sales revenue generated in 2021, $2.9 billion worth of transactions were made through smartphones—that’s 44% of all revenue.
Shopping apps are contributing to the boom, so think carefully about whether you want to create your own shopping app, build a progressive web app or make your eCommerce store mobile-responsive.
Get your UAE cross-border expansion off to the best start
There are several things you’ll need before you can start operating in the UAE. The first is a DED trader licence to operate an eCommerce business in Dubai. This costs around AED 1400 (£300). You’ll also need to register for VAT and charge 5% on all goods.
Finally, you’ll need to finalise cross-border delivery arrangements. It’s one thing to make your goods available to UAE consumers; it’s another to physically deliver your products to them.
That’s where Pro Carrier comes in.
We combine cutting-edge technology with a range of global delivery options and a network of final-mile delivery partners to help retail brands of any size reach customers in the UAE and beyond.
Our cross-border service integrates with your existing eCommerce platform and gives you real-time visibility into your operations. We can even handle product returns, too.
For more information about delivering cross-border to the UAE or getting started with Pro Carrier, speak to a member of our team today.