With Black Friday upon us, we thought we’d have a sneak preview into the global e-commerce market estimated to reach just under $3.5tn this year. According to sources, it is growing at around 20% annually; this is around four times faster than the world’s “traditional” retail sector combined. E-commerce is said to have expanded from ~7% in 2012 to just under 40% in 2017 and estimates suggest that by the end of 2020 it could account for over 50% of all transactions.
As members of the Gulf Cooperation Council (GCC) continue to diversify their economies away from the hydrocarbon sector, into the likes of tourism, renewable energy, infrastructure projects, and fintech, spending on e-commerce has also witnessed a rapid acceleration.
It's amazing to think that the high per capita income region only really witnessed mass internet adoption in the mid-2000s, with businesses also a bit late to the fourth industrial revolution digital party. However, according to Deloitte’s Going Digital Report, the UAE has one of the highest internet penetration rates globally, at 80%, versus the global average of around 50%. BMI research estimates that by 2020 e-commerce could be worth just under 46% of the Middle East market, and the World Economic Forum expects e-commerce in the UAE to be worth $27.2bn by 2020.
It is no secret that China is increasing its investment ties with the UAE, and the e-commerce evolution in the region has been a major pull. Proactive government policies, including the UAE Vision 2021 and the Smart Dubai 2021 initiative, have boosted the digital culture within the region, with a trend toward a more cashless society, thus increasing transparency. Importantly, as the domestic economies become more saturated and drive to internationalise, global cross-border logistics will become ever more necessary, and the UAE is primed for this with its advanced infrastructure and transhipment hubs, which include the Jebel Ali port, Dubai’s airports and Abu Dhabi’s Khalifa Port.