The trend of online shopping among UAE residents is growing rapidly due to the convenience factor and emergence of new platforms. Residents splurged Dh36 billion on online shopping this year, with a large chunk spent on purchases from portals outside the UAE.
According to the Fourth Annual Cross-border Commerce report released by PayPal and Ipsos, around 61 per cent of residents shopped from websites out of the UAE in the past 12 months, a growth of 33 per cent from the previous year. In fact, 12 per cent of online shoppers surveyed stated that they only shop online in marketplaces outside the UAE.
Statistics showed that cross-border shopping has grown by an estimated Dh1.6 billion since 2016, accounting for an estimated Dh12.5 billion of all online spend in 2017. Strong e-commerce growth placed the UAE as one of the top two countries of the 31 surveyed for proportion of cross-border purchases.
The US was the most popular cross-border online shopping destination, with 22 per cent of UAE online shoppers making purchases from a US website, spending an estimated Dh2.1 billion. This was followed by 16 per cent of online shoppers shopping from India and 15 per cent from China.
Of late, the UAE's e-commerce industry has witnessed heightened activity through the launches of portals to tap the growing online shopping trend among residents.
Efi Dahan, general manager, Eastern Europe, Middle East and Africa at PayPal, said the UAE's commerce revolution is well underway, backed by the country's diverse population plus improving logistics services. Consumers are increasingly looking internationally to source their favourite products and services.
The study revealed that the increase in online spending is also forecast to continue, with 49 per cent of online adults surveyed stating they will increase their online spending in the next 12 months, citing convenience of shopping online and the rise in available platforms to shop from as the key reasons for the expected increase.
Rabia Yasmeen, research analyst, Euromonitor International, said Internet retailing is growing on the back of key developments in the country's Internet retailing landscape as Amazon completed the acquisition of Souq.com, opening up Amazon's web-store on the platform as well as new market entrants featured by noon.com.
"With increased momentum in the pure-play Internet retail segment, brick-and-mortar retailers continue to invest and amplify their online presence in the country. The segment is expected to see an average growth rate of 18 per cent in the country over the next five years," she said.
"While homegrown platform Souq.com retains market leadership in the online retail sector, consumers also buy goods from web-stores in other countries. Most active players in the pure-play segment include Amazon, eBay and other emerging players like Jolly Chic. Nearly 20 per cent of the Internet retail is conducted through cross-border platforms. Other platforms include players such as Asos.com which are popular among shoppers seeking affordable and trendy fashion wear," Yasmeen added.
While the basic reason for people buying from overseas markets remains non-availability of products and lack of greater variety from local retailers in certain categories, Yasmeen said consumers also seek foreign web-stores for lower prices, especially platforms from Asian origins are able to offer cheaper products at comparable service levels.
"Private label products and third party merchants on marketplaces such as eBay are able to offer lower priced products and better quality for various product categories such as electronics and accessories," Yasmeen said.
According to the Ipsos and PayPal survey, clothing, footwear and apparel were the most common cross-border purchase category in the UAE, with 64 per cent of cross-border shoppers having bought from this category, an increase of 60 per cent from 2016.
Almost half of cross-border shoppers (49 per cent) purchased cosmetics and beauty products, making this the fastest growing category, more than doubling for this category with an increase of 158 per cent. Toys and hobbies (40 per cent of cross border shoppers) and health products (36 per cent of cross-border shoppers) were also key growth categories for cross-border commerce, the survey results found.
Mohammed Fahad Al Harthy, founder, Almall shopping website, attributed the extensive buying from overseas portals to expats who earlier used to purchase their favourite goods from the US, Europe and East Asia. But now, they can buy the same goods with the click of a button.
Commenting on what products that are ordered most online, he said modest fashion is the new market.
With high rates of mobile penetration in the UAE, the survey revealed that online shoppers are increasingly opting to make purchases on their mobile devices. Mobile spend is forecast to grow 26 per cent between 2018 and 2019 to reach close to Dh20 billion, with momentum expected to continue into 2020 with a further 25 per cent growth.
UAE shoppers making cross-border online transactions indicated that on average 49 per cent of their cross-border purchases were made either on a smartphone or tablet. Around 84 per cent of cross-border shoppers had made at least one purchase cross-border using a mobile device.
The survey was carried out between April 17 and April 23 among 1,000 people. Of them, 932 were online shoppers and 568 were identified as cross-border shoppers.