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The UAE is Expected To See eCommerce Surge

e-Commerce has grown from strength to strength globally over the last few years and projections only underline this. From shopping for groceries to clothes, planning one’s travel plan, e-options are sprouting across. The 2015 Global Retail E-Commerce Index expects the global e-commerce sales to mount to USD 1506 bn by 2018. While the industry is dominated by traditional strongholds US and China, rapid strides are being witnessed across economies, UAE included. The UAE is expected to see e-commerce surge from an estimated USD 2.5 bn in 2015 to USD 10 bn by 2018, as per consulting firm Frost & Sullivan, translating into a phenomenal CAGR of over 55%.

Here’s a look at some of the players leading growth in the region and their latest happenings:

    souq.com: This online retail and marketplace has established itself as the largest e-commerce platform in the region with over 400,000 products across categories such as consumer electronics, fashion, household goods, watches or perfumes. It records nearly 24 mn unique page visits per month. The month of February 2016 saw the company complete another round of funding of over AED 1 Billion, the largest financing of an e-commerce business in the Middle East. Investors included New York-based Tiger Global Management and South Africa’s Naspers Ltd, both of which had invested in Souq.com in earlier funding rounds.

    mumzworld.com: Founded by Mona Ataya in 2011, www.mumzworld.com has enjoyed considerable growth across the region. With over 100,000 products spanning the mother, child and baby segment, 15,000 of which it offers exclusively, the e-commerce retailer has outlined plans to focus on expansion into m-commerce in 2016. It saw a successfully round of fund raising earlier this year with a multi-million dollar investment led by Wamda Capital, twofour54 and Endeavor Catalyst.

    jadopado.com: Online marketplace JadoPado sold a 14.8% equity stake for USD 4 mn, in a funding round led by venture capital firm BECO Capital towards the latter part of 2015. The investment bought the startup’s valuation to around USD 28 million, is its first external round and follows prior cash injections from Al Bogari Holdings. The platform allows one sell new, used and refurbished products directly to buyers.

    wadi.com: Launched in 2015 by the Middle East Internet Group – a JV between German internet platform Rocket Internet and South African telecommunications provider MTN, Wadi.com is a general merchandise marketplace. The company offers more than 150,000 products from over 2,000 international brands. The marketplace raised USD 67m in funding in February this year, 10 months after its launch.

    careem.com: Founded in 2012, Careem, an app-based car service has established itself as the leading provider covering a host of markets. The firm secured USD 60 million from the The Abraaj Group (Abraaj) towards the end of 2015.  It marks the 3rd round of fundraising by Careem.

These are a few of the umpteen start-ups in the region aiming to make a mark in the e-commerce space. It would be prudent for the region, lawmakers and setups, to take a cue from the regions which have seen a boom in e-commerce activity triggering a spate of start-ups. India, for one, can be highlighted here – amongst the stellar cases of successful brands emerging from this e-commerce playground, the last 24-36 months have seen a large number of shutdowns and loss makers. The grocery retail segment has been witness to a host of such shut downs – PepperTap, LocalBanya, RationHut amongst others losing out to the traditional brick-and-mortar setups.

Can they co-exist? The landscape of the e-commerce industry in the UAE, offers enough evidence, to suggest the coexisting of the brick-and-mortar & e-commerce model. The ‘mall culture’, given the comfort of mall locations across is reason enough to keep the ‘touch and feel’ factor part of the buying process. At the same time, given the large percentage of expats, e-commerce setups are ensuring there is no ‘missing out’ feel to the comfort of shopping within one’s 4 walls.

With the region dominating headlines in terms of smartphone penetration, and the leadership increasing focus on innovation, it is not difficult to imagine why the e-commerce industry is expected to continue to record strong growth rates. The current market conditions, both in terms of operations and funding pose a challenge to incumbent and start-up firms. It would be interesting to see how this race takes shape as the region’s industry heads towards the projected fourfold growth.

Source: By Fareem Chagla

United Arab Emirates
Country in the Middle East
Capital: Abu Dhabi
Currency: United Arab Emirates dirham
President: Khalifa bin Zayed Al Nahyan
Prime minister: Mohammed bin Rashid Al Maktoum
Population: 9.346 million (2013) World Bank

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