The e-commerce sector is booming everywhere, including the UAE and its nearby region. According to market research Abu Dhabi, the e-commerce sector is expected to have a compound growth rate of 25% annually, up to 2020. It is only a matter of time before the e-commerce sector is becoming a multi-billion dollar industry in the UAE.

E-commerce Market Size

How large the market size of the UAE is? Very large and it still keeps growing. Internet penetration and technological advances in the UAE allow the population to engage in the e-commerce business. In the past few years, about 72% of the population have become online shoppers and did their first online transaction.

Market size is, of course, an important part of market research Abu Dhabi. In 2015, the market size of e-commerce in the UAE region is USD 2.3 billion dollars. The number is expected to reach USD 7.5 billion dollars by 2020. The amazing growth of the e-commerce market size provides an opportunity for business, local and foreign, to thrive.

UAE Conditions

A business cannot thrive if the condition is not accommodation. The emirate of Abu Dhabi, which is part of the UAE, provides conditions that are suitable for e-commerce business. In the region, the level of the disposable income is high, transportation and logistics infrastructure are great with most of its population live in the urban area.

According to market research Abu Dhabi, the technological aspect of Abu Dhabi also allows e-commerce to thrive. For instance, the smartphone penetration of the UAE is the highest in the world, about 73.8%. Moreover, 90% of the UAE population also has internet access, which means more people are able to engage in the e-commerce business.

 The UAE’s young population is also a contributing factor in the growth of the e-commerce business. The young population is more familiar with smartphone and internet, and thus, e-commerce. About a third of the UAE’s young population is under 25, making them the ideal target to embrace e-commerce. All these conditions should help the e-commerce sector to grow rapidly.

 What’s Holding Back E-commerce Business? 

Despite having conditions that enable e-commerce to grow rapidly, e-commerce in the UAE also has problems that hold back its growth. One of the most crucial problems is fraud, particularly credit card fraud. The population of the UAE is wary of credit card fraud, which can be an obstacle for an e-commerce business that employs a credit card as a method of payment.

Also, while the UAE provides a lot of incentives for UAE-based e-commerce businesses, the local e-commerce businesses are still underdeveloped compared to e-commerce businesses from the West. It is interesting to note that despite its underdevelopment, the population prefers local e-commerce businesses than foreign ones. Underdevelopment is a problem but it is likely to be overcome in the foreseeable future.

 Malls’ enduring popularity is also a hindrance to e-commerce business growth. Malls are seen as not only shopping destinations but also social destinations as well. E-commerce, however good, is unable to compete with malls in these terms. There is also the fact that customers prefer products that they can touch before they buy it.