UAE’s e-commerce market is estimated to hit $27.1b by 2022

Business Bureau, Gulf Today

The UAE e-commerce market is poised to grow to $17.8 billion in 2020, and the logistics providers they choose will play a key role in the exponential growth of online shopping, according to industry specialists. More than 80 per cent of UAE’s 8.2 million internet users make purchases online, according to the annual report of Admitad – a global affiliate network. With the rise of digital retail platforms, such as Namshi, Noon, Ounass, Amazon.ae (formerly Souq.com) and several others, the UAE’s e-commerce market is estimated to be worth an astounding $27.1 billion by the year 2022, says Admitad report.

Average annual online spend per-capita in the UAE is around US$300, significantly higher than Saudi Arabia at US$90 and France at US$94, according to UK-based consultancy firm Business Monitor International (BMI). Online shopping is growing faster in the UAE than other countries. The UAE currently ranks 33rd in the world, in terms of the size of its e-commerce market.

The UAE is also a leading emerging market player in the logistics industry as the country ranks first in the Gulf region and third globally after China and India, according to the latest Emerging Markets Logistics Index.

“The aggressive growth of the e-commerce market in the UAE increases demand for professionally qualified logistics service providers to meet the logistics requirements of their customers,” Gulf Pinnacle Logistics Chairman Shailesh Dash said.

Logistics include many aspects like product handling, packaging, billing, labelling, inventory management, warehousing, transportation, cash on delivery, payment, product return & exchange, in addition to other value-add services.

Once an online order is placed, the customer becomes eager to receive the shipment and a sophisticated logistics and delivery system plays a key role to provide timely and efficient delivery of goods or products. Once a customer is satisfied with a combination of metrics such as the quality of the product, its price point, speed of delivery and ease of payment,  he/she engages in more frequent purchase orders and becomes a regular and retained customer fueling the growth of e-commerce players.

Many e-commerce giants have realized and tied the importance of a reliable, efficient and timely logistics system to their own success. Hence, those e-commerce giants who can afford vertical integration, started to either acquire state-of-the-art logistics providers or build a logistics arm internally to ensure a reliable, speedy, on-time, delivery services to their clients. For example, Amazon in the US, have established their own warehouses, and plane delivery network (Amazon Air) and are even purchasing abandoned malls in densely populated areas which are treated as fulfilment centres to reduce delivery times.

In contrast to the very large players who have a significant volume of shipments to be able to support an in-house delivery and logistics network, medium and small-sized e-commerce players still seek an external vendor like Century Express, which specializes in express e-commerce delivery and is highly regarded by its corporate clients.  

In order to retain existing customers by offering them an exceptional delivery service and attract new ones, some e-retailers offer free or low-cost shipping for many products. None of this is possible without logistics management, as it is the cornerstone of the e-commerce industry.

“It is in the best interest of the e-commerce players to entail professional logistics service which would result in faster growth, success and dynamism for the company,” said Turab Ur Rahman, the General Manager of the Last-mile Division in Gulf Pinnacle Logistics. Average annual online spend per-capita in the UAE is around US$300, significantly higher than Saudi Arabia at US$90 and France at US$94.

BMI forecasts e-commerce market in the Middle East to be worth $48.6 billion in 2022, up from an estimated $26.9 billion in 2018. An estimated $51 billion of e-commerce sales were registered across the Middle East, North Africa and South Asia (MENASA) in 2017, according to new research launched by Dubai CommerCity.

E-commerce is fueling logistics opportunities and reputed logistics companies will grab the opportunities and grow their businesses in the UAE as well as in the region, Dash said.

Gulf Pinnacle Logistics (GPL) is a logistics and transportation company advised by Regulus Capital. Established in May 2014, GPL has the vision to become a MENASEA-focused fully integrated logistics and transportation holding company. We aim to become an ‘integrator’ of the highly fragmented mid sector market, encompassing logistics operations, freight-forwarding, warehousing, road transportation, courier and last-mile delivery services. To date, the company owns majority stakes in four assets involved in warehousing, CFS operations, student bus transportation and courier services.