Know Your Markets: Cross-Border E-commerce Opportunities in the United Arab Emirates

March 17, 2020

The UAE has grown from an undeveloped region of the Persian Gulf to a Middle Eastern economic powerhouse. Find out why cross-border e-commerce is heating up, and what retailers must do to succeed here.

The United Arab Emirates consists of seven states, or emirates: Abu Dhabi, Dubai, Ajman, Sharjah, Ras al Khaimah, Fujairah, and Umm al-Quwain. Though these nation-states have traditionally been conservative, the UAE has become one of the more liberal regions in the Gulf. As such, consumers here are eager to be part of the larger global economy, and the UAE has become a growing worldwide destination for the cross-border industry.

UAE has one of the highest internet penetration rates in the Middle East (over 90%), so it’s not surprising that e-commerce is on the rise. With an average annual growth rate of 25%, e-commerce in the region has been leading the rest of the Middle East. It’s the reason why Amazon and other marketplace e-commerce vendors are already making major investments here.

The appetite for cross-border e-commerce in the UAE is particularly strong: 60 percent of UAE consumers have made at least one purchase from an international retailer online. Popular cross-border categories are apparel and footwear. Other hot categories include beauty products and cosmetics, children’s toys and hobbies, and health products.

Where do UAE online shoppers purchase their cross-border goods from? The U.S. is the most popular cross-border shopping destination, followed by India and China. UAE shoppers turn to U.S. e-commerce merchants because they offer competitive prices and quality goods. But it takes more than great deals and superb products to make a splash in the UAE e-commerce market. Here are a few things to know about the United Arab Emirates.

  1. Consumers are young, tech-savvy, and love their smartphones. UAE is second only to Singapore in its rate of smartphone adoption. Mobile optimization is a requirement to connect with consumers in this market. The median age of the population in the UAE is 30 years old. These are consumers who are digital natives, and expect to be engaged as such.
  2. The official currency is the United Emirates Dirham, or AED. It is considered one of the world’s most stable currencies in terms of exchange rate stability. Cross-border e-commerce brands should keep this in mind when localizing your online store for UAE consumers.
  3. It has a strong logistics infrastructure. By several accounts, the logistics infrastructure in the UAE is developing and transforming significantly, rivaling if not surpassing that of many developed markets. The government here has prioritized the development of strong air and ground transportation, particularly in Dubai.
  4. Social media usage is growing, but with some restrictions. With an internet penetration rate like the one in UAE, it’s no surprise that consumers spend close to three hours a day on social media apps. Facebook and YouTube are tied for the most popular social media platforms, followed by Instagram and Twitter. However, social media is much more regulated in the UAE than in the Western world, and brands should take note. VoIP apps such as Skype are banned in the UAE. However, messaging apps such as WhatsApp, Facebook Messenger and Snapchat are allowed.
  5. Alternative payments are abundant. UAE’s progressive e-commerce laws and a growing hub of technology startups have resulted in a thriving landscape of alternative payment options for everything from public transportation to brick-and-mortar retail purchases. Consumers here are not only used to certain local alternative payment solutions like Cashu and OneCard, but also expect them.
  6. Holiday gift giving is big business. UAE is an Islamic nation, but because of its large population of expatriates, holidays such as Thanksgiving and Christmas are observed. Western holiday shopping trends such as Black Friday and Cyber Monday are catching on here. Even non-Christians take advantage of seasonal deals, thanks to a national holiday held in early December called “National Day.” For Muslim citizens of UAE, a major holiday is Eid al-Fitr, which marks an end to the fasting month of Ramadan by holding festivals, donating to the poor and exchanging gifts.

The value of UAE’s e-commerce industry is expected to reach $27.2 billion by the end of this year. To ensure that your brand captures some of that exciting market share, it’s important to have a clear understanding of local consumers’ expectations and tailor your online presence accordingly. Flow’s experts can help you sell in the UAE, quickly and seamlessly. To find out more about how to create a frictionless, localized experience in the UAE and dozens of other markets, contact us today.

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