Online purchases in the UAE are expected to cross the Dh100 billion mark this year with cards remaining the most preferred mode of payment, accounting for 40.8 per cent of e-commerce deals in 2023.
According to the 2023 Financial Services Consumer Survey by GlobalData, the second most popular payment tool is alternative payments such as Apple Pay, PayPal and Google Pay, which are expected to collectively account for 27.7 per cent of e-payment transactions this year.
The UAE consumers’ third and fourth most preferred modes of payment for online purchases are bank transfers and cash, respectively.
The e-commerce sector has gained massive popularity in the post-pandemic period in the UAE and other advanced economies with consumers increasingly buying goods and food online due to its ease, lower rates and more variety of goods available at a click of a button. The arrival of Noon, Souq, Namshi, Talabat, Deliveroo and other such players in the UAE e-commerce have also boosted the market size substantially.
In addition, the establishment of a free zone for e-commerce companies in Dubai will further boost the local e-commerce industry and attract increased foreign direct investment.
GlobalData’s 2023 Financial Services Consumer Survey was carried out in Q2 2023 among approximately 50,000 respondents aged 18-plus across 40 countries.
The data and analytics company said the UAE’s e-commerce market grew 18.5 per cent in 2022 to reach Dh92.4 billion, as an increasing number of consumers shift from offline to online purchases. It is estimated to grow by 16.4 per cent to reach Dh107.6 billion ($29.3 billion) in 2023.
Ravi Sharma, lead banking and payments analyst at GlobalData, said the UAE will see a compound annual growth rate (CAGR) of 12 per cent between 2023 and 2027 to reach Dh169.5 billion in 2027.
“E-commerce in the UAE has registered healthy growth in the past five years, mainly due to rising internet and smartphone penetration coupled with increasing consumer confidence in online transactions. Furthermore, the pandemic accelerated the shift in consumer preference from brick-and-mortar to online channels. Online shopping events such as Black Friday and Cyber Monday have also supported the growth of e-commerce,” he added
88% of consumers shop online in 6 months
According to GlobalData’s 2023 Financial Services Consumer Survey, 88 per cent of UAE consumers reported having shopped online in the past six months, while only 5 per cent indicated that they had never shopped online.
GlobalData’s survey also revealed that consumers prefer cards as a mode of payment due to the value-added benefits offered by them, including interest-free instalment payments, reward programmes, cashback, and discounts.
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