UAE e-commerce market forecast to reach $9.2bn by 2026

The UAE's e-commerce market is expected to be worth $9.2 billion in 2026, up nearly 92 per cent from 2021, as online sales continue to soar in the country, according to a Dubai Chamber of Commerce study.

The study, based on data from Euromonitor, also projected that the share of e-commerce in total retail sales will reach 12.6 per cent by 2026.

Growth momentum within the UAE’s e-commerce sector is being supported by rising demand for online shopping and steady investment flows in the sector’s infrastructure, the study said.

E-commerce sales in the UAE grew to $4.8bn in 2021, up almost 85 per cent compared with $2.6bn in 2019.

The Covid-19 pandemic, which led to lockdowns around the world, hastened the move to digital services as consumers switched to cashless payments and online shopping.

Globally, the e-commerce market is expected to hit $55.6 trillion by 2027 at a compound annual growth rate of about 27.4 per cent, from an estimated $13tn in 2021, data from US-based research firm Imarc Group showed.

"The improvement and modernisation of payment systems and services was identified as another key factor that has boosted demand and business activity within the UAE’s e-commerce sector," Dubai Chamber said.

Globally, digital payments are expected to grow to $8.26tn by 2024, from $4.4tn in 2020, Statista said, with the likes of pay later platforms, digital wallets and contactless card models gaining traction.

Meanwhile, investments in the sector have significantly changed the dynamics of the UAE e-commerce market, with the main impact being a downward pressure on prices due to increased competition and supply, Dubai Chamber said.

The study found that in the UAE, consumer electronics was the top selling online product in 2021, accounting for 34 per cent of sales, while apparel and footwear accounted for 31 per cent, food and beverages for 12 per cent, and media products for 8 per cent.

"Among the main product categories offering the most untapped potential in the e-commerce market in 2022 are apparel and footwear, personal accessories, beauty and personal care, and home and gardening," the report said.

More than one third of consumers in the UAE bought a product or service using their smartphone at least once a week, which is above the global average of weekly online purchases, the study said.

The mobile retail market reached $2.6bn last year, accounting for 44 per cent of the total e-commerce market value. It is further expected to record a compound annual growth rate of 15.6 per cent over the 2022-2026 period to reach $4.6bn, the report said.

In the UAE, the growing number of loyalty rewards programmes offered by online retailers also drove up demand for online shopping.

Shoppers based in the UAE preferred local retail websites to overseas retailers, with domestic e-commerce websites accounting for 73 per cent of total sales.

"The increasing momentum of e-commerce activity in the country is expected to provide more business opportunities in payment systems, financial technology, electronic logistics and distribution centres," Dubai Chamber said.