Dubai: While malls still reign supreme, a significant base of local shoppers are now just as comfortable buying online and helping the UAE to 25th spot in the world in a new ranking. China tops the list in the ‘A.T. Kearney Global Retail E-commerce Index’ and ahead of Japan and the US, in second and third spot.
In fact, other industry estimates also reckon that China would soon be the biggest market for e-commerce and moving ahead of the US. But Japan’s second place might come as a surprise to many.
The A.T. Kearney’s index ranks the top countries in online retail, based on a 0-to-100-point scale. The higher the ranking, the more near-term return on investment (ROI) potential a country has in online retail.
For the UAE’s e-commerce prospects, it is about fully utilising the ready infrastructure that is available to facilitate online transactions. “Mobile phones per capita in Russia (1.8) and the UAE (1.7) are much higher than many developed markets, including the US (1) and France (1),” said Mike Moriarty, A.T. Kearney partner and co-author of the study. “Consumers in these countries use their phones to research products, compare prices and seek input from their friends on social media.”
The UK, South Korea, Germany and France took up positions from fourth to seventh, with Brazil, Australia and Canada rounding up the Top Ten. Apart from the UAE, none of the other regional markets figure in the top thirty places.
According to Martin Fabel, partner and head of consumer industry and retail practice, A. T. Kearney Middle East, “The vital ingredients exist, but to exploit the growth potential of e-commerce, consumer behaviour in the UAE must change. For instance, online shopping needs to provide an experience to rival the allure of malls. Other GCC markets are further behind due to even lower consumer interest in e-commerce.”
Market sources reckon that online security issues are proving less of a pull back for online retail growth than in the past. “But a major concern for e-retailers has to do with pricing and the perceived value of what is being sold,” said Devayani Dayal, founder of the online apparel vendor She Moves Company LLC, who has now opened a physical store as well.
“Where portals are offering steep discounts on the perceived value, they are able to attract traffic and customers. But try selling a full priced product to a buyer who has no experience of that product beforehand and it becomes a difficult sell. If that mindset changes, UAE’s adoption rates can easily zoom and top the charts.”