Dubai: More than half of residents in the GCC shop through their mobile phones, a trend that could grow by leaps and bounds as the bloc has one of the highest levels of penetration, industry experts said.

The purchase of airline tickets tops the list of spend on mobile, followed by buying from the app store and then buying of consumer electronics. However, currently only about 1 per cent of retail revenues come from online sales in the UAE, compared to around 10 per cent in advanced markets with similar access and penetration.

“When we look at our markets, smartphone penetration is the highest in the world, so more products are being made available online. Some of the shifts from overseas purchases, along with travel expenses to now consumer electronics and app stores are coming in as prominent members of the survey. Domestic and regional sites are taking over the top position in the market,” Aaron Oliver, head of emerging payments — Middle East and Africa, MasterCard told Gulf News.

Google estimates the current e-commerce market in the Middle East to be worth $1 billion (Dh3.67 billion).

“E-commerce is witnessing a steady and predictable growth, but going forward, we would see a lot higher growth here. As we start seeing more options available and things like MasterCard which comes in and make it easier safer to shop online, and as we see domestic merchants implement new technology, it becomes easier to shop with your mobile phone.

Growth in mobile commerce is much higher than in other parts of the world,” Oliver said.

“People find mobile [use] much more convenient.” He said there are different reasons and one is the fact that people have their mobile phones with them all the time and they also have a limited amount of time. “When they need to make that shopping purchase it makes it very easy for them to do with a mobile [phone],” Oliver said.

A senior official at online portal Souq.com agreed.

“We are seeing a huge growth in the trend toward online shopping and currently one in two consumers in the UAE have shopped on Souq.com, with an item is sold every 1.5 seconds. As the number of people shopping online increases, so do their expectations of service and delivery which is something Souq.com strives to not only meet, but exceed together with our partners, including MasterCard. We currently provide customers secure payment options, a one-year warranty on all products as well as free delivery, all of which enhance the whole online shopping experience,” said Co-founder of Souq.com, Ronaldo Mouchawar.

Wide selection

More goods and services are available online than ever, with a minimum delivery time, which would trigger next bout of growth in the industry.

“It’s not just payments that makes the online purchases flow but it is the goods that are available to consumers. It’s the wide selection of what they would like to purchase, the logistics and the ability to quickly deliver them at their house,” Oliver said.

He said that the shorter time it takes to deliver consumer goods in the UAE is driving up demand. He also said switching from paying in cash to using mobile phones will not happen overnight. “Cash is a big thing in this region currently, and that behaviour change also takes time.”

There is a lot of room to grow if more sellers come online, so long as logistics providers minimise the delivery time.

However, the challenges are many. This region lags significantly and is behind Europe and the US in online marketing spend. While online retailers in the UK, France, Germany and US spend 39 per cent, 30 per cent, 25 per cent and 23 per cent of their total budget respectively, on online marketing, the GCC spend is only 5 per cent.

Some markets such as Saudi Arabia has very low credit card penetration, some others have restrictions on using debit cards for shopping online, leaving more consumers dependent on cash transactions.

Even local banks have also been slow to set up online payment channels for smaller businesses because of the lack of significant revenues, slowing the sector’s growth. The largest barrier to growth in the region is regional instability that prevents companies opening up new markets like Syria, Yemen and Iraq.