Dubai: Total e-commerce sales in the Gulf Cooperation Council (GCC) are estimated to be between $3-$3.5 billion (Dh11 billion). The UAE's annual sales which approached an estimated $2 billion in 2010 made up approximately 55-60 per cent of GCC e-commerce sales during the period, according to Visa.
"E-commerce is without doubt one of the crucial drivers for the world economy and increasingly, the regions. With such a significant increase in internet usage, it's no surprise that the internet is quickly becoming the cornerstone for business and communication, especially as the UAE is such an important financial hub," said Kamran Seddiqi, general manager for Visa Middle East.
The UAE government is leading the way in e-commerce transactions in the country. The Telecommunications Regulatory Authority has created an effective e-commerce environment while the e-pay gateway allows customers to settle fees for e-government services online on a 24/7 basis in a secure environment. Those looking to pay traffic fines are also able to do so online.
"E-portal adoption with government entities has had a lot more activity online.
"Dewa, for example has seen a 49 per cent year on year growth. As consumers become more comfortable with government transactions they may be more likely to use other e-commerce outlets," said Stephen Leeds, e-commerce business leader for Visa Middle East.
However, while there is growth, online shopping is still in its early stages in the region due to a number of barriers such as lack of trust, perception of merchant's ability to fulfil orders and a cash-oriented society.
"Online shopping is still in its infancy in the region, but all the signs are there that it will continue to grow, such as government commitment, retailer investment and — most importantly — a young population open to trying new technologies and innovations," said Leeds.
According to a recent survey by Onecard, 56 per cent of respondents based in the Middle East said they were concerned about credit card fraud, 37 per cent cited the non-return policy if they didn't like the product, 20 per cent said they couldn't tell what the product was like online, 16 per cent said it did not give them the real buying experience and 9 per cent said they needed help from a sales person.
"We're still faced with the same barriers here that we see around the world, with lack of trust and payment security regularly being cited as key concerns for people when choosing to shop online," said Leeds.
Local entrepreneurs are leading the way in e-commerce businesses. Local success stories include Market VIP, Sukar, Cobone, Living Social, Lowcostdubai and Mumzworld.
Online retail business grew 14 per cent in 2011 to $226.8 million compared to $198.2 million in 2010 as the economic recession drove shoppers to surf the internet for bargains, according to the latest statistics by Euromonitor International.
One recent local venture in online shopping is BonAvenue, a private shopping club which offers international brands at discounts of up to 90 per cent.
"People in the UAE mostly shop on group-buying websites in search of bargains.
"The trend to shop online for apparel and electronics is growing slowly although not yet developed for the reason that most people visit the mall on the weekend anyway and would rather touch the item/see it on display than shop online," Sana Toukan, research manager at Euromonitor International, told Gulf News.
E-commerce in the region is growing two times faster than the global average with GCC sales in online business to consumer transactions expected to reach $5 billion by the end of 2011.
The GCC e-commerce industry is predicted to continue growing at a rate of 30 to 35 per cent year on year to almost $15 billion by 2015, according to Visa.
Saudi Arabia holds the second largest share of the market, with an estimated $520 million in sales, followed by Qatar at $375 million and Kuwait $280 million according to the inaugural joint report between Visa and Ineractive Media in Retail Group International.