e-commerce scores over traditional retail

Ecommerce is one of the fastest growing sectors in the Middle East and is a very closely analysed sector. The biggest advantage that this sector has over the traditional medium is ease of use. Today users can buy products while watching a movie in the cinemas. Also what has helped is the deep mobile penetration and improvement in logistics. With smartphone penetration at 74 per cent in the UAE and logistic companies improving their ability to reach remote areas within the GCC, this sector is poised for substantial growth.

Easy price comparison also helps. Most products are cheaper online due to lack of additional costs which offline stores have to measure in their pricing (labour/rent etc). This is a pivotal difference in shifting price-sensitive customers.

Although e-commerce will not replace the offline retail in the short term, the growth in ecommerce is substantial enough for big retailers to take note. With logistics issues being resolved in the region, we do see there is a massive opportunity of mass reach through this medium. The e-commerce market in the Middle East is valued at $4.9 billion and it is expected to go up to $10 billion by 2018. Over 33 per cent of internet users in the Gulf regularly use the Net for purchasing or researching products. The UAE has the highest percentage of internet users who shop online. Among all GCC countries, around 43 per cent of Internet users have reported making an online purchase at least once a month, according to one study.

Another major development that has taken place over the last few years is the measures taken by ecommerce websites and banks against credit card fraud. When we launched in 2011, cash on delivery comprised 40-50 per cent of our business. Today, this number is down to 15-20 per cent. Smart payment is creating quite a stir due to its ease of use and assurance of safety from fraud.

In fact, the biggest challenge ecommerce has overcome is to position itself as a safe avenue for online payments. This is clear from the fact that 39 per cent of adult internet users in Saudi Arabia buy products and pay for services online (that’s 3.1 million people; around 12 per cent of the total population).

The author is CEO of the Cosmos Group. As told to Chief Reporter Sharmila Dhal