"Remote" is the buzzword driving today's online sales in the UAE, whether it is to do with work, learn or play. Image is for illustrative purposes only. Image Credit: Gulf News Archive

Dubai: Sudden demand and supply shortages have led to a sharp rise in online prices of fast-moving tech gadgets in the UAE over the last two weeks or so.

With people spending more time at home and remote working and learning part of the daily routine, as part of the precautionary measures for the coronavirus outbreak, some increase in demand was foreseen. But now, it has touched levels where prices too are moving higher.

The price increases represent a complete reversal from last month, when online marketplaces in the UAE were slashing prices, even up to 50 per cent. The offers available applied even for the latest launches, such as the iPhone 11 series handsets.

“Tablets, game consoles, laptops sales have shot up by almost 20 per cent on UAE online portals,” said Sandeep Ganediwalla, Partner at RedSeer Consulting, which tracks online sales activity in the UAE and Gulf. “Their average pricing has also gone up - primarily because of lack of availability of lower priced products in these categories.

“There is also a price increase on some categories because of the lowering of discounts from the listed prices. Entry level models have almost sold out, and customers are having to buy higher end products.”

But there is one category where prices are still stuck at the same levels – smartphones. The current demand has bypassed this category altogether, with shoppers more likely to pick up a laptop or home desktop.

According to market sources, Dubai’s consumer protection agency has been making the calls to online portals to ensure there are no sudden – and unjustified – price hikes. (The agency had made a similar move when it was noticed that grocery items were being transacted at higher retail prices than was the norm after malls shut down as a response to keep the COVID-19 spread in check.)

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What is leading to the current surge in online demand in the UAE and Gulf markets. Image Credit: RedSeer Consulting

Tighter oversight

Sources say it’s no surprise that the consumer protection agency is keeping a close watch. “The consumer protection bureau has been extremely vigilant checking any price rises that may have occurred… and for the most part has checked any “unusual” hikes,” said Altaf Abbas Patel, Head of Procurement at thedubaibazaar.com.

“Given that our buyer demographic is for the lower end of the price range, our procurement is predominantly from China. And we see some shortages across categories - from electronics to apparel. We expect these to be short-lived especially as China has started to reopen.”

Will it take long for supply to stabilize?

There are no easy answers – sources say it could take between another four to eight weeks before supply levels stablise to pre-COVID-19 levels. Others reckon even that it being too optimistic.

But what everyone agrees upon is that supplies are, for now, irregular. “I think the main driver of the price rise is shortage, which also forces many customer to opt for a higher priced product as a low-priced option is not available,” said Ganediwalla.

“There are even instances where prices for similar products have increased. For example, last year, an entry-level PS4 was selling for lower than Dh850 on online platforms after discounts, while now the price for an entry level PS4 is around Dh1,000.

“This is noteworthy as a newer version (PS5) launch is imminent and prices for older generation are generally weaker during the period before a new version arrives as retailers try to dispose old inventory. “However, customers are still not complaining as these prices are still below list prices.”


Number of UAE residents stocking up, according to Kantar survey

Not a chance to be missed

But one thing is for sure – this is online retailing’s defining moment in the UAE. If they get the customer experience right, they will have a wider audience than was the case before the COVID-19 outbreak.

According to a survey by the research consultancy Kantar, The majority (of consumers) feel the virus will have an impact on their lifestyle and spend. In the UAE, 75 per cent feel that this will have a high impact.”

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UAE shoppers are ordering in more these days. And they are picking and choosing from all categories. Image Credit: Kantar

But not everything is happening online

“Shopping behaviors are being adapted by some consumers to suit the new reality, and - surprisingly - that is resulting in the corner grocery store becoming more popular with consumers owing to greater familiarity and ease of access,” the Kantar survey finds.

According to Amol Ghate, CEO - Middle East at the Insights Division of Kantar, “We do see retailers have started ramping up their efforts on online delivery with the pickup in consumer demand.

“However, consumer feedback also suggests people are struggling with the [online] experience and mention of out-of-stock and delay in delivery time are two key issues they face. Additionally, with higher internet traffic, the web browsing experience is starting to suffer.

“It is essential that the retailers bridge the say-do gap fast and deliver a more consistent, convenient and enjoyable experience if they want these habits to sustain.”

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What UAE's shoppers are buying and from where in the time of COVID-19 Image Credit: Kantar