How much do you and your family spend online during a typical year?
Or to put it another way: have you ever thought about taking advantage of this incredible demand and considered an e-commerce license in the UAE? Because embracing e-commerce has the potential to transform your business into a global money-spinner, especially in our region.
The Emirates is one of the best places in the world for e-commerce, thanks to incredible business incentives, favourable demographics and active government support.
So if you’re not already developing your e-commerce capability, you need to consider it. Failing to act now could mean missing a major revenue stream, and losing out to more agile competition.
Here are five reasons e-commerce could be right for your business.
1. Young people expect to buy online
E-commerce is the norm for millions of people.
Globally, e-commerce is expected to increase 73% through 2022 to become the largest shopping channel.
And its appeal is not limited to the young – in fact, UAE shoppers in general are among the world’s top spenders when it comes to e-commerce. Each citizen spends USD 1,648 per year which is the highest spend in the MENASA region (Middle East, North Africa and South Asia).
This number is only set to rise, given the UAE’s high percentage of tech-savvy young people. These young consumers expect to make purchases in seconds, with a few taps, clicks, or swipes of their digital device.
The younger generations buy virtually everything online, from food and drink to gifts, holidays and services. And when they are not buying online, they are researching the internet to find the best deals.
Don’t miss out on potential sales
If you don’t provide some way of buying your product or service online, you will miss out on the many customers who want to do everything at the click of a button. Not to mention those impulse buyers who shop online at all hours of the day and night.
What’s more, with today’s younger generations, there’s nothing worse than being irrelevant. If you do not have a strong online sales presence you will be quickly overlooked for a competitor that does.
Think of male grooming products. They have been around, in some form, for hundreds of years. But using e-commerce – and in particular creating a sense of excitement through relevant content and branding and then making those products easily available to buy online – meant that Beardbrand became one of the great e-commerce success stories. Starting from humble beginnings, they’re now grossing USD 100k per month.
2. E-commerce can save you money
Sell to a global audience 24/7.
Worldwide sales from e-commerce are expected to increase by 18.8% to USD 4.87tn in 2021. Being part of this booming market is more cost-effective than you may think.
Going digital with your sales efforts can mean you can reach more people than ever before without having to invest in expensive infrastructure such as physical stores and offices, while also lowering the costs associated with adding large numbers of staff.
While traditional face-to-face or telephone sales require boots on the ground, e-commerce gives you the chance to do ‘more with less’ allowing you to sell anywhere, anytime, even when you’re asleep.
And it opens up new ways to make savings through digital advertising, chat bots, and virtual assistants and achieve greater consumer personalisation based on data analytics.
Avoid unnecessary costs
With a traditional bricks and mortar business, your cost of acquiring more retail space will continue to rise as your business expands, and you could find yourself burdened by unnecessarily high capital costs. And as base salaries grow, so will your outgoings on sales employees.
While an online sales focus doesn’t mean you no longer need staff, it does give the opportunity to remained streamlined. So the longer you ignore the e-commerce revolution the bigger the negative impact it will have on your brand.
3. E-commerce is easier than you may think
Doing business online is straightforward in the UAE.
The UAE is one of the most startup-friendly places on earth and launching an e-commerce platform here is relatively simple compared to many places in the world.
E-commerce is already well-established in the Emirates. To develop your own online capability, you need a user-friendly website and good payment processing options. You also need to think about logistics, storage and marketing.
Once you have the structure in place, you simply need to apply for the relevant trading license. This will depend on whether you base your business on the mainland or in a free zone.
While it’s pretty straightforward to launch an e-commerce platform in the UAE, it’s worth obtaining advice on location, strategy and licensing from a local startup specialist before you go ahead.
Don’t lose out to the competition
The benefits of e-commerce in the UAE are such that if you don’t make the transition, you know that your competitors will.
E-commerce giants are locating their operations in free zones in the UAE and other business growth hotspots because of their strategic locations, low tariffs and ease of doing business.
As well as providing access to ready-made, highly connected and technologically advanced business communities, free zones have the added benefit of:
- 0% corporate and personal tax
- 100% company ownership
- 100% repatriation of capital and profits
- No currency restrictions
- 100% import and export tax redemption within the free zone
4. The government supports e-commerce
Adoption of online payment technology is a game changer.
The explosion of e-commerce in the Emirates is largely driven by the government’s investment in online platforms and mobile apps to make payment for government services easier. This alone has increased the number of digital transactions in the Emirates, and most government entities in the UAE now have an online channel for payment.
Customers can access and pay for services such as electricity and water using a single website or a dedicated government portal or mobile app.
Don’t be left behind
Unusually in the digital world, the UAE government has been quicker to adopt e-commerce than many businesses. But the tide is changing and now is the time to get on board.
With online payment for government services so widely available and easy to use, customers are going to wonder why private companies don’t have similar payment options.
So those companies that invest in e-commerce will be at an advantage as much of the target market will already familiar with paying for goods and services online using a variety of methods.
5. UAE residents love to shop
Going online opens up multi-channel sales opportunities.
Almost 63% of internet users in the UAE shop online and they are among the biggest spenders in the world. Having profited from a highly successful mall culture, the Emirates’ bricks and mortar retailers have been quick to adopt online payments to fuel growth.
While retail is by no means the only sector to benefit from e-commerce in the UAE, it is one of the frontrunners.
As great example of this is InstaShop, a UAE e-commerce startup. Founded in 2015 as a platform to facilitate grocery orders, it’s now grown to include everything from pharmacies to maid services. It currently boasts more than a quarter of a million monthly users, and its platform hosts some of the biggest supermarkets in the region. It has also been able to expand from the UAE across the Gulf and wider Middle East.
Be part of the revolution
The road to e-commerce is now firmly established in the UAE. With the right approach, it could be a great way to start, or grow, your business. And that begins with an e-commerce license.
While brands such as Amazon.ae (formerly Souq.com) are demonstrating the power of e-commerce platforms to generate sales, this approach shouldn’t be limited to retailers. This is something that can apply to a variety of companies.
So the question for forward-thinking entrepreneurs in the UAE is no longer: ‘Do I need to invest in e-commerce?’
It’s: ‘How can I leverage e-commerce to maximise sales?’