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Series: Join the UAE tech boom – Part 4: E-commerce

The UAE tech boom

Quite simply, e-commerce is looking set to be the dominant retail model of the future. Global e-commerce sales are set to consistently grow from USD4.21tr in 2020 to USD4.93tr next year, USD 5.7tr in 2022 and USD 6.54tr in 2023. In fact, it’s one of the few industries that has truly boomed during the Covid pandemic.

This is hardly surprising given today’s market realities. Time-poor consumers increasingly prioritise convenience above all else. Meanwhile, more and more people are working from home and online deliveries have risen accordingly. The list goes on.

The UAE recognised this trend early on. Its future economic strategy has fintech very much front-and-centre, and as part of that it is actively promoting the e-economy. This has been aided by high internet usage and smartphone penetration across all emirates.

Here are just some of the ways in which the UAE is creating a great environment for the e-economy:

  • Dubai CommerCity: The Dubai CommerCity is a free trade zone centred specifically around e-commerce. It is split into three clusters – business, logistics and social – and offers a range of incentives such as no corporate income tax, 100% foreign ownership and 100% repatriation of capital and profits. Location is also of paramount importance for the e-economy, which relies on a combination of efficient logistics and warehousing. Dubai CommerCity is located just five minutes’ drive from Dubai International Airport, making it an excellent gateway to the global marketplace.
  • Fintech Hub: Many free zones have been working to provide a business-friendly climate for tech startups. While not all are e-commerce-specific, they are still highly attractive for startups in this sector. The Dubai International Finance Centre (DIFC) has established the ‘FinTech Hive’. This is an ecosystem in which young fintech companies can access venture capital and knowledge, as well as essential e-commerce-related support such as e-payment services to ensure their growth.
  • Improved applications process: The process of obtaining e-commerce licenses in the UAE has been greatly simplified – demonstrated by the fact that 196 licenses were issued to the e-commerce business sector in the UAE during May 2020 alone. There are a range of licenses specifically for this sector: for example, the eCommerce licence from Abu Dhabi Department of Economic Development (ADDED) allows entrepreneurs to add their online trade activities to their existing licences, or obtain a new licence to conduct business through websites and social media networks.
It’s no wonder, then, that so many startups are looking to reap the rewards of the e-commerce boom. In the UAE there are already a wide range of new and established players on the market. Dtec member company Bazaara, for example, is a fashion platform that connects buyers and sellers of preloved clothing. Established in 2020, it already has an impressive 5000 users across the UAE. Instashop and Kibsons, meanwhile, are Dubai-based grocery delivery apps – a subsector that has of course been particularly buoyant during the Covid crisis.

UAE innovation in this sector is even attracting international attention. Souq, the well-known auction website with a vast product catalogue, was taken over by global online retail giant Amazon in 2017.And yes, you could say that Covid has hastened the adoption of e-commerce – but this was a trend that was already coming. What the above tells us is that this is not a passing fad: it is here to stay, in the UAE as everywhere else. But not many markets will have such a supportive backdrop for tech startups – something you might want to bear in mind when choosing a location.

And that wraps up our four-part series on hot tech industries. To stay up to date on all our content, do check out our blog at www.dtec.ae/blog.