Its strategic geographic location, ease of doing business and favourable legislation position the UAE at the forefront of e-commerce investment in the region and globally

Dr. Belaid Rettab

senior director for Economic Research & Sustainable Business Development at the Dubai Chamber of Commerce and Industry

The United Arab Emirates with Dubai in the lead has recently been named the top country in the Arab world for ease of doing business. The recognition is well deserved and comes at a highly opportune time as investors increasingly look the region to expand their business and improve their geographical advantage. The UAE is now viewed as the fastest growing market for e-commerce whose value is expected to grow from $2.5bn currently to some $10bn over the next two years. This will largely be due to high internet and smartphone penetration among local residents and expats, as well as improved connectivity and changing consumer attitudes, according to experts.

“In recent years, we have seen a shift in the local business community towards e-commerce,” said Dr. Belaid Rettab, senior director for Economic Research & Sustainable Business Development at the Dubai Chamber of Commerce and Industry.

“Many companies are recognising the importance of building an online presence and platform to market products and services to a wider client base. They have also seen a number of big success stories come out of the UAE, where e-commerce businesses have flourished, expanded regionally and raised significant funding from investors abroad,” he added.

Some of the UAE’s most successful ventures include Souq.com, an English-Arabic language e-commerce platform, often described as the Amazon of the Middle East; it is also the largest in the Arab world. Groupon and Dubizzle are two other highly successful e-ventures, the former being an American multinational platform present in more than 28 countries including the UAE, and the former – a region-wide website for classified ads where you can buy, sell or advertise almost anything for free.

According to Rettab, interest in e-commerce has been on the rise particularly from Dubai Chamber members. This has prompted the organisations to launch a number of comprehensive programmes to help educate and train its members and the wider business community on best e-commerce practices. Its latest initiative to support the sector’s growth includes a partnership with what’s arguably the world’s top e-commerce enterprise Alibaba.com. Launched and based in Hangzhou, China, Alibaba is a leading business–to–business (B2B) e-commerce platform for global wholesale trade. The idea is to further empower businesses to take full advantage of the Internet revolution and facilitate their access to global markets, Dr. Rettab explains.

“The partnership opens the door for companies in the MENA region to explore untapped potential in new markets, enabling them expand their reach globally. We expect to reach an agreement soon to offer our members Gold Membership on Alibaba.com at a discounted rate, providing an even greater incentive for businesses to buy and sell on the platform,” he said.

In response to strong regional demand, Dubai Chamber is now looking to add more e-commerce services. It would seek to aid companies engaged in business-to-consumer (B2C) activities by partnering with the region’s biggest B2C e-commerce platform to help enhance their products and service offerings.

“We have recently introduced a “Trusted Member” Label scheme as a mechanism to help our members and companies throughout the Middle East and North Africa build trust with potential partners online. The logo gives businesses a competitive edge in a crowded market. Moreover, we have been actively working with chambers of commerce from other emirates, in addition to Saudi Arabia, to extend similar the benefits to their members,” Rettab said.

Regardless of location, type of service being offered, and target customers or markets, there are a number of ground rules every e-commerce entrepreneur should know about before proceeding with any major investments. Proper planning, for example, is absolutely essential if you wish your business to be able to compete well on a regional and global scale.  

“It is important to remember that online platforms are the face of a brand and should be designed around the needs of tech-savvy consumers. Websites, tools and solutions should evolve in line with consumer demands, which tend to change rapidly. Staying on top of the latest technology trends and digital marketing techniques is incredibly important,” explains Rettab.

Developing a sustainable business model and manpower investment are just some of the challenges investors are likely to face when looking at e-commerce opportunities, according to Rettab, who believes entrepreneurs tend to underestimate the costs of building an online business of scale. To help address these issues, companies should exchange best business practices and lessons learnt in the form of educational and interactive platforms, roundtable discussions, seminars and conferences, Rettab adds.

Over the last few years, the UAE government has expended significant efforts to encourage e-commerce investment. It offers a favourable business environment for entrepreneurs and startups through its various free zones which offer up to 100% foreign ownership and tax exemptions, in addition to low setup and labour costs. The process to set up an e-venture in the UAE is considered a lot simpler when compared to other countries in the region. After securing a trading license, entrepreneurs can register with free zones which allow them to make use of flexible office space at a fraction of the rent cost.

Dubai is at the forefront of the UAE’s e-commerce strategy. It houses three major freezones -- Dubai Internet City, Dubai Media City, and Dubai Silicon Oasis, where startups and small businesses can benefit from operating alongside likeminded organisations with similar interests and ambitions.  The government has recently adopted legislation that encourages foreign investment and eliminates administrative obstacles, and is currently looking at allowing full foreign ownership of companies outside free zones in strategic sectors.

“These incentives, along with a rapidly growing e-commerce sector and very high Internet and smartphone penetration rates, make the UAE an attractive market for foreign investors offering plenty of unique opportunities,” said.

Despite most markets staying depressed and global economic growth showing no signs to recover, not at least in the short term, the future of e-commerce both in the region and outside looks overall bright. The sector is growing rapidly and could exceed $3.6 trillion by 2020, according to market research firm Technavio. In the short to mid-term the Middle East and North Africa (MENA) region is likely to see heightened investor interest, with Dubai leading the way in adopting new solutions and technologies as it transitions towards becoming a smart city, Rettab says. He views the emirate as being at the center of the region’s e-commerce boom, serving as a gateway to other Gulf countries, as well as other African and Asian markets with high growth potential.

“Consumers are increasingly turning to e-commerce websites for cost-savings and convenience. At the same time, they are demanding quality products and a seamless shopping experience. This is why e-commerce players in this region must continuously work to improve their standards, solutions and offerings,” he concluded rather positively.