x Abu Dhabi, UAETuesday 12 December 2017

Gulf shoppers turn to Web

Middle East consumers are spending more money online, but a lack of trust in regional sites means local internet retailers are missing out.

A Christmas tree decorated and on display at the Mall of The Emirates. Mike Young / The National
A Christmas tree decorated and on display at the Mall of The Emirates. Mike Young / The National

People in the Middle East are now more likely to do their festive shopping online - but a lack of trust in regional merchants means the local industry is missing out.

The Dubai electronic payments company CashU says it doubled the amount of online transactions it handles this year.

About US$8 million (Dh29.3m) a month is now handled by the company's key service, said Martin Waldenström, the chief executive of CashU.

But while there is an increase in spending on international sites, there is still a perception that Middle East e-commerce sites are unreliable, said Mr Waldenström.

"It's trust that is holding it back. People don't trust the local merchants here," he said.

"More and more people are coming online and feel comfortable to purchase online. The negative side is that most of our merchants who have large transaction volumes are from Europe and North America."

Mr Waldenström said Dubai was leading the way in the regional e-commerce industry.

CashU, based in Dubai, is part of the Jabbar Internet Group. The "daily deals" website Cobone is also part of the same group and said last week that it had sold more than 500,000 offers to regional shoppers.

"Cobone customers bought 509,920 Cobones and saved Dh100,014,203.71 in the process in just 14 months," the company said via its Twitter feed.

Mr Waldenström acknowledged there had been growth in the "daily deals" segment and said he received many requests from startups looking to launch similar services.

"I get at least one request per week, only from the UAE, about setting up a new 'deal of the day' company," he said. "People don't really understand the work that has to go into it."

But despite the rise of "daily deals" sites in the region - which also include Groupon and LivingSocial - there is still a general lack of trust in other online retail sites, said Mr Waldenström.

"The buyers are here. But if you go outside Dubai, the initiative to start a serious professional e-commerce business is not really there yet," he said.

"There is a lack of trust in the [regional] merchants. People don't believe that they will deliver the service, they don't believe that the quality, returns policies and warranties are as good."

CashU allows internet users to purchase goods online through an account similar to PayPal.

Users can top up their accounts in a variety of ways, such as buying a pre-paid scratchcard, and the system has an inbuilt fraud-protection system.

The company works with almost 6,000 merchants, the majority of which are from the Middle East.

But the sites attracting the biggest volumes of transactions are based outside the region, said Mr Waldenström. CashU takes a commission of between 1.5 and 4.5 per cent on each transaction.

The company recently launched a separate credit-card gateway service, and handles online transactions for the airline Air Arabia.

Mr Waldenström said he expected the UAE's relatively sophisticated e-commerce industry to expand next year.

"We see some very positive trends happening in the UAE right now," he said. "We hope that will spread across the GCC countries."

bflanagan@thenational.ae