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Abu Dhabi, UAEWednesday 17 October 2018

Online shopping in Mena to grow three-fold by 2022 led by Saudi Arabia and UAE

Grocery shopping online to grow the most among other product categories 

Groceries are set to be the biggest grower in e-commerce spend in the region. Leslie Pableo / The National
Groceries are set to be the biggest grower in e-commerce spend in the region. Leslie Pableo / The National

Online shopping in the Middle East and North Africa is expected to grow more than three-fold by 2022, led by Saudi Arabia and the United Arab Emirates, according to a new study.

The e-commerce market in Mena is set to expand 28 per cent to $28.5 billion over five years, up from $8.3bn in 2017, according to the findings of a new study by Google and Bain & Co. released on Monday. Saudi Arabia is forecast to grow by 27 per cent a year to reach about $10bn by 2022, with e-commerce representing an 8 per cent share of total retail sales in the kingdom.

"The expansion of the middle class, the growing role of women in the workforce, improvements in logistics and access to online products in second tier and third tier cities represent key drivers for growth," the report said.

The UAE's e-commerce market is predicted to grow 31 per cent annually to $9bn by 2022 with a share of 13 per cent of the total retail sales.

"We expect broader product selection, the entry of new players and innovation in business models to play key roles in this growth," the report said.

More people are expected to buy their groceries online in the Arabian Gulf and Egypt over the next five years.

The market growth for online grocery shopping is set to jump 89 per cent, topping all other product categories, to $4.5bn.

"A more aggressive expansion strategy by hypermarkets, further transition from the region's drive-through and phone delivery culture to online marketplaces and broader geographic expansion to new cities would help facilitate growth," the report said.

Mena's e-commerce market still needs to make "quantum leaps" in challenging areas such as payment methods and logistics, according to the report findings.

Paying by cash on delivery is still one of the industry's biggest challenges in the region as it leads to higher return rates and failed deliveries.

About 62 per cent of regional online shoppers prefer to pay by cash on delivery compared to less than five per cent in the UK and France.