E-commerce in the UAE: Is it the new normal? (Part 1)

24 minute read
22 July 2020


COVID-19 and global lockdown scenarios have inevitably changed the way we look at shopping generally; and specifically, the way we shop. In fact, it has changed the consumer experience and expectations entirely. Whilst we have seen a portion of the population return to the physical shops as restrictions on movement have eased, it is anticipated that the pre-COVID numbers may never return. This is especially the case in the UAE where the retail sector relies heavily on tourists. Due to the restrictions required to ensure social distancing and other health and safety measures, combined with the increase of retailers and service providers going online means that the stage is firmly set for e-commerce to grow over the coming months and years.

Our Dubai team of lawyers across technology, intellectual property, corporate and commercial have written a series of articles focused on e-commerce in the UAE to share their experiences and thoughts on the region's e-commerce landscape; now and moving forward.

In this article, we discuss the changing e-commerce landscape in the UAE.

It should come as no surprise that e-commerce is likely to grow exponentially in the UAE. Currently in the UAE, e-commerce represents 4.2%[1] of the retail revenue and is estimated to grow by an average of 23%[2] by 2022. Offline shopping (i.e. brick and mortar shops) remains relevant in the UAE for cultural and geographic reasons, however, with increased convergence between online and offline channels (referred to as omni-channel offerings) the market is increasingly competitive, challenging the existing incumbent e-commerce operators in the region and bringing more consumer benefits (and expectations) with it.

Uptake in the e-commerce business sector

The relevance of e-commerce has never been more obvious than in the UAE right now. The UAE is on the verge of a pivotal shift away from the typical shopping experience, and running towards online shopping and e-commerce transactions.

Recent statistics illustrate this change very clearly:

  • 196 licences were issued to the e-commerce retail business sector in the UAE during May 2020 - the highest number of business licences to be issued in a sector;
  • a 300% increase in consumer demand for e-commerce services in the UAE was recorded in the first five months of 2020; and
  • the DED Trader licence in Dubai, which supports the growth of UAE e-commerce, has also seen a surge in applications - 943 licences were issued to new businesses in the first three months of 2020 (a 179% increase from the first three months of 2019)[3].

These statistics tell a clear and positive story in the UAE. E-commerce is here to stay, develop and grow. Market competition and technological innovation will continue to ensure this; think AI-driven virtual assistants and smart virtualisation engines, virtual reality and augmented reality platforms enabling trying on clothes to suit your body shape or trying make-up or hairstyles all without leaving the house.

Why this increase in e-commerce in the UAE?

It is not simply a response to COVID-19. COVID-19 and the implications of the lockdowns have almost certainly fast-tracked the levels of adoption of e-commerce transactions by UAE residents. But more than that, it is a reflection of the ecosystem the UAE has, and continues to develop, making the UAE an e-commerce-ready country for e-commerce growth, development, innovation and rapid adoption. The UAE and, in particular, Dubai remain the fastest-growing e-commerce country[4]. Such readiness factors include:

  • high internet penetration and adoption in the UAE (higher than the US and China)[5];
  • successful adoption and support for e-payment platforms (from Smart Dubai to PayFort (Amazon's online payment platform and Ali Pay with Mashreq) and adoption levels (see article later in our series));
  • increased consumer trust in e-commerce and e-payment platforms;
  • high standards and growth of logistic infrastructure;
  • bricks and mortar retailers' high level adoption of their own e-commerce and e-payment platforms; and
  • UAE Government support for entrepreneurial initiatives, incubator-development (FinTech Hive, Dubai Future Foundation) and regulatory support.

Recent newcomers and investment into e-commerce

It is important to remember that e-commerce is not always about traditional shopping, such as buying clothes etc. The UAE's e-commerce landscape is diverse and the UAE is a leader in government services and payments and education payments in the e-commerce space. Further, with a projected worth of $48.6 billion in 2022 (up from $26.9 billion in 2018)[6], e-commerce is seen as the engine of future retail growth in the region. Retail services (such as healthcare, beauty, couriers, etc.) continue to grow and show there is room for greater growth in these as well as other sectors. As one example, Majid Al Futtaim has seen year-on-year online sales grow by 59% in March 2020[7].

In response to this opportunity, the Dubai Government has gone as far as to commit to building a free trade zone specifically dedicated to e-commerce, Dubai CommerCity, split into three clusters. The three clusters are: (1) Business; (2) Logistics; and (3) Social - offering incentives, infrastructure and tax free status to encourage and develop e-commerce players, particularly given the recent COVID-19 experiences. Obtaining e-commerce licences has been made a simple and seamless process with the Telecommunications Regulatory Authority (TRA) noting that during the first week of April 2020 (early-COVID period) the TRA received no less than 51 applications for the start of new online store licences in the UAE.

The UAE has a robust and emerging set of e-commerce players in the region. We have Amazon, Noon, Namshi, Deliveroo and Careem Eats as what we could term the recent "incumbent" e-commerce operators in the UAE. However there are opportunities for new "disruptors" to enter into the e-commerce market and challenge the existing operators and their business models. A good example of this is Carrefour, traditionally a single play supermarket only, it has successfully developed a strong omni-channel e-commerce platform challenging those regional incumbents. We are likely to see more of this over the next few years as competition increases and innovation drives new services and increased benefits to UAE consumers.

Right now - the major e-commerce players in the UAE

  • Aido
  • Amazon
  • Awok
  • Careem Eats (previously Uber Eats)
  • CarrefourNow
  • Deliveroo
  • Ebay
  • FarFetch
  • Mumzworld
  • Noon
  • Namshi
  • Ounass

Looking forward

Everything, everywhere and now! E-commerce gives us all these things from the comfort of our home and from the ease of your PC, mobile or laptop.

Bricks and mortar retail is not dead in the UAE; it is pivoting alongside the growth of e-commerce as the world of retail and shopping changes due to COVID-19, competition, consumer expectations and tech innovations.

E-commerce, whether it be retail, services, payments or government or education platforms, has exponential room for growth in the UAE. COVID-19 may have been an accelerator of this development, but the UAE has been ripe for a serious e-commerce surge, both in platforms, competition and customer usage. This presents an opportunity for consumers, businesses and investors alike.

Together with the increased focus of UAE companies and government on digitalisation, it is not surprising that the UAE's e-commerce future is looking very strong.

Stay tuned

Read the next two instalments in the series; how to establish an e-commerce business in the UAE, Intellectual Property considerations and Logistics.

We are well placed to advise on these matters and would be delighted to speak to you.

Authored by Rachel Armstrong and Tony Fielding.

Jargon Buster: Below is a table of commonly used terms in the world of e-commerce.

Jargon/Term Definition
Authorisation A transaction performed by using a payment card to determine if the card holder has sufficient funds to pay for a given transaction.
B2B The process of selling services or products to another business (business to business).
B2C The process of selling services or products directly to the consumer (business to consumer).
Brick and Mortar Retailers with a physical store/location, that may also have e- commerce capabilities (but not all).
Bundling The process of combing several individual goods or services that are sold to consumers as one package.
Chargeback Where a transaction is debited against a merchant in case of refunds and/or fraud.
Cookies Text files sent to a user's browser related to how the customer interacts with the website.
Customer Relationship Management ("CRM") The entire process of pre-sales, sales and service relationship with a customer.
Domain Fulfilment The process of receiving, packaging and shipping orders for goods.
e-commerce players Retailers with an online presence including e-commerce pure players, bricks and mortar players and some e-commerce presence and omni-channel players.
e-commerce pure players Retailers operating only online, with no physical presence or location.
Gateway The platform that processes payments for online purchases and the transfer of data from the user's bank to the website for the transaction to occur.
Merchant Account Provider A service provider that provides merchant account and credit card processing services to ensure a business receives the money when a customer pays by credit or debit card.
Mobile commerce The process of buying products or services on a mobile or wireless handheld device.
Omni-channel Retailers with both physical and online digital stores to deliver to services and experience seamlessly to the customer.
Payment Card Industry ("PCID") Compliance A set of requirements and standards developed by major credit card companies to ensure the protection of data. as well as consistent security processes and procedures for online financial transactions.
Payment Service Provider A service provider that provides a business the ability to accept credit card payments without a dedicated merchant account (eliminates account fees and lengthy traditional merchant account contract terms) - these accounts are however more prone to being frozen or terminated without notice.
SEO Search Engine Optimization ("SEO") is the process of enhancing websites to increase visibility and gain rankings. It is a form of digital marketing that uses Google and other search engines to bring users to a website by organic listings.


[1] Fitch Solutions. November 29, 2018. MENA E-Commerce: Great Growth Potential, Final Mile Challenges Need To Be Navigated.
[2] The Retail Summit press statement. December 10, 2018. UAE's US$55 billion retail industry forecast to grow 16% by 2023.
[3] WAM, the Emirates News Agency, May 2020.
[4] ae.visamiddle east.com.
[5] ae.visamiddle east.com.
[6] BMI Research Report as quoted in The National, June 30, 2018.
[7] Life After COVID -19, Future Trends, The Retail Sector, Dubai Future Foundation, 2020.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.