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Online shopping in KSA, UAE likely to grow during Ramadan – Report

Online shopping in KSA, UAE likely to grow during Ramadan – Report
Online shopping has become more of a long-term behavior change

Riyadh – Mubasher: A greater surge in online shopping is expected to be witnessed during the month of Ramadan, which has just started today on 13 April, a recent survey Checkout.com unveiled.

Online spending by consumers in the UAE and Saudi Arabia is forecast to increase over the coming 30 days, as 95% of those surveyed in both countries said they shop online, with 29% practising this on a weekly or daily basis.

The frequency of online shopping seems to be increasing in countries like Saudi Arabia, with the percentage of online shoppers growing to 26% currently, compared with 20% in September 2020.

Online shopping has become more of a long-term behaviour change rather than a temporary shift due to the new lifestyle resulting from the COVID-19 pandemic.

Nearly three-quarters of those surveyed, representing 76%, intends to purchase products and services online more frequently this Ramadan or maintain last year’s online shopping behaviour, which was during the pandemic as well.

Meanwhile, a quarter or about 26% would tend to be shopping in person less frequently for products and services this Ramadan.

Wealthy consumers as well as shoppers of 18 years to 34 years of age are expected to practice more frequent online Ramadan purchases.

This Ramadan, purchases will likely not be limited to more online shopping only, but consumers would buy a wide variety of products and services more frequently compared to last year. Groceries will be the top category, with 60% of those surveyed planning to buy them online more frequently this year. Food delivery followed with 50%, clothing with 44%, and household products with 39%.

About 67% of the consumers would pay through cards and digital wallets. This is a behaviour change that has been accelerated by the pandemic.

One in three or about 37% anticipated using less cash-on-delivery this Ramadan compared to last year. Consumer preference for digital payments is seen higher during Ramadan than at other times of the year, representing 59% of the respondents, comparing similar data from six months ago.

About half of consumers across the Middle East, North Africa, and Pakistan (MENAP) region are projected to increase their online shopping during 2021 compared to last year, according to Checkout.com’s Connected Payments in MENAP report.

During the period between March and September 2020, when the pandemic first escalated, the region witnessed an 86% growth in online payment volumes on an annual basis. Approximately 400 million e-commerce transactions in the region were registered between 2019 and 2020 alone.

MENAP Regional Manager at Checkout.com, Mohammed Ali Yusuf, said: “Many traditionally cash-centric countries in the Middle East are now converting to higher rates of digital payments. The pandemic has spurred a payments revolution of sorts, and it is not one that is going away.”

E-commerce Industry Outlook

About 80% of young Arabs shop online frequently nowadays, compared to 71% in 2019, a recent report by Wamda revealed. Meanwhile, 50% of those aged 18-24 years old in MENA are shopping more online after the pandemic.

The e-commerce sector, therefore, reached a value of $22 billion by the end of 2020. The growth was driven by the UAE, Saudi Arabia, and Egypt, which together accounted for 80% of the region’s overall e-commerce market.

In the UAE, the digital economy prior to COVID-19 contributed 4.3% to the country’s gross domestic product (GDP). In addition, the e-commerce industry will likely reach $62.8 billion by 2023, according to the Dubai Future Foundation.

In Saudi Arabia, the sector is expected to register a market volume of $8.2 billion by 2024.

E-commerce in MENA is seen growing by 35% in 2021, to reach an annual gross merchandise value of $30 billion, according to RedSeer.