Nowadays, information technology has affected the structure of businesses. Technology has given new focus and identity to all aspects of organizational structure and functions including policy formulation, decision-making, administration, production, sales, marketing, communications, and human resources. The invention of faster internet connectivity and powerful online tools has resulted in a new commerce arena i.e., E-commerce, which offered many advantages to companies and customers. Electronic commerce also known as “E-commerce’ is the process by which businesses and consumers buy and sell goods and services through an electronic medium. E-commerce emerged in the early 1990s, and its use has increased at a rapid rate. Today, the majority of companies have an online presence. Everything from food and clothes to entertainment and furniture can be purchased online. There are several types of E-commerce which are business-to-consumer (B2C), business-to-business (B2B), Consumer to business (C2B), and consumer-to-consumer (C2C).
The United Arab Emirates (“UAE”) is a resource-rich nation consisting of ultramodern cities, with incredibly high rates of Internet penetration, a tech-savvy population, and a solid infrastructure for business, is an ideal location for the start-up or expansion of the E-commerce business.
The UAE has recently geared up to adhere to the dot-com era of shopping from home and taking advantage of the growing number of educated and highly tech-savvy young adults. The growth and development of technology and online systems have led companies to deliver goods and services online, which allows customers to shop with a few clicks on their electronic devices, especially smartphones. According to a 2016 MasterCard press release, in connection with a cross-country study about the consumers’ attitude to digital technology, mobile phones are the preferred payment device for 59% of consumers in the UAE. The high rates of mobile penetration and high internet connectivity in UAE make consumers purchase online and avoid the effort of going to malls and retail stores.
Now there are many advantages to starting an E-commerce business in UAE while the market is still growing and strengthening. As per the World Bank’s latest “Ease of Doing Business” report, the UAE scored 21st in the world. The cost of registering a firm in the UAE is also about half of the average cost to register a firm in the Middle East which enables entrepreneurs to create an online market in the UAE easily.
It was found that banks, investment firms, and financial institutions are actively using E-commerce systems and applications, to provide their services more conveniently to their consumers. Government actions such as the establishment of Dubai Internet City initiate widespread use of e-commerce and urges businesses to reap its benefits and prosper the overall economy. The total value of e-commerce in the UAE stood at $2.5 billion in 2014 and is expected to reach $10 billion in 2018 according to data published by Forbes. A separate study by Network International found that 34% of UAE residents make online purchases between one and five times a week. The product categories that produce the most revenue in online sales in the region are consumer electronics, computers, and jewelry including watches. Online shopping for clothing also has begun to gain in popularity. The most important factors for online shoppers in the U.A.E. were price, customer service, and ease of use.
It is noteworthy that the growth in E-commerce is not solely driven by the private sector. An important factor in building trust in online commerce over the last few years has come from E-government initiatives. Across the region, the Government integrated all traditional offline services such as visa services, traffic services, and utility services onto online platforms integrated with online payments to provide citizens and residents faster and more effective public services.
The value of E-commerce is expected to accelerate steadily and become the U.A.E.’s fastest-growing sales channel because of the country’s increased connectivity, the rapid proliferation of connected devices and services, and U.A.E. Government initiatives encouraging a digital lifestyle. Mobile commerce has a high potential in UAE as smartphone and tablet penetration is high, and mobile is often the most common mode of connection to the internet in the region.
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