A’mall-ing Research: Online Retail in UAE
A lack of trust and confidence in local merchants strikes Kipp as a far more realistic reason online shopping hasn’t quite taken off in this region, as opposed to the fact that consumers preferring the ‘hedonistic’ pleasures Dubai Malls provide--as some academics prefer to pander...
December 27, 2011 3:51 by Eva Fernandes
Malls of Dubai have been the object of affection of many—they even are the inspiration of a local YouTube viral video. Even though some may argue the UAE is saturated with malls—Dubai boasts of the highest sq metre of retail space per capital in the world, a record Abu Dhabi is well on its way to steal—footfall is still considerably high. With shops, cafes, cinemas, arcades, spas, salons and even ski slopes it is no wonder a good percentage of the UAE’s population chose to frequent mall, even if they do not end up purchasing goods. Should we end our Ode to the Mall and get to the point of this article? Probably, but let the record show, Kipp is fully aware of the popularity of the malls in the UAE-heck, we frequent them too.
And yet, for all the splendor of the fabulous fountains of Dubai Mall or the serenity of the spectacular slopes of Mall of the Emirates, we can not accept a hypothesis one marketing academic put forth: the popularity of the malls is the reason why the online retail market in the UAE remains undeveloped.
Nnamdi Madichie, an associate professor of marketing at the University of Sharjah, says “online shopping is unlikely to ever match the hedonistic consumption patterns in Dubai’s malls” in a report entitled, “The Bold and the Beautiful of the UAE Retail Environment” published in the journal Marketing Intelligence and Planning.
Now, there is academic research and then there is academic pandering—and for some reason Kipp thinks Nnamdi Madichie’s work on “the Bold and the Beautiful of the UAE Retail Environment” is more of the latter.
The fact that online retail in this region is unpardonably out of date is indisputable—but the reasons for the phenomenon probably are. Earlier this year when Kipp and our friends at YouGov chose to survey 1500+ participants in the UAE and KSA about online shopping we found that credit card fraud and lack of trust in local websites are the top barriers to online shopping, with broken sites and pages loading too slowly following closely on the list of complaints. Our participants suggested improving security or protection for online sites would help drive online sales. For more on our findings click here.
But there are a lot of insights that show steady growth in online shopping in the UAE. However, most of these transactions are made through international sites. The bank’s lack of facilities that would allow local businesses to offer easy online payment structures is just one of the hurdles.
In fact Martin Waldenström, CEO of CashU, says CashU doubled the amount of online transactions it handled in 2011. But while there has been an increase in online transactions, those related to local or regional sites haven’t fared as well: “”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.”
Thanks Martin, but if we may, one last question: why? Why is there this hesitation to buy local? “”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.”
And there you have it folks—we couldn’t have put it better if we tried.