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Competing with the web giants

Competing with the web giants

Despite the rise of online shopping, UAE retail websites charge up to 50 percent more than their US counterparts. A strong ‘mall culture’ and poor postal service are also holding back the fledgling industry.

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January 14, 2010 2:16 by



A Kippreport survey has found that UAE shopping websites charge 50 percent more than their US counterparts, casting doubt on the true competitiveness of the growing online retail sector.

Armed with a shopping list of 10 items – including DVDs, books, electrical items and flowers – Kipp surveyed various online stores in the UAE and US. The total cost of buying the 10 products from US sites, to ship within the States, was $421.37. If you used UAE sites for local delivery, you would pay $650.74 – or 54 percent more than in the US.

The survey comes at a time of true growth in the UAE’s online retail sector. More and more online shopping sites are springing up; one contender, QuickDubai.com, reported a 20 percent rise in sales during Eid al Adha, and a 25 percent rise over Christmas. Other websites catering to the UAE shopper include nahel.com, citrusstv.com, souq.com and brownbag.ae. A website called ‘Dia’, the first ever Arabic-language online fashion store, will launch in spring.

Consumers were slow to embrace internet shopping due to a distrust of using their credit cards online, despite the UAE having the highest broadband penetration in the Middle East. But local online retailers have given customers the option of paying on delivery, which has eased the concerns of some. Evidence of this came with a Mastercard survey released last year, which found that UAE residents spent $1,193 online in the fourth quarter of 2008, more than consumers in Hong Kong ($543), Singapore ($841) and Australia ($644). According to the Arab Advisors Group, a quarter of the UAE’s population shops online.



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3 Comments

  1. Didier Picard on January 16, 2010 7:51 am

    Dear Ben,
    Congratulation on your article. I would like to bring another perspective, if I may. We are preparing the launch in February of http://www.fashionation.me, the first online, by-invitation only shopping club in the Middle East. Our site wil enable its members to have access to luxury and lifestyle brands at prices up to 70% off retail. Fashionation.me is established in the Middle East and sources excess inventories directly from the brands and their official representatives in the region. Such operation must be very lean to be competitive and propose attractive prices to the members. It is interesting to note that the limited number of banks authorised to receive online payments from credit cards in the UAE (only 3 local banks have received approval) does not seem to encourage the implementation of effective fraud procedures, and does not give these banks a strong incentive to really compete. As a consequence, a customer will on average pay twice as much for a credit card transaction as he would in Europe or US, without getting the level of protection one would expect.
    Best regards
    Didier Picard
    Managing Director
    Fashionation.me

     
  2. NK on January 19, 2010 8:23 am

    Hi Ben,
    Indeed a very well written article.. i follow most of your articles whether its kipp report or any of your publications.. somehow i beg to differ on this article there are other sites which do give clients a more competitive price than the market; as well better delivery service… I recently shopped for a Blackberry phone on http://www.ALshop.com and must say their prices were good as well a very good serivce.. I had my phone in 35 minutes after placing the order… I was very damn impressed and when compared prices with other sites or even retailers realised i paid 30% lesser with out the hassle of parking, salik, queues…. you should have a look at the site as well… worth mentioning.. infact i also compared it to the sites you have mentioned again they get my vote..
    Re the cost of products being cheaper in west you have to even see the consumption ratio.. ipods sold in UAE doesnt even contribute to 2% of the sales in the west.. hence the price even from retailers are the same…. apart from that this market still has to see major online buying for prices to go on par with other shopping portals…
    Once again great job…
    N

     
  3. LL on January 15, 2011 9:42 am

    Hi Ben,

    While I agree that COD is popular here across The UAE I also agree with NK that there are sites that give local customers a very competative price within this market as well as an exceptional delivery service.
    Luxe Little – http://www.luxelittle.com offers baby products to parents in the Middle East – many items are at the same price as they are in the USA.

     

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