How Dubai Commercity aims to grow on back of $148bn regional e-commerce surge

The e-commerce market will grow to $148.5 billion in the Middle East, Africa and South Asia (MEASA) by 2022, according to a board member of Dubai CommerCity.

Amna Lootah, assistant director general, DAFZA, and a board member at Dubai CommerCity, the first dedicated e-commerce free zone in the region, said it is witnessing significant growth, driven by changing consumer behaviour amid the ongoing coronavirus pandemic.

The MEASA region’s e-commerce market is experiencing a compound annual growth rate (CAGR) at 18.4 percent, higher than the global 16.6 percent growth over the 2019-22 period.

She said this represents a big opportunity for the region to benefit from the growing e-commerce activity.

Her comments came in a new report which highlights Dubai Commercity's efforts to strengthen the emirate's position as a gateway for growth of the regional e-commerce sector.

The study showed that e-commerce has experienced a significant leap during the Covid-19 pandemic with the Gulf region witnessing a 214 percent year-on-year increase in cross-border online sales by mid-year 2020.

Findings of the report indicated that the MEASA B2C products e-commerce market equated to 2.5 percent of the global market.

South Asia represented the largest sub-regional e-commerce market size, with India the largest country by e-commerce sales in the MEASA region, valued at $45.7 billion sales in 2019.

The GCC is the fastest growing sub regional e-commerce market over the forecasted period where Saudi Arabia and the UAE led the way with 39 percent and 38 percent CAGR respectively.

African markets have strong potential and covered at least 19 percent of the regional sales within the MEASA e-commerce market share in 2019. Nigeria is the second largest e-commerce market in the region at $ 7.7 billion sales, with South Africa and Morocco also in the top-10. Kenya is the fourth fastest growing economy at 36.6 percent CAGR.

The report suggested that the affluent, young population and cross-border e-commerce are the two strongest growth drivers for the MEASA region.

Other growth drivers include internet penetration, smartphone and social media adoption, government policy and ease of doing business.

DeVere Forster, chief operating officer at Dubai CommerCity, said: “We are working with our strategic partners to build a world-class e-commerce ecosystem, which helps businesses start up, expand and enhance their operations at a time when the sector provides promising opportunities.

“This report shows the potential growth expected to take place in the e-commerce sector. It will help local, regional and multinational companies to better understand the B2C product market in the MEASA region,” Forster added.

For the MEASA region to become an increasingly competitive global player, the report suggests that there are key structural barriers that must be addressed at a government and industrial support level.

The report devises five broad strategic considerations around key e-commerce barriers including a robust policy framework, consumer awareness and trust-building, logistics and postal services, digital infrastructure, and global collaboration.

With an area covering 2.1 million square feet and an investment of around AED3.2 billion, Dubai CommerCity aims to enable innovation trends like IoT, big data analytics, cloud solution and blockchain, allowing major regional and international players to collaborate and leverage local talent.