UAE & Saudi Arabia: E-commerce Spending Soars to New Heights
▼ Summary
– E-commerce is growing rapidly in the UAE and Saudi Arabia, driven by increased digital engagement and evolving payment habits.
– Cross-border e-commerce is significant, accounting for about one in six transactions, especially in sectors like travel and fashion.
– Online spending penetration is high in categories like food retail and restaurants but remains low for luxury goods, which are still purchased in-store.
– Seasonal events such as Ramadan, Eid Al Fitr, and Black Friday cause major spikes in search interest and transaction volume.
– Consumers show a strong preference for international e-commerce platforms, which dominate app downloads and active users in both countries.
The digital shopping landscape across the UAE and Saudi Arabia is undergoing a remarkable transformation, driven by shifting consumer habits and a growing preference for online transactions. A recent joint study by Google and Visa highlights how deeply e-commerce has penetrated these markets, reshaping not only how people shop but also where they choose to spend their money.
Fueled by rising digital engagement and evolving payment preferences, both nations are witnessing a surge in online spending. In the UAE, e-commerce made up half of all Visa purchase volume in 2024, a notable jump from 42 percent just two years earlier. Saudi Arabia also recorded steady growth, with online transactions climbing from 23 percent to 29 percent over the same period. While the UAE currently leads in digital adoption, Saudi Arabia’s expanding market signals considerable room for further development.
Cross-border shopping is another major force shaping the regional economy. Approximately one in every six transactions now involves international sellers. In the UAE, cross-border purchases represented 17 percent of Visa’s volume, while in Saudi Arabia the figure reached 15 percent. Travel agencies dominate this segment, accounting for more than half of all international transactions. Fashion is another key category, particularly in Saudi Arabia where 20 percent of online fashion spending goes to global retailers, far outpacing local merchants.
Spending patterns vary significantly by product category. In both countries, everyday purchases like food, groceries, and restaurant orders are overwhelmingly made online, with penetration rates exceeding 85 percent. Multi-category and fashion retail also show strong digital adoption. However, luxury goods remain an exception. Only 9 percent of high-end purchases in the UAE and a mere 3 percent in Saudi Arabia occur online, indicating that consumers still prefer in-person experiences for premium products.
Seasonal events play a crucial role in driving consumer behavior. Holidays such as Ramadan, Eid Al Fitr, and Black Friday trigger substantial spikes in search interest and spending. During Eid, fashion-related transactions surged by 136 percent in Saudi Arabia and 58 percent in the UAE. Black Friday sales pushed e-commerce volumes 44 percent above monthly averages, with spending increases of 31 percent and 36 percent in the UAE and Saudi Arabia respectively.
The demand for speed and convenience has given rise to quick commerce (Q-com), with ultra-fast delivery services gaining traction. Search interest in Q-com grew by 35 percent in the UAE during the first half of 2024, reflecting consumer expectations for instant gratification, especially for everyday items.
International platforms continue to dominate the app landscape. Nearly 60 percent of the top shopping app downloads in both countries came from global brands, which also accounted for significant shares of active users. This preference underscores the trust shoppers place in international retailers’ product range, reliability, and delivery performance.
Fashion remains a standout category for cross-border activity, with spending intensifying during summer travel periods. To remain competitive, local retailers must enhance mobile experiences, delivery speed, and return policies.
End-of-year festivities are also gaining prominence. Spending rose by 17 percent in the UAE and 29 percent in Saudi Arabia during the Christmas and New Year period, with beauty and luxury apparel categories showing particularly strong growth.
For businesses, the path forward involves adopting omnichannel strategies that seamlessly blend online and offline experiences. Key recommendations include aligning with cultural calendars, tailoring promotions to local seasons, and improving delivery and return processes. The use of AI and visual search tools is also becoming increasingly important, with technologies like Google Lens processing over 100 billion searches annually, many with commercial intent.
In summary, the UAE and Saudi Arabia are at the forefront of a digital retail revolution. Companies that prioritize cultural relevance, technological integration, and operational excellence will be best positioned to capitalize on the region’s expanding e-commerce opportunities.
(Source: Economy Middle East)
