UAE Logistics/Supply Chain Industry Trends: Ken Research

Buy Now

Growing Government Support: The UAE remains the most active in attracting funding, with UAE-headquartered start-ups garnering 30% of all deals and 70% of total funding. This is attributed to continued govt. support, corporate venture interest and growing investor appetite for start-ups. Favorable legislation and government initiatives are keys to supporting the adoption of mobile wallets.

Dubai Government has committed to building a free trade zone specifically dedicated to e-commerce, Dubai CommerCity, split into three clusters. The three clusters are: (1) Business – home to modern landscaped buildings with Grade A premium offices; (2) Logistics – state-of-the-art dedicated and multi-client warehouse units with scalable pay-as-you-go pricing models; and (3) Social – housing restaurants, cafes, exhibitions and events.

Dubai Executive Council approved the Dubai eCommerce Strategy with a primary goal of with the aim of solidifying the emirate’s position as a hub for global ecommerce.

The objective is to attract more FDI in the ecommerce sector and increase the market share of Dubai-based firms in terms of local & regional distribution to reach AED 24Bn by 2022 through slashing business cost of ecommerce activities by 20%.

3PL Logistics Companies in UAE

UAE E-Commerce Logistics Market Overview

Challenges in UAE E-Commerce Sector: One of the reasons behind the relatively slow uptake of e-commerce in the country is the last mile logistics complexities. Same day delivery expectations demand a lot from e-commerce companies and due to infrastructure difficulties like the absence of street addresses and lack of penetration of courier services, delivery speeds get affected. Moreover, around 60% of the total logistic cost is spent on Last Mile Deliveries in UAE. Timely scheduling is crucial for effective deliveries as a customer’s unavailability to receive package despite multiple attempts, leads to increase in the operational costs. Growing expectations of replacement or refund of online orders is a challenge e-commerce companies need to tackle. Players should lay emphasis on strengthening reverse logistics channels, keeping a scope for managing incoming inventory at the fulfillment centre(s)/warehouses and quicker replacements.

Impact of COVID-19 on UAE E-Commerce Logistics Market: The UAE was one of the top-performing economies globally before the sudden outbreak of the new novel coronavirus in China. However, the pandemic has positively impacted the growth of e-commerce market in UAE. Digitalization was already becoming an emerging trend in the UAE, the onset of COVID-19 acted as a catalyst and accelerated the call to action. China has become a significant trade partner of the UAE amidst this global lockdown.

Revenues for brick and mortar retailers have also declined dramatically in recent months, prompting many stores to shift or expand their presence online, while also quickly building out their ability to process cashless and contactless payments. A prominent example includes the Dubai Mall’s partnership with Noon to create a virtual store to continue to engage with customers online. With increased customer use of various online channels, vertical and horizontal e-commerce platforms across certain categories – pharmacies, groceries, essentials, and many more – have witnessed a significant surge in sales. The region’s biggest online baby shop, Mumzworld, for instance, reported an 800% growth in demand from January to March alone. Other e-commerce platforms such as Amazon and Noon have also reported a considerable rise in e-commerce sales.

Analysts at Ken Research in their latest publication “UAE E-Commerce Logistics Market Outlook to 2025 – Driven by Growth in Online Shoppers along with Introduction of New Age Technologies by Logistics Players” observed that the e-commerce and e-commerce logistics market in UAE has a great potential to grow supported by emerging e-commerce players in the country. Covid-19 outbreak has further accentuated the growth of the market by shifting major retailers on online platform for sustenance in the market. UAE E-Commerce Logistics Market is expected to grow at a CAGR of 15.8% on the basis of number of shipments delivered over the forecast period 2020-2025.

Key Segments Covered