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With strong double-digit growth in both markets, online sales of FMCG in the UAE now account for 4-6% of the total market size of AED 1.5 billion
According to data released by Statista, the UAE will be one of the fastest-growing e-commerce markets in the world in 2022, as global online sales continue to see a stunning boom.
The online share of FMCG sales grew by 68% in the UAE and 58% in Saudi Arabia, disrupting the course of the FMCG landscape.
With strong double-digit growth in both markets, online sales of FMCG in the UAE now represent between 4% and 6% of the total market size of AED 1.5 billion. In Saudi Arabia, online sales account for between 2% and 4% of the total SAR 1.8 billion FMCG market, according to NielsenIQ, a global leader in consumption measurement. This growth shows that e-commerce is now the main driver of future growth in retail.
According to data released by Statista, the UAE will be one of the fastest-growing e-commerce markets in the world in 2022, as global online sales continue to see a stunning boom. Since 2021, e-commerce spending in the UAE has grown by 1.10% as a percentage of GDP, and e-commerce is expected to account for 7.0% of total retail spending by 2022. Statista predicts that e-commerce spending in the UAE will increase by another 22.32% by 2022, with online sales expected to exceed US$8 billion by 2025 from US$5 billion in 2021.
The UAE’s e-commerce market is expected to reach $9.2 billion by 2026, up nearly 92 percent from 2021, as online sales continue to soar, according to a study by the Dubai Chamber of Commerce. The study, based on Euromonitor data, also predicts that e-commerce’s share of total retail sales will reach 12.6% by 2026. Investments flowed to the industry’s infrastructure, the study said.
In its report, NielsenIQ noted that the online share of global FMCG sales has been growing, strengthened during the Covid period in 2020 and 2021, and even increased in mature countries.
“While hypermarkets and supermarkets are facing a drop in visitation frequency this year, the online channel is clearly a must-see. If there was doubt in the past about whether shoppers would use online channels, the key questions now are how often they shop, how much they spend and how much they spend. How they are using online channels to supplement or even replace traditional brick-and-mortar stores. Mortar stores,” the report said.
“Online shopping penetration and sales are still growing strongly in the region, even post-pandemic. With this demand from consumers and the latest moves by retailers, we see a huge opportunity and clear signs of further growth ,” said Andrey Dvoychenkov, General Manager, Arabian Peninsula and Pakistan, NielsenIQ.
“Online is not an extension of the brick-and-mortar model, it’s a new model with different cost drivers and different shopper values,” Dvoychenkov said.
E-commerce in every FMCG sector has shown double-digit growth this year, from 39% in the “personal care” category in Saudi Arabia to 89% in laundry products. In the UAE, the frozen food segment has the fastest growth at 112%, while the home care segment has the weakest growth at 50% compared to the 2021 trend. In the UAE, fruit juice milk drinks are the first to grow online (176% vs. 202).
“This report brings clarity to the emerging and dynamic channels retailers and manufacturers can now accelerate their e-commerce activities in the Middle East and further improve the experience of online shoppers. E-commerce is growing and will continue to grow – That’s why retailers and manufacturers can’t ignore this trend and must invest to ensure they don’t fall behind,” said NielsenIQ.
— issacjohn@khaleejtimes.com
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