E-Commerce and the Changing Face of Retail Market

This article explores the impact of e-commerce on the retail market in UAE. It discusses the shift towards online platforms, lowering of costs, logistic challenges, and growth opportunities. The article also provides statistical data and expert opinions to support the arguments presented.

Running head: E-COMMERCE AND THE CHANGING FACE OF RETAIL MARKET
E-Commerce and the Changing Face of Retail Market
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1E-COMMERCE AND THE CHANGING FACE OF RETAIL MARKET
Table of Contents
1. Change of Supply Behaviour.......................................................................................................2
1.1 Shift of Organization towards E-Commerce Websites..........................................................2
1.1.1 Lower Costs....................................................................................................................3
1.1.2 Business Sustainability...................................................................................................3
1.2 Organizations making use of Technological Advancements.................................................4
1.3 Logistic Challenges...............................................................................................................5
2. Growth in the Retail Sector due to E-Commerce........................................................................7
2.1 Lowering of Prices and Increasing Competition...................................................................7
2.2 Digital Platform for Growth in Opportunities.......................................................................7
3. References....................................................................................................................................8

2E-COMMERCE AND THE CHANGING FACE OF RETAIL MARKET
1. Change of Supply Behaviour
1.1 Shift of Organization towards E-Commerce Websites
With the rise of internet technologies, the different traditional businesses are shifting their
trends towards the online platform. In the recent months, it has been seen that the UAE markets
have formed their major form of impact on the global map of e-commerce. The traditional
markets have made the massive use of internet technology for enabling warehouses to store their
goods before they would be shipped to the global markets (Mago & Trivedi, 2014). The retail
sector is shifting from the brick and mortar systems to the online platforms due to a range of
opportunities that are provided by the online platforms. The main reason for the increase in the
shift in business traditions based on the increasing of digital connectivity, rapid proliferation of
services and connected devices and the initiatives of the government based on adopting a digital
lifestyle.
(Fig 1: E-commerce Retail Sales in UAE within 2015-2020)
Source: (E-commerce | Deloitte Middle East | ME PoV issue 25, 2018)

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There are a number of UAE retailers such as clothing, mobile device sellers, medicare
services providers and many other that have started experimenting with the trend of shopping on
the internet platform. Based on the consideration of different ways, the use of e-commerce
websites and online shopping should naturally fit within the business environments of UAE.
They would be based on the high form of disposable income as UAE has a high form
infrastructure based on developed transport and logistics (E-commerce | Deloitte Middle East |
ME PoV issue 25, 2018). UAE has the highest percentage of smartphone penetration that is
ranked at 73.8 percent. UAE also holds the record of the highest population that has accessibility
to high speed of internet.
1.1.1 Lower Costs
With the rise of e-commerce websites and businesses, the suppliers within the market
have the capability of decreasing the managing costs of the inventory of goods. These could be
automated by them based on inventory management by making use of web-based system of
management. In an indirect manner, this form of systems could be helpful in saving the costs of
operation (Yaseen, Dingley & Adams, 2016). One of the major form of advantages about the
impact of e-commerce websites within the businesses is that they would be helpful for
decreasing the costs incurred over the business. Some of the other forms of costs that could be
reduced based on opting the facilities of e-commerce are – Personnel, elimination of travel costs,
marketing and advertising costs.
1.1.2 Business Sustainability
The rapid form of growth based on the growth of different forms of e-commerce websites
reflect the potential form of benefits for businesses based on increased sales, lowering of costs
and enhanced form of business sustainability. Though e-business websites help in providing such

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kinds of benefits, yet many traditional businesses would be reluctant for enhancing their
businesses to the e-business platform (Al-Somali, Gholami & Clegg, 2015). Most of the
traditional business in UAE make use of the e-commerce platform as it helps in providing
various kinds of opportunities in order to reach out to a vast number of users. This would help in
enhancing the sustainability of their firm.
(Fig 2: Business Sustainability based on E-commerce within UAE)
Source: (E-commerce in the UAE: is 2017 the year it finally takes off?, 2018)
1.2 Organizations making use of Technological Advancements
In UAE, the e-commerce is becoming a virtual trend in the recent times. This is due to
the reason that most of the population are making use of the internet platform to buy and sell
products. In a recent published report, it has been reported that UAE has evolved as the e-
commerce leader among the states of Gulf Cooperation Council (GCC). Vigorous internet usage

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and smartphone penetration within the markets of UAE have helped in playing an active role
based on enabling the growth of e-commerce websites within the region of UAE. In a recent
research done by Google, it has been revealed that the UAE leads the major form of global
smartphone market at 73.8 percent. The statistics based on internet usage shows a 91.9 percent of
the entire population has an easy accessibility to the internet.
(Fig 3: Shift of Business Organisation towards E-commerce Platforms in UAE)
Source: (Al-Somali, Gholami & Clegg, 2015)
Another report by AWOK.com in 2016 have showed that the online shopping trends in
UAE have increased by 80 percent. This is due to the reason that most of the people have made
use of their mobile phones to purchase different items from various online shopping websites.
From the various informative trends, it could be concluded that the UAE markets make use of
the various kinds of innovative technologies in order to propagate their products to a large
number of base of customers.

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1.3 Logistic Challenges
With the upcoming trends in the rise of e-commerce websites, it has also led to different
kinds of challenges, such as:
 Warehousing Challenges – The players of e-commerce face numerous challenges such
as maintenance of real-time inventory, lack of technical standards and quicker
replacement (Ghandour, 2015).
 Issues of First Mile Pick-up – Major e-retailers of e-commerce face challenges based on
picking up of products from several small and medium business.
 Complexities based on Last Mile Delivery – The expectations based on same day
delivery could not be met due to difficulties based on infrastructure. This includes the
lack of integration of courier services, absence of proper street addresses and experienced
delivery experts (Overcome Logistics Challenges of E-Commerce in Middle East, 2018).

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(Fig 4: Different Logistic Challenges in UAE Retail Markets)
Source: (Overcome Logistics Challenges of E-Commerce in Middle East, 2018)
2. Growth in the Retail Sector due to E-Commerce
2.1 Lowering of Prices and Increasing Competition
The industry of e-commerce is facing a major form of competition based on the growth
of e-commerce. Due to the advantages provided by the e-commerce platforms, the traditional
business have to compete in order to sustain within the market. These factors have led to the
falling of rents and major rise in the rates of vacancy. With the growth in the number of e-
business websites, the traditional businesses would have to majorly focus on bringing
promotions and reduce prices in order to entice customers (Hong & Li, 2017). They should also

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be able to open their businesses in new and proper locations that would attract people in
exploring new kinds of products.
2.2 Digital Platform for Growth in Opportunities
A high level of digitisation with the increased form of use of e-commerce platforms have
helped in majorly contributing towards the growth of economics. This has also led to the growth
in GDP of the economy of the Middle East countries such as UAE. Based on the analysis, it had
been indicated that the unified digital market would have the capability of contributing to 3.8
percent of GDP on an annual basis.

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3. References
Al-Somali, S. A., Gholami, R., & Clegg, B. (2015). A stage-oriented model (SOM) for e-
commerce adoption: a study of Saudi Arabian organisations. Journal of Manufacturing
Technology Management, 26(1), 2-35.
E-commerce | Deloitte Middle East | ME PoV issue 25. (2018). Retrieved from
https://www2.deloitte.com/xe/en/pages/about-deloitte/articles/we-are-25/e-
commerce.html
Ghandour, A. (2015). An Analysis of Factors Affecting Growth and Barriers of E-Commerce in
UAE.
Hong, G. H., & Li, N. (2017). Market structure and cost pass-through in retail. Review of
Economics and Statistics, 99(1), 151-166.
Mago, B., & Trivedi, P. (2014). EVIDENCE OF CUSTOMERS’PERCEPTIONS TOWARD
THE USAGE OF SOCIAL NETWORKING SITES AS E-BUSINESS MECHANISM IN
UAE. European Scientific Journal, ESJ, 10(16).
Overcome Logistics Challenges of E-Commerce in Middle East. (2018). Retrieved from
http://holisolscs.ae/2016/12/logistics-challenges-e-commerce-industry-middle-east/
Yaseen, H., Dingley, K., & Adams, C. (2016). Capturing the growth of e-commerce in Jordan
using a novel research approach. International Journal Of Management And Commerce
Innovations, 3(2), 811-827.

10E-COMMERCE AND THE CHANGING FACE OF RETAIL MARKET
E-commerce in the UAE: is 2017 the year it finally takes off?. (2018). Retrieved from
https://www.thenational.ae/business/technology/e-commerce-in-the-uae-is-2017-the-
year-it-finally-takes-off-1.620139