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B2B commerce in the UAE faces opportunities, challenges

One of the key hurdles lies in the economics of last-mile delivery

With the UAE’s e-commerce sector projected to grow from Dh27.5 billion in 2023 to Dh48.8 billion by 2028, the opportunity for B2B e-commerce is immense. Yet, the unique characteristics of B2B transactions — often overshadowed by the flashier B2C world — bring forth challenges that demand little scrutiny, an expert said.

One of the key hurdles lies in the economics of last-mile delivery. “Unlike lightweight consumer goods, many B2B electrical products are heavy and require specialized handling. Transporting these items efficiently, especially in areas with fragmented infrastructure, significantly drives up delivery costs. Despite the UAE’s world-class logistics network, the heavy-weight nature of niche products complicates the equation for achieving profitability,” said Vibha Thusu, Global Head of Marketing and Communications, Himel.

Another complexity is product customization. In niche markets, the one-size-fits-all model rarely applies. “Customization — ranging from tailored specifications to bespoke solutions — is often essential, requiring close collaboration between suppliers and buyers. While e-commerce can facilitate discovery and initial transactions, it struggles to fully replicate the depth of interaction needed for bespoke orders,” Thusu said.

Also, B2B relationships thrive on multi-touchpoint engagement. The decision-making process for high-value transactions often involves multiple stakeholders, in-person meetings, and a series of negotiations. “Unlike B2C’s streamlined checkout model, multi-layered interactions in B2B ecosystem are harder to digitize effectively,” Thusu said.

Lastly, pricing in B2B markets is far from straightforward. Variables such as volume discounts, contract terms, and project-specific requirements make standard pricing structures almost impractical. “E-commerce platforms must incorporate significant flexibility to manage these complexities, which can become resource-intensive and detract from their cost-efficiency,” Thusu said.

Despite these challenges, B2B e-commerce presents undeniable opportunities. The simplicity and convenience of online shopping, a hallmark of B2C, have seeped into professional buying behaviours. Decision-makers appreciate the ability to browse products, compare specifications, and track deliveries online, simplifying what were once labour-intensive processes.

“E-commerce platforms enable vertical distribution—an often-overlooked advantage. By creating digital avenues to sell a wider array of products to existing customers, businesses can strengthen their relevance to retailers. For example, an electrical supplier could cross-sell complementary products like circuit breakers, cables, or smart devices to the same client base, maximizing their revenue potential without expanding their geographic reach,” Thusu said.

This aligns with the UAE’s push toward digital transformation, driven by initiatives like Smart Dubai and the UAE Digital Economy Strategy. High smartphone penetration and secure digital payment options are further lowering the entry barriers for businesses to adopt e-commerce models.

For niche markets like electrical products, the key to sustainability lies in hybrid models that blend digital convenience with traditional touchpoints. “Technology should enhance—not replace—human interaction. For instance, e-commerce platforms can provide a repository of standardized offerings while allowing for bespoke consultations offline. Integrating advanced features like real-time inventory tracking, AI-driven recommendations, and customizable pricing tiers can address the sector’s unique demands without losing the personal touch critical to B2B relationships,” Thusu said.

Additionally, the UAE’s robust logistics infrastructure offers a foundation to tackle the last-mile challenge. “Strategic partnerships with key local distributers, coupled with investments in smart warehousing solutions, can help streamline deliveries of heavy-weight products. Amazon’s $104 million investment in enhancing grocery logistics highlights the region’s commitment to tackling logistical inefficiencies. B2B e-commerce players, such as Himel, are utilizing data analytics to fine-tune operations and enhance delivery performance,” Thusu said.

By analyzing purchase histories, product preferences, and client feedback, businesses can refine their offerings, improve customer retention, and build deeper trust. Such data-driven insights are not just a differentiator—they are a necessity in today’s competitive landscape, Thusu said.

The question of whether B2B e-commerce is financially viable for niche markets like electrical products has no one-size-fits-all answer. “While challenges like last-mile delivery costs, product customization, and multi-touchpoint engagement present significant hurdles, the benefits of digital adoption—ease of transactions, enriched customer value propositions, and vertical distribution — cannot be ignored,” Thusu said.

For businesses willing to innovate and adapt, B2B e-commerce offers a pathway to sustained growth. Hybrid models that blend digital efficiency with traditional relationships can provide the flexibility needed to meet the unique demands of niche markets. Strategic investments in logistics infrastructure, data analytics, and scalable platforms are key to overcoming the sector’s challenges.

As the UAE continues to embrace its vision of a digitally enabled economy, the growth of B2B e-commerce will likely mirror the success of its B2C counterpart. “Businesses that act now, taking a thoughtful and forward-looking approach, can unlock the full potential of e-commerce in the B2B ecosystem. The future belongs to those who can strike a balance between innovation and practicality while keeping their customers at the center of every decision. At Himel, we’re committed to driving innovation and delivering exceptional value to our customers. By leveraging the power of technology and human expertise, we’re shaping a more efficient and sustainable future for the electrical industry,” Thusu said.