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Online share of FMCG sales posts big surge in UAE

With strong double-digit growth across both markets, FMCG online sales in the UAE now account for 4-6 per cent of a total market size of Dh1.5 billion

Published: Mon 19 Dec 2022, 7:37 PM

By
Issac John

The UAE ranks as one of the fastest-growing e-commerce markets in the world in 2022 as online sales across the world continue to register a phenomenal boom, according to data released by Statista.

Online share of fast-moving consumer goods sales is growing by a phenomenal 68 per cent in the UAE and by 58 per cent in Saudi Arabia, disrupting the course of the FMCG landscape.

With strong double-digit growth across both markets, FMCG online sales in the UAE now account for 4-6 per cent of a total market size of Dh1.5 billion. In Saudi Arabia, online sales represent 2-4 per cent of overall FMCG space valued at SAR1.8 billion, according to data released by NielsenIQ, a leader in measuring consumption around the globe. The growth indicates that e-commerce has now become a key driver of the retail sector’s future growth.

The UAE ranks as one of the fastest-growing e-commerce markets in the world in 2022 as online sales across the world continue to register a phenomenal boom, according to data released by Statista. The UAE’s e-commerce spending as a percentage of GDP increased by 1.10 per cent since 2021, and in 2022 e-commerce is expected to account for 7.0 per cent of the total retail spending. Statista has predicted that the UAE would increase e-commerce spending by an additional 22.32 per cent in 2022, well on track to surpass $8 billion in online sales value by 2025 from $5 billion recorded in 2021.

A Dubai Chamber of Commerce study has revealed that the UAE's e-commerce market is expected to be worth $9.2 billion in 2026, up nearly 92 per cent from 2021, as the online sale continues to soar. The study, based on data from Euromonitor, also projected that the share of e-commerce in total retail sales will reach 12.6 per cent by 2026. Growth momentum within the UAE’s e-commerce sector is being supported by rising demand for online shopping and steady investment flows in the sector’s infrastructure, the study said.

In its report, NielsenIQ noted that online share in FMCG sales has been growing all over the world, reinforced during Covid times in 2020 and 2021 and increasing even in mature countries.

“While hypermarkets and supermarkets are facing this year a drop in visit frequency, the online channel is clearly one not-to-be-missed. If in the past one can have wondered if shoppers will ever use the online channel, now the critical question is how frequently they shop, how much they spend and how do they use the online channel to supplement or even replace the traditional brick-and-mortar stores,” said the report.

“Online shopping penetration and sales are still rising strongly in the region, even in the post-pandemic sequence. With this appetite from consumers and the latest retailers' initiatives, we are seeing big opportunities and obvious signs for further growth,” says Andrey Dvoychenkov, general manager of Arabian Peninsula & Pakistan at NielsenIQ.

“Online is not an extension of the brick-and-mortar model, it is a new model with different cost drivers and different values for shoppers,” Dvoychenkov says.

Every FMCG department has shown double-digit growth in e-commerce this year, going from 39 per cent for the “personal care” category to 89 per cent for laundry products in Saudi Arabia. In the UAE, the frozen food segment was the fastest growing at 112 per cent while the homecare segment showed the weakest growth at 50 per cent versus the trend in 2021. In the Emirates, juice milk drinks are the number one growing online (176 per cent compared to 202).

“With this report bringing clarity to an emerging and dynamic channel, retailers and manufacturers can now speed up their e-commerce activities in the Middle East and improve the online shopper experience further. Ecommerce is growing and will continue to grow – that's why retailers and manufacturers cannot ignore the trend and must invest to make sure they are not left behind,” NielsenIQ said.

— issacjohn@khaleejtimes.com