The UAE: when figures speak louder than words

Thanks to e-commerce in today's world, international business has been excessively enlarged and keeps on increasing its sizes, transforming its processes, improving efficiency and effectiveness. Businesses are rushing ahead in a chase of its own place on the rapidly evolving market. And the same striving show economies in the UAE and Dubai. In 2006, e-commerce was estimated at US$6.8 trillion, growing by more than 935 per cent from $657.0 billion in 2004. The report made by Arab Advisor Group in September 2007 shows that the valuation of e-commerce in UAE during 2007 was $1.16 billion (AED 4.3 billion).

In Feb 2008 Dubai Chamber conducted survey on implications, regulations, impact and future potentiality of the Dubai's e-commerce market in order to control it and share with information concerning the policy that will help to improve e-commerce practices and make the environment in the region/world more beneficial for e-commerce evolution.

And 332 companies responded to the survey, giving a response rate of 13.4 per cent from the selected sample.

So ecommerce survey results concerning activity and size distribution show that 44.8% of the respondents to the survey belong to the wholesale retail trade and repairing services sector, 19.4% to the manufacturing and electricity, gas and water industries, 14.2% to the construction, 6% to the transport, storage and communication sector, 6% to the social & personal services sector, 5% to the financial corporation sector and collectively 5.2% to the other sectors.

Though the use of the Internet in UAE is rather high (40% in 2006), large amount of companies do their business without Internet service. As the inquiry shows 43% of the responding companies prefer not to use the ecommerce. Such situation is explained by the Dubai's economy structure and by the prevalent part of small and medium companies in the selected sample of companies in retail wholesale and repair services, which are less involved in ecommerce.

And what about the use of e-commerce? The inquiry shows that the greater part of companies that deal with e-commerce uses it for more than one of its facilities. About 115 (or 64%) of respondents use it to receive orders. 52% uses it to place orders. And smaller part actually falls to electronic payments (30%) indicating that orders are made and received via the Internet. But it does not signify that transactions in terms of payment are frequent. Following placing orders, the second most used function of e-commerce in Dubai, is in identifying possible suppliers with 58% of respondents claiming to use this function.

Nevertheless electronic payment is the most common method used for e-commerce and 50% of responders use this facility. As in the UAE only two Internet providers offer their services, users have to operate through a local area connection with either DU or Etisalat. Wireless (Wi-fi) local area network that prefers 31% become commonly used in offices, cafes, shops and free zones throughout the UAE.

Nearly three quarters of respondents engaged in e-commerce in Dubai are assured in benefit it brings increasing the efficiency of commerce, reducing costs, increasing turnover, improving quality, improving market share and broadening circles of suppliers and customers.

A quarter of respondents engaged in trade have faced legal problems and security problems. This turned out to be inevitable consequences of the earlier rejection of closing deals on-line. Such poor service provision in Dubai ruin of business structure. A fifth of electronic traders cite regulations in Dubai as a major problem facing trade, while 12% claim that problems with the specification and quality of products and slow processing of electronic orders cause challenges and barriers to electronic trade.

Despite the problems faced by ecommerce, 67% of optimistic traders believe in future of e-commerce. And though 31% are somewhat optimistic and 2% of respondents are ‘somewhat pessimistic', benefits of e-commerce outweigh the constraints and problems that are caused.
Planning to reach optimal result ecommerce traders should focus their common forces on fulfillment of next recommendations:
Ecommerce practices in the UAE have to be upgraded to the level of international practices through international partnerships with giant providers.
Internet providers need to invest more on the quality of services provided and security issues in order to make online transactions efficient and safe.
Validity of online contracts and authentications need to be regulated and recognized to facilitate business deals.
Quality of products and services need to be monitored and controlled.