ANALYSIS: E-com - the new battleground
SEE ALSO: Logistics of an e-commerce start-up
Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the Dubai Airport Freezone Authority (DAFZA), announced a new freezone for the e-commerce sector in November.
Called Dubai CommerCity, the new freezone joint venture between DAFZA and wasl Asset Management Group will be located in the Umm Ramool area of Dubai, spread across 2.1-million square feet.
It is an expensive and highly visible stake in the ground as the logistics sector in the region prepares for battle over a share of the region’s e-commerce market, which is expected to reach USD 20 billion in 2020.
“The convenience and access in terms of choice is what is driving the explosive growth in e-commerce,” said Anass Boumediene, co-founder and co-CEO of Eyewa, a UAE-based e-commerce platform. He was speaking at the Leaders in Logistics 2017 conference, held in October. Another e-com executive at the event, Mumzworld.com co-founder and partner Leena Khalil, added that the growth in e-commerce was also a result of the region catching up with more developed markets.
“I think the region has a lack of retail space, it seems like we’re a consumer driven economy, but our retail space per capita is actually lacking,” she said. “In Saudi the retail space per capita is a fifth of what it is in the UAE, and in e-commerce total spend compared to brick and mortar, we’re far lower than the rest of the world, there is a lot of room for growth and especially when it comes to essentials.”
The need is there then, and it’s creating demand, which a plethora of regional e-commerce companies are positioning to fill. The most famous of these brands is of course SOUQ.com, which Amazon purchased last year. The global online retail giant has since said it plans to establish a Dubai hub in the coming months.
Dubai CommerCity is strategically intended to promote Dubai’s position as a leading platform for international e-commerce and to support economic diversification and smart transformation strategies, DAFZA said in a statement. Put more simply, it is intended to help e-commerce platforms and their logistics service providers to succeed.
Dubai CommerCity will be located near the Dubai International Airport, and will be well-connected to major local and national highways, providing direct access to market in last mile delivery for e-commerce stakeholders in the MENA and South Asia regions.
Dubai CommerCity spans a total area of 427,000 square meters 207,000 square meters of which will be for logistics and warehousing. DAFZA says the freezone will offer world-class cargo and logistics services and an integrated and sophisticated infrastructure with easy access to land and seaports, enabling swift and efficient distribution and delivery of services.
“Dubai CommerCity will enhance the role of e-commerce as a key driver of Dubai’s sustainable economy. DAFZA will apply its leading experiences and services based on comprehensive studies on the future of e-commerce in the MENA region,” said Mohammed Al Zarooni, director general of DAFZA.