Global payments technology company VISA reports that the GCC’s e-commerce sector is surging by high-spenders from Saudi Arabia and UAE.
According to the research, e-commerce industry generated around $2.5 billion in VISA cards payment volumes the previous year and is further expected to increase 25% by the end of this year.
This study was conducted with interviews from 1000 18-34-year-old Millennials and 34 years old and above non-millennials from GCC who provide untapped wealth opportunities. Out of this, around 40% came from the UAE and around 35% from Saudi Arabia.
The VISA Company expects credit cards to rise retail payments volumes by 2018 with 65% and 70% from UAE and Saudi Arabia respectively.
Average gross income
The average gross income is expected to climb $40000 in the UAE by 2019. In Saudi Arabia, it is projected to rise $18000 in the same period.
VISA points out that the Middle East millennials have been ranked high regarding travel-related spending, around $2888 compared with North American Millennial $2500 or with Europe’s $1297.
Social Media influence has been noted elevated in the GCC for making purchasing decisions. Users in UAE and Saudi Arabia regain the use of Social Media with importance as it pertains to their purchasing behaviour rather than for entertainment purposes.
The company further noted that around 76% of Millennials make purchases online and 55% pay bills online.- around 4.5 to 6.5 online are spent by users between the ages of 18 to 24 years. Another finding is that Millennials are a large, influential and increasingly affluent group, and are the fastest growing segment within the region. Other high-spending were on business travel with $699 and $585 for leisure travel both per transaction.
Cash towards Cards
In the UAE, credit cards are the preferred way of payment for all the main online categories. In Saudi Arabia, due to their popularity among younger millennials, prepaid cards are the preferred means of payment for electronics by 40%, travel for leisure by 44% and travel for business by 53%. Cash on delivery, however, remains the preferred payment method for clothing by 33% and takeaway food by 40% in Saudi Arabia, suggesting untapped opportunities in these sectors for card issuers and retailers, according to VISA.
Kriti Makker of Visa Performance Solutions, who undertook the study on behalf of Visa, said with a spending power two and five times that of their Middle East peers, millennials would be highly sophisticated consumers who have embedded technology into their lives, which has important commercial implications for areas like the development of loyalty programmes and the targeting of advertisements.
With approximately 80% of millennials in both the UAE and Saudi Arabia paying their electricity and water bills online, Visa’s research suggests this is a natural area for development, for instance by extending reward programmes and co-branded partnerships.
Car services company Uber is piloting a project where it is studying the feasibility of cash payments in the UAE. Around 31% and 50% of the population in UAE and Saudi Arabia are aged under 25 years, according to the Visa study.
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