The UAE e-commerce landscape is witnessing a surge in the influence of loyalty programs. While constituting just 30% of the overall online consumer base, online loyalty program members drive almost 50% (>$5.5 billion) of the UAE’s online retail market.  

This highlights the importance for e-commerce businesses to strategically design their loyalty programs to capture a larger share of wallets from consumers. Well-designed Loyalty Programs become the smarter avenue for e-retail & omnichannel players to win.  

Read on to find more. 

Loyalty Programs have now become an important decision criterion for UAE consumers, with 3-out-of-4 consumers subscribing to them

Loyalty Programs have now become an important decision criterion for UAE consumers. This points to a maturing digital ecosystem in the UAE, where experience is increasingly becoming important, and loyalty is becoming a key lever. In a competitive landscape where convenience and a large selection of products no longer offer any differentiation to a retailer, loyalty programs allow them to carve out a niche with customized offerings. 

Discounts + Free Delivery are the top 2 reasons for adopting loyalty programs 

Consumers seek benefits such as free delivery and attractive discounts from a loyalty program because these incentives directly address two of their primary concerns: cost savings and convenience. These benefits create a sense of value and reward for consumers, encouraging repeat business and increasing customer retention. 

Online loyalty program adoption has doubled across Beauty & Personal Care, Food & Grocery, and Electronics! 

• With electronics being the most penetrated category across all of the e-commerce In UAE, loyalty programs have become an attractive avenue for online shoppers to gain access to the best deals and early access options for their favorite gadgets.  

• Increasing preference for top-ups and impulsive purchase patterns are key use cases for eGrocery loyalty users. The free delivery perk coming with most eGrocery schemes primarily drives this behavior. 

Quick Commerce Players & Online Horizontals have primarily driven this increasing adoption of online loyalty schemes 

UAE Consumers have now become comfortable with these platforms and trust them enough to shop regularly and thus sign up (and on many occasions pay) for the loyalty programs.  

Consequently, these players have doubled down on their loyalty programs to capture a larger share of the wallet from their existing customer base. 

Category Deep Dives into AOV and Frequencies reveal major shifts in Purchasing Behaviour driven by Loyalty Programs 

• With free delivery available to them, eGrocery loyalty program users feel comfortable using these platforms for a quick top-up for any items needed urgently. This is demonstrated by a >20% increase in eGrocery purchasing frequency among these consumers (vs non-loyalty users). 

• There has been a >50% increase in Average Order Values in online electronics purchases for loyalty users (vs. non-loyalty users). Purchases are shifting Online for select high-priced electronics items with attractive offers (e.g.: Smartphones, Home Entertainment, etc.) 

• Consumers are increasingly buying high-value BPC items (perfumes, lipsticks, facial creams, etc.) online in larger bundles. This has driven a >50% increase in Average Order Values in online BPC purchases for loyalty users. 

Thus, Well-designed Loyalty Programs become the smarter avenue for e-retail & omnichannel players to win 

Well-designed loyalty programs are the secret sauce for e-commerce success in the UAE. The significant impact on purchasing behavior, with increased frequency and higher average order values across various categories, underscores their effectiveness. 

 E-commerce and omnichannel players can gain a competitive edge and capture a larger share of wallets by strategically implementing robust loyalty programs.