A recent study reveals that loyalty programs significantly influence online shopping behavior in the UAE, with 75% of shoppers subscribing to various loyalty schemes offered by online marketplaces and companies across sectors.
Loyalty Program Adoption on the Rise
The adoption of online loyalty programs in the UAE has surged dramatically, doubling from 20% last year to 40% this year. According to research by RedSeer Strategy Consultants, these programs are a major factor for shoppers, with just 30% of high-value loyalty program members contributing approximately $5.5 billion, accounting for 50% of the country’s online retail revenue.
The study highlights that 55% of loyalty program members are motivated by discounts, followed by the convenience of free delivery (52%), cashback offers (42%), and early access to sales (35%). The widespread adoption of loyalty programs is evident, with 75% of UAE shoppers – three out of four consumers – subscribed to various loyalty programs across different sectors.
“As high as 76 percent of shoppers are currently members of UAE consumers’ loyalty programme memberships, while 20 percent remain outside of it and four percent exited,” stated RedSeer. “For 40 percent of the members, the loyalty programmes are most important for their purchase decisions,” it added.
Evolving Digital Ecosystem in the UAE
Industry experts suggest that these findings indicate the development of a mature digital ecosystem in the UAE, where experiential factors are becoming increasingly important, and loyalty programs play a crucial role in this evolution.
“Historically, price has been the key element for online shoppers. Now, we are increasingly seeing experiential elements becoming increasingly important,” said Sandeep Ganediwalla, a Dubai-based Partner at RedSeer Strategy Consultants, to Arabian Business. “The focus from players on loyalty and the widespread adoption is an illustration of this. This shows a maturing digital economy for the region.”
The study also notes that discounts and free deliveries are the top reasons for UAE shoppers adopting loyalty programs. Loyalty behavior is particularly pronounced in the e-commerce sector, with adoption rates doubling in the past year across grocery, electronics, and beauty and personal care (BPC) segments, though the increase for fashion products was less than 25%.
Loyalty Programs Drive Online Shopping
Q-commerce players such as Careem, Talabat, and Deliveroo Plus, along with online platforms like Amazon Prime and Noon VIP, have significantly boosted the adoption of loyalty schemes. “These players have doubled down on their loyalty programs to increase the share of wallet for consumers,” the study noted.
Consumers have grown comfortable with these platforms, trusting them enough to shop regularly and subscribe to, or even pay for, loyalty programs. The study also revealed shifts in purchasing behavior, with loyalty programs driving more online purchases of high-priced electronics like smartphones and home entertainment systems, as well as high-value BPC products such as perfumes, lipsticks, and facial creams. Over 50% of loyalty program members in the electronics and BPC categories now make their purchases online.
For grocery consumers, the prime reason for shifting to online shopping is the free delivery option, which facilitates easy top-ups, further highlighting the importance of convenience in loyalty program offerings.
