Is WhatsApp the New Frontier for Small Business Growth?
The rapid evolution of digital commerce in recent years has presented SMEs with a wealth of opportunities to expand their reach and grow their businesses.
In the UAE, the percentage of people shopping on e-commerce websites is around 60 percent. However, a deeper look at the data reveals that e-commerce giants like Noon, Lulu, etc are the main beneficiaries of these platforms. These large tech companies have strong technical expertise, significant spending capacity and teams that can manage end-to-end e-commerce processes. This raises the question of how smaller e-commerce players can benefit from the same landscape.
The emergence of the WhatsApp Shop could be the game-changer, offering smaller businesses the advantages that could potentially surpass traditional e-commerce platforms. With over two billion users worldwide, WhatsApp is no longer just a messaging app.
The Customer Journey in E-Commerce
The customer journey in e-commerce starts the moment a brand acquires a customer. For smaller SMEs, this can be through ads or previous interactions with the customer. However, many e-commerce brands fail to realise that retaining customers on the platform is just as critical as acquiring them.
In Dubai, for example, with nearly 95 percent SMEs and a population of over 3 million, the competition for customer acquisition and retention can be fierce. For small businesses based in areas like Deira, Bur Dubai or International City, where most customers are localised, having a full-fledged e-commerce store and marketing it effectively is challenging. Instead, the focus should be on retaining and engaging customers using automated features and seamless in-system payment options.
The introduction of WhatsApp Shop (still with limitations in this region) has allowed businesses to sell their products directly through chat, enabling a seamless and personalised shopping experience. The trend is catching on fast, partly due to its appeal to customers who prefer the simplicity and immediacy of chat-based interactions over navigating complex e-commerce websites. For SME owners, this can also be a boon, as it facilitates new customer acquisition and can be prioritised for customer retention, repeat purchases and loyalty.
WhatsApp Business has also introduced rich media capabilities and workflows for ticketing and automated customer service solutions. In countries in Asia, where there are numerous languages, WhatsApp's advanced customer support and linguistic features help a lot of customers seamlessly get what they want which works for the multilingual Gulf countries just as well.
The UAE e-commerce market is expected to touch US$9.2 billion in 2026, based on data from Euromonitor International. About 70 percent of e-commerce transactions in the UAE are conducted via mobile phones as per Arab News. This makes the case for Whatsapp Shop even more stronger as we can see more people using Whatsapp for making basic transactions.
An interesting report that has been published by Dubai Commercity in 2023 also reveals that 40 percent of SMEs use social media platforms (including WhatsApp) predominantly as the major channel for customer interactions, 35 percent use traditional ecommerce websites and 25 percent use marketplace platforms to sell and distribute their products. This creates opportunities for smaller brands to capitalise on Whatsapp.
The Cost Factor
Setting up and maintaining a full-fledged e-commerce website can be costly, with development costs ranging from AED 5,000 to AED 50,000 depending on complexity. This is especially challenging for small businesses with limited budgets and can also confuse stakeholders who might not have the relevant technical knowledge to choose the right website platform for their company. In the case of WhatsApp shop these nitty-gritties can be greatly avoided
Global Reach and Market Expansion
With WhatsApp’s global reach, SMEs in UAE can also potentially access international markets that might have been too costly or difficult to tap into through traditional e-commerce channels. In a market like UAE where the access to Africa or Asia is much easier, a global reach can help SME owners through Whatsapp.
Understanding the Limitations of Whatsapp Shop
While the advantages are compelling, it’s also essential to acknowledge the limitations of WhatsApp Shop. Currently, it lacks some advanced features of traditional e-commerce platforms, such as in-depth analytics, inventory management and integration with third-party apps. Additionally, managing a high volume of customer inquiries via chat can become overwhelming without the right tools.
Despite these challenges, the continual advancements in WhatsApp's capabilities suggest a promising future for its Shop feature. Enhanced functionalities are expected as the platform evolves, further bridging the gap between chat-based sales and traditional e-commerce. Another challenge would be the pace at which Whatsapp Pay/Wallet and other solutions are getting embraced in the UAE market to enable seamless payments through the WhatsApp interface without leaving Whatsapp. With solutions by Etisalat and FAB available, the pace at which Whatsapp Pay is being embraced in markets such as UAE will also accelerate the pace of adoption of Whatsapp Shop.
Traditional vs Innovation
While WhatsApp Shop may not yet fully replace traditional e-commerce platforms, it offers a compelling case for SMEs seeking innovative ways to engage customers and optimise their sales strategies. The inherent advantages of personalisation, cost-effectiveness, ease of use, and global reach position WhatsApp Shop as an attractive alternative for SMEs. By leveraging these strengths, small businesses can offer a shopping experience that resonates with modern consumers who value convenience and connection.
The future of small business indeed looks brighter with WhatsApp Shop in the mix, and it’s a trend worth watching closely.
About the Author:
Shishir Surendran is a distinguished executive with extensive experience in digital product development and consulting. As the Founder and Director at Decimal Technologies, Shishir has spearheaded digital transformation initiatives, enabling companies to leverage cutting-edge technologies to achieve their business goals.
