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E-commerce in Saudi Arabia and the SAR 50bn Opportunity

Saudi Arabia is the 25th largest market for e-commerce in the world. Given that its 35 million-strong population has only recently adopted e-commerce in the wake of the pandemic, it has the capacity to grow even further in the coming years.

With the move from the high street to online shopping, Saudi Arabia’s e-commerce industry has recently begun experiencing exponential growth. Business-to-consumer (B2C) spending now surpasses SAR 29.7bn annually, and with more Saudis accessing smartphones and the Internet than ever before, we can expect to see online sales increasing.

The country’s ongoing National Transformation Agenda – Vision 2030 – paired with rapid market evolution, is set to further propel e-commerce into the stratosphere. Due to the vision’s focus on economic diversification, the growth of SMEs and entrepreneurs within the kingdom has been unprecedented.

Saudi Arabia’s Key Growth Enablers

Several factors have contributed to the incredible growth of the kingdom’s e-commerce industry, including:

1. Saudi Arabia has one of the youngest populations in the world

Two-thirds of the Saudi population is under the age of 35, and this includes 37% that are under the age of 14. This particularly youthful population is highly active online, and their desire for more convenient and modern shopping solutions is propelling the move towards greater availability of local e-commerce.

2. Increased consumer acceptance fuelled by the pandemic

Saudi Arabia’s response to COVID-19 resulted in extended stay-at-home orders and curfews that heavily restricted the nation’s ability to shop at brick-and-mortar stores. But that doesn’t mean that the desire to spend went away – Saudis quickly turned to the e-commerce sector to meet their consumer needs. This forced companies who had long since neglected their online presence to suddenly ramp up their digital efforts and offer online purchasing and delivery options, which has now become the norm.

3. E-commerce investor growth

As part of their plan to diversify the economy, the Saudi government has encouraged regional and international retail investors to participate further in the e-commerce market. This investment push has encouraged smaller businesses to expand their capacity to accommodate the new demands of the evolving market. Furthermore, the tech investment landscape continues to remain buoyant, which has further propelled the sector.

4. e-Payment Solutions

A lack of viable online payment solutions previously held back the retail industry from developing its online presence, but this is no longer an issue. New and emerging players entering the e-payment market have enabled ecommerce further.

5. Delivery infrastructure

Just a few years ago, Saudi Arabia’s infrastructure inhibited large scale product delivery. The introduction of formal residential addresses and postcodes is a recent development, with infrastructure progressing rapidly. In 2021, Amazon announced their plan to locate six fulfilment centres and 13 delivery stations within the Kingdom. Meanwhile, Saudi’s courier, express, and parcel delivery market is expected to grow at a rate of 6.5% per year until 2026, which is further testament to the nation’s commitment to improving delivery infrastructure.

What Does the Future Hold for e-Commerce in Saudi Arabia?

Saudi’s booming e-commerce market is expected to evolve into a SAR 50 billion opportunity, according to a white paper published by BCG in collaboration with Meta. This future evolution will undoubtedly be supported by the digital marketing industry, which can assist businesses to navigate their move to the online sphere.

There are many innovative ways Saudi businesses can compete effectively and capture their market share. Q-commerce – “quick commerce” – is the logical next step for many local businesses aiming to succeed in the e-commerce market. With the growing popularity of local on-demand delivery apps, businesses can now get their products to customers faster than ever before.

Localised SEO strategies can be utilised by brands to get their websites seen by the right people, while digital advertising can open the door to entirely new markets that could not be accessed just a few years ago. Ever since the pandemic, young Saudis started spending significantly more of their time on social media, creating even more opportunities for digital advertisers to reach their key demographic.

By breaking down your digital advertising strategy to target social segments unique to the cultural landscape of Saudi Arabia, you can begin your journey towards establishing brand dominance in the e-commerce space.

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