eCommerce growth is breaking records worldwide, and Saudi Arabia too, is getting hold of it slowly and steadily. So, will the online retailing be the new normal for Saudis? What are the latest trends and opportunities as an e-commerce retailer of Saudi Arabia must keep watch? Let’s peekaboo.
Known to be the third-largest in terms of population in the Middle East after Iran and Iraq, Saudi Arabia is home to about 34 million inhabitants. It also holds the second-largest position in terms of the internet user population having a penetration rate of 73.5%, which is expected to hit 91.2% by 2024. It even tops in terms of smartphone penetration rate that is 65.2% right now. Saudi has about 84% of the country covered by urbanized people who have good access to super-fast internet connections. Moreover, a majority of its population are rich, young, and tech-savvy that makes it the most eligible market for e-Commerce offering a huge potential for industry players.
Ranked among the top 20 richest countries by spending power, Saudi is pretty soon going to become an eCommerce hub not just because of its people’s high-spending potential but also due to its government’s going all out to improve digital payments, streamline licensing, and activation of affordable e-commerce enablers. Till now, modernization was the main reason for eCommerce growth in Saudi, but today, with the COVID-19 pandemic that forced us all to stay home, eCommerce witnessed a sudden boom as online shopping appears to be safe rather than going out for shopping risking lives.
Online shopping was not so popular among Saudis until last few years when it began to gain momentum. In fact, just a few years back only the Kingdom of Saudi Arabia (KSA) started to experience a steady shift from offline shopping to online shopping. In spite of being the largest among the GCC countries, KSA’s eCommerce penetration in 2017 was just 1.4% but times are changing, and now it has exceeded 32% and is expected to cross 9 billion USD by 2025.
Although growing at a slow pace compared to the global average (12.5% as opposed to 24.8% worldwide), eCommerce in Saudi is predicted to grab the position of top e-commerce market in the Middle East from the United Arab Emirates. If we take a look at the eCommerce segments then, fashion products lead online sales in Saudi Arabia until Corona arrived, as today, online grocery sales are riding high not just in Saudi Arabia but the entire world.
After fashion products which stood at US$ 1.91 billion in 2017, comes the electronics & media which amounted to US$ 1.85 billion in the same year, followed by furniture & appliances due to the growing number of real estate development. As soon as the government lifted the ban on the use of beauty products, online sales of personal care products sky-rocketed. Other than that, online purchase of games, consoles, music, film, event tickets and travel services doubled in the past few years taking online sales in Saudi to a whole new level.
By payment methods, Saudis depended on Cash on Delivery only (comprising between 69% and 85% of online orders according to various estimates) due to fear of cyber frauds. However, the situation has changed. Now cards and e-wallets such as PayPal, Amazon Payments, Google Wallet, Apple Pay, Mada Pay, STC Pay, and BayanPay are taking over accounting for 24% of all purchases.
By eCommerce marketplace, Amazon, eBay were the rulers in Saudi Arabia due to people’s craze of shopping foreign products. Now, 65% of all online purchases are made from websites based in Gulf Cooperation Council countries like Noon.com, based in the UAE but owned 50% by Saudi Arabia Public Investment Fund, Haraj.com.sa – an online auction website, Waadi.com, and others.
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Saudi online shoppers are frequent buyers. According to the Saudi Communications and Information Technology Commission, about 23% of e-commerce customers shopped online at least once every two weeks, while only 3% buy less frequently than every six months. Also, the smartphone leads among devices for online shopping in Saudi Arabia. This indicates that Mobile Commerce will soon become the hottest trend in Saudi Arabia by looking at the pace with which mobile shopping is happening right now.
Many local offline retailers experienced a great loss during the pandemic which has pushed the need for eCommerce solution provider in Saudi Arabia to get their online portal developed. Therefore, the trend of setting up online stores is going to spice up further in the coming days due to cut-throat competition.
From brick and mortar to click and mortar
Saudi Arabia offline retail is the strongest but now with many local retailers opting for online presence. Omnichannel commerce has a good scope.
Also Read: Why Middle East Entrepreneurs Must Make Their Appearance in the eCommerce Market?
New and wide customer reach
Since eCommerce in Saudi Arabia is still at its growing stage, it is the best time for those planning to tap into its eCommerce market as not only the government is welcoming and issuing licenses for it but also the demand from Saudis for online groceries and appliances are increasing day-by-day.
Saudis were found to spend on an average of 2 hours 55 minutes per day on social media. There are nearly 19 million social media users having a Facebook account followed by Instagram, Snapchat, etc. While 88% of the total – 21.2 million people use WhatsApp. Therefore, Saudi retailers must not miss the chance of social commerce and make use of these platforms for advertising and promotional activities as between one-third and one-half of online shoppers in Saudi Arabia make purchases from social media sites, according to a survey from early 2017 cited by yStats.com.
The economic recovery post-pandemic
We all very well know how the world economy has affected due to the COVID-19 infection. For Saudis, the two major operations oil export and offline retail business which make the most of the economy came to halt during the lockdown, causing a disruption in the economy. Hence, now is the time for investing in the Saudi eCommerce market.
Ecommerce in Saudi Arabia is growing at an impressive rate due to the rise of digital payments, improved logistics, high internet penetration, etc. The Saudis are open to new markets and with the government allowing the eCommerce sector, the time is ripe for those eyeing in it now. The future of eCommerce is Saudi is only going to rise further and hence you better approach an eCommerce app development company in Saudi Arabia like MobiCommerce – who is gaining popularity in the entire Middle East for its eCommerce solutions, to get your online presence developed for Saudi market as soon as possible.
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