Go Back 11.05.2023 - Insights

Why You Can’t Ignore the $20 Billion Saudi E-Commerce Market: Here’s What You Need to Know

by Malak Mitch

Have you been thinking about expanding your e-commerce business and reaching out to new markets beyond your borders?

Well, let me tell you, there’s one market you definitely don’t want to overlook: Saudi Arabia.

With everything happening in the world economy, Saudi Arabia has a bright future when it comes to e-commerce, and there’s never been a better time to enter this market.

The Saudi e-commerce market has been growing at an impressive rate. In 2022, the market was worth $8.53 billion and is expected to reach $20 billion by 2027. (Source: Research & Markets).

So, if you’re ready to take your e-commerce business to the next level, then keep reading because, in this blog post, I am going to dive deep into the Saudi e-commerce market and show you why you should be paying attention to it.

Breaking Down the Factors Fueling the Growth of Saudi E-commerce Market

saudi e-commerce market

The size of the Saudi market is significant, with a population of over 34 million people and a high percentage of internet users.

This remarkable growth in Saudi e-commerce market can be attributed to several driving forces:

  • The increasing use of smartphones: Smartphones are becoming increasingly popular in Saudi Arabia, and this is making it easier for people to shop online.
  • The rise of online shopping: More and more Saudi Arabians are shopping online, and they are looking for a wider variety of products than are available locally.
  • Changing cultural attitudes towards shopping: Younger Saudis see online shopping as a more convenient and modern way to shop. As a result, the Saudi e-commerce market is growing rapidly, and it’s clear that this trend is set to continue.
  • The development of e-commerce infrastructure: The Saudi government is investing in e-commerce infrastructure, such as e-payment systems and logistics networks.

The Dynamic Landscape of the Market: Opportunities and Challenges Ahead

Let’s explore the opportunities and challenges in the dynamic landscape of the Saudi e-commerce market.

The biggest opportunities e-commerce businesses in Saudi Arabia have

The following are some of the growth opportunities and future trends in the Saudi e-commerce market:

  • The growing middle class: The middle class in Saudi Arabia is growing rapidly, and this is creating a larger pool of potential customers for e-commerce businesses.
  • The government’s support: The Saudi government is supportive of e-commerce, and this is creating a more favorable environment for e-commerce businesses.
  • The availability of payment methods: There are a variety of payment methods available in Saudi Arabia, which makes it easy for people to shop online.
  • The availability of logistics services: There are a variety of logistics services available in Saudi Arabia, which makes it easy for e-commerce businesses to ship and deliver goods to customers.

These are just some of the opportunities that business owners have when it comes to e-commerce in the Saudi market.

By taking advantage of these opportunities, businesses can tap into the growing e-commerce market in Saudi Arabia and reach a wider audience of potential customers.

The biggest challenges facing e-commerce businesses in Saudi Arabia

Saudi Arabia is a large and growing market with a lot of potential for businesses. However, there are also a number of challenges that businesses need to overcome in order to succeed in the Saudi market.

  • Lack of trust: There is a lack of trust among consumers in Saudi Arabia when it comes to online shopping. This is due to a number of factors, including the fear of fraud, the lack of transparency, and the lack of customer support.
  • High cost of shipping: The cost of shipping goods to Saudi Arabia is high. This is due to a number of factors, including the distance, the weight of the goods, and the customs fees.
  • Cultural barriers: There are some cultural barriers that can make it difficult for e-commerce businesses to succeed in Saudi Arabia. For example, some consumers in Saudi Arabia are reluctant to purchase goods online from businesses that they are not familiar with.
  • The competition: The Saudi market is becoming increasingly competitive. Businesses need to find ways to differentiate themselves from their competitors.

Despite these challenges, the e-commerce market in Saudi Arabia is growing rapidly. As the market matures, these challenges are likely to be addressed. As a result, e-commerce is expected to play an increasingly important role in the Saudi economy in the years to come.

saudi e-commerce market

Although all e-commerce categories offer immense potential in the Saudi market, these categories account for over 90% of the Saudi Arabian eCommerce revenue.

  • Fashion is the largest market and accounts for 33.9% of the Saudi Arabian eCommerce revenue and predicted to reach US$4,058.1 million by 2023 (ecommerceDB)
  • Electronics & Media is the second largest market and accounts for 26.9% of the Saudi Arabian eCommerce revenue (BlueWeave).
  • Food & Personal Care is the third largest market and accounts for 23.0% of the Saudi Arabian eCommerce revenue (ecommerceDB)
  • Toys, Hobby & DIY is the fourth largest market and accounts for 9.2% of the Saudi Arabian eCommerce revenue (ecommerceDB)
  • Furniture & Appliances is the fifth largest market and accounts for the remaining 7.0% of the Saudi Arabian eCommerce revenue (ecommerceDB)

The Kingdom Ambitious Plans for E-Commerce

saudi e-commerce market

The Saudi government’s Vision 2030 plan aims to increase the contribution of e-commerce to the GDP from 2% to 10%.

To achieve this goal, the government has implemented a number of policies to support the growth of e-commerce, including:

Streamlining the regulatory environment for e-commerce businesses

The Saudi government has taken steps to simplify the regulatory environment for e-commerce businesses.

This includes reducing the number of licenses and permits required to operate an e-commerce business, and making it easier for businesses to register and pay taxes.

Investing in e-commerce infrastructure, such as logistics and payment systems

The Saudi government has invested in e-commerce infrastructure, such as logistics and payment systems.

This has made it easier for businesses to ship and deliver goods to customers, and has made it easier for consumers to pay for goods online.

Drone delivery in Saudi Arabia

Drone delivery is a new technology that has the potential to revolutionize the way goods are delivered.

Drones can deliver goods to customers quickly and efficiently, and they can reach areas that are difficult to access by traditional means.

Drone delivery is still in its early stages of development, but it has the potential to have a major impact on the e-commerce market in the coming years.

Promoting e-commerce awareness and adoption among consumers and businesses

The Saudi government has promoted e-commerce awareness and adoption among consumers and businesses.

This includes educating consumers about the benefits of e-commerce and providing businesses with training on how to operate an e-commerce business.

Creating the Saudi E-commerce Council

The Saudi E-commerce Council is responsible for promoting and supporting the growth of the e-commerce sector in the country.

To achieve their goals, the council has launched a number of initiatives, including a national address system that will make it easier for businesses to deliver products to customers across the country.

Investing in e-commerce startups through the Saudi Venture Capital Company

The Saudi government has invested in e-commerce startups through the Saudi Venture Capital Company.

This has helped to support the growth of the e-commerce sector in Saudi Arabia.

Providing financial incentives to e-commerce businesses, such as tax breaks and grants

The Saudi government has provided financial incentives to e-commerce businesses, such as tax breaks and grants.

This has helped to make it more affordable for businesses to operate an e-commerce business.

The government’s efforts to support the growth of e-commerce have been successful.

The e-commerce market in Saudi Arabia is growing rapidly, and it is creating new jobs, stimulating economic growth, and making it easier for consumers to access goods and services.

Final Thoughts

If you’ve made it this far, it’s likely that you’re serious about expanding your e-commerce business and tapping into the potential of the Saudi Arabian market. And let me tell you, that’s a great decision.

The Saudi Arabian e-commerce market is booming, and there’s no reason to believe that this trend is going to slow down anytime soon, and you probably need to catch the upcoming wave of it.

In the end, it’s clear that the Saudi Arabian e-commerce market offers a tremendous opportunity for businesses looking to expand their reach and grow their customer base.

With the right strategy and a commitment to understanding the unique aspects of this market, you can unlock the potential of the Saudi Arabian e-commerce market and take your business to the next level.

Best of luck on your journey!