Saudi Arabia - Country Commercial Guide

Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.

Last published date: 2019-10-13

The Saudi Communications and Information Technology Commission’s (CITC) 2017 annual report revealed a notable growth in the eCommerce market in the Kingdom, reaching USD 7.92 billion.  Around USD 8 million purchases were made through electronic applications and websites on that same year, with nearly 70 million website hits per month.  User growth continues to expand at an estimated 9.3 percent per annum.  The report also shows that female users of the eCommerce market is higher than male users, with fashion constituting the largest segment of the market volume at USD 1.7 billion.  Particularly, the apparel segment dominates Saudi Arabia’s fashion market with many international brands present in the online space.  This is followed by personal care products and luxury goods with 44 percent of market share. [1]

ECommerce faces a number of challenges to growth.  Saudi consumers favor cash payments on delivery rather than credit card payments at the point of sale on the Internet.  Saudi eCommerce business-to-consumer (b2c) websites must overcome this challenge in order to significantly increase the eCommerce market share.  Payment gateways that encourage electronic payment are being developed to address this issue.  With Saudi Arabia being the second largest global market for spam e-mail, improved cyber security is necessary to engender greater consumer trust in eCommerce transactions.

Almost half of all Saudi Internet users report purchasing products and services online and through their mobile handsets.  The SAG has passed a number of regulations to control and monitor electronic transactions and combat cybercrime.  Additionally, the government has allocated close to USD 800 million to implement an e-Government Initiative.  In order to drive the e-Government Initiative forward, the YESSER program (meaning “to facilitate” in Arabic) was launched by the government.  The initiative is expected to develop the first National e-Government Strategy and Action Plan within the next five years.  The YESSER program’s role is to enable the implementation of individual e-government services by ministries and other government agencies and to provide best practice in implementing pilot services.

Having identified and noted the significant growth and the growing demand for this market, the SAG has undertaken several initiatives and strategies to further develop this market.  The main objective is to diversity the economy and boost GDP as these strategies will help in job creation, strengthen the local industry, generate investment, and foster entrepreneurship and innovation.  In order to achieve these objective, the SAG has to first address the following challenging in the eCommerce ecosystem, which fall under two main categories:

  • Increase demand and adoption

    • Consumer awareness and confidence

    • Connectivity and broadband coverage

    • Card payments for online shopping

  • Logistics ecosystem

    • Developing the supply side ecosystem

    • Retail industry transformation

    • E-payment ecosystem

    • Startup and funding ecosystem

    • Technology enablement

To make the most of this emerging opportunity, these aspects need to be advanced in order to encourage a paradigm shift in the traditional retail sector, according to the CITC report.