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Current State of E-commerce in Saudi Arabia

Updated: Aug 23, 2019

The Saudi E-commerce market is undergoing a major shift as the participation of all stakeholders across ecosystem such as buyers, sellers, regulatory bodies, technology providers and payment providers has increased at a fast pace considering the available opportunities and steps taken to make the foundations strong for further market development. Growing investments in digital infrastructure, acquisitions and several government initiatives are propelling the E-commerce in the Saudi market. In addition, the evolution of traditional retail market to a hybrid model by adoption of new digital capabilities is likely to accelerate the online retail growth further.

Following the global trends, Saudi E-commerce ecosystem has equally evolved in recent years to offer great opportunities within the country. In 2018, United Nations Conference on Trade and Development (UNCTAD) conducted a global study to understand and benchmark the readiness of countries to engage in online commerce on the basis of four parameters:

1) Internet usage penetration: Percentage of total population using internet.

2) Secure servers per 1 million inhabitants: Secure internet servers per-one million of the population indicates the maturing digital infrastructure of the country/region.

3) Banking penetration: Account ownership data, sourced from the World Bank Findex survey, which is carried out every three years.

4) Postal reliability: Postal reliability reflects the strength of logistics system which is a major pillar in the success of e-commerce in any country/region.

The UNCTAD E-commerce Index measures an economy’s preparedness to support online shopping. The 2018 study covered 151 economies across the globe. Saudi Arabia was listed among the top ten developing economies in that index and listed in position 52nd among all counties.

Looking at the Saudi buyers shopping pattern, it is observed they are generally using a combination of offline and online channels for their purchases. Considering the online shopping scenario by product category - apparel, clothing and accessories lead the chart and data shows it has matured fast where people majorly prefer buying them online. Other major growing categories are, personal care products, luxury items and travel segments. Grocery, home furnishing, smart phones, tablets and electronic appliances are yet to take off majorly and lies at the bottom of the chart as most people prefer buying these items in stores after having a good look and feel of the product.