Renub Research has recently released a new research study titled; “Saudi Arabia E-Commerce Market, Size, Share, Forecast 2023-2027, Industry Trends, Growth, Insights, Impact of Inflation, Company Analysis”. The Saudi Arabia E-Commerce Market is expanding at a CAGR of 20.87% from 2022 to 2027. The retail landscape in Saudi Arabia is undergoing a significant transformation as e-commerce takes centre stage. This shift is bringing about changes in the way consumers make purchases, leading to the emergence of novel customer experiences, the disruption of traditional business models, and the creation of growth opportunities for retailers of all sizes, as well as a new wave of e-commerce pure players.
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Due to the safety and convenience it offers, a vast number of customers have turned to online shopping, including those who were previously loyal to brick-and-mortar stores. As a result, e-commerce shoppers are now spending more frequently and in larger amounts, while a new cohort of consumers who were previously reluctant to adopt this channel have now embraced it. The Fashion, Food & Beverage and home-related product categories have witnessed the most rapid growth, although all other segments are also experiencing significant expansion.
The National Transformation Program (NTP) and Vision 2030 share a vision for multifaceted economic development, with each presenting substantial initiatives to support this objective. Key priorities include promoting economic diversification, boosting growth in the small and medium-sized enterprise (SME) sector, and nurturing innovation and entrepreneurship. Integrating the e-commerce industry into the NTP will further support these goals, adding momentum to the broader economic development plans.
As of January 2023, the number of internet users in Saudi Arabia reached 36.31 million, representing a 99.0 percent penetration rate among the overall population. In the same month, Saudi Arabia also boasted 29.10 million social media users, accounting for 79.3 percent of the total population. Furthermore, there were 42.50 million active cellular mobile connections in Saudi Arabia in early 2023, which equates to 115.9 percent of the total population.
Increase in Social Media and Smartphone Users has led to a rise in the demand for Online Fashion Purchases
In Saudi Arabia thriving retail market, fashion stands out as one of the major beneficiaries. Despite strict social regulations that govern dress and appearance, both men and women show a growing interest and purchasing intent for clothing, apparel, footwear, and accessories. The country’s young population, in particular, is driving this trend, contributing to one of the world’s fastest-growing retail markets. E-commerce represents the most significant opportunity for fashion, with numerous new online retailers and traditional brick-and-mortar businesses pursuing Omni channel strategies.
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The growth of the online fashion market can be further facilitated by strategic expansion through inorganic growth by existing market players, as well as innovative tools like 3D try-and-buy technology. E-commerce markets are expected to attract a growing customer base, with significant contributions from cities like Riyadh and Jeddah. As an example, a new digital fashion design program is being launched by the Saudi Fashion Commission in collaboration with the prestigious IstitutoMarangoni in Jan 2023.
Surge in Digital Payments can be attributed to Saudi Arabia youthful Population, with Two-thirds of them being under the age of 35
The e-commerce industry is experiencing significant growth, fueled by the increasing number of smartphones worldwide and high-speed cellular networks in most countries. This growth is expected to lead to a rapid increase in mobile transactions, providing a significant boost to the mobile payments market. As part of Vision 2030, Saudi Arabia aims to accelerate its digital economy and increase cashless transactions to 70% by 2025.
However, the country’s deep cultural traditions, particularly in local markets and souqs, have traditionally made it a cash-based society. Nonetheless, Saudi Arabia’s young and digitally-savvy population is rapidly changing payment preferences. With two-thirds of the population under the age of 35 and ranking third globally in smartphone usage with 24.2 million users, almost three-quarters of the population uses smartphones.
According to a recent study by the Saudi Central Bank (SAMA), electronic payments overtook cash as the most common payment method for the first time in 2021. Apple Pay and Samsung Pay are among the well-received payment services in Saudi Arabia, with a wide range of e-payment methods available. However, debit cards remain the most popular form of transaction in Saudi Arabia, with the highest acceptance rate of any payment system.
The Kingdom’s initiatives to promote a business-friendly and digital-first environment have led to a surge in the number of fintech companies, resulting in increased access to digital financial tools. The Ministry of Finance has unveiled a new strategy aiming to triple the number of fintech firms from 82 to 230 by 2025. These new startups will offer a broad spectrum of services to private, corporate, and government partners.
Key Company Analysis
The competition among companies in Saudi Arabia’s e-commerce market is intensifying. Key players in the market include Amazon, eBay, Emmar Properties, Namshi, Noon, Alibaba, and Jarir Marketing (Bookstore).
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