The MENA e-commerce market is amongst the fastest growing in the world with the growth being predominantly led by the GCC region. Amongst the strongest contenders on that front is Saudi Arabia. Fueled by its dominantly young and tech savvy population, Saudi Arabia is well-positioned as a great platform for exploring omnichannel opportunities.
KSA e-commerce landscape in a nutshell
Backed by its young and tech savvy population, Saudi Arabia is ideally positioned to witness growth in e-commerce. In fact, what initially started as a trend that is mostly exclusive to a more affluent segment is slowly becoming adopted by a wider and less affluent audience.
The proliferation of e-commerce in the country was in large part assisted by the advent of cash on delivery as a payment option. With the limited number of credit cards among key target segments (namely females, the youth, and lower socioeconomic classes), the adoption of the cash on delivery payment model has facilitated the growth of e-commerce in the Kingdom.
That being said, the current online payment infrastructure in the country has also been witnessing changes characterized by the emergence of various digital payment means. Players like PayPal and CashU offer shopper easy and secure payment options further facilitating e-commerce for the eager Saudi e-shopper.
People are also embracing e-commerce due to cost and time implications. For the savvy shopper, online channels give access to a world of offers and promotions that make online platforms a more appealing option when compared to instore channels. Not only that, but e-commerce also provides them with the convenience of shopping at the comfort of their own homes at whatever time that best suits them.
On the other side of spectrum, there are still some inherent challenges that stand in the way of the growth of online shopping in the country. Many are still weary about the trustworthiness of online channels especially when it comes to their portrayal of their offerings online. This is especially cumbersome due to high delivery fees and the difficulty of the return process associated with online purchases. Additionally the heavy reliance on postal addresses when it comes to the delivery of goods presents itself as an issue. With that in mind, the current implemented system makes it more difficult to get products to consumers quickly and efficiently – further hindering e-commerce especially in situations where urgency plays a crucial role.
As a result, online shopping is more popular in shopping occasions where urgency is not a main concern. Shoppers are resorting to online channels in situations where speed is not a priority – and the quest for a good deal justifies a delay in the product acquirement. Furthermore, with shoppers in Saudi following a premeditated approach to brand choice both offline and online- it also becomes increasingly more important for e-retailers to be comprehensive in their brand offerings.
Finally, while the initial growth of e-commerce was driven by the purchase of specific categories, such as fashion, online travel and accommodation bookings, and specific high-ticket items, the next drivers of growth will be everyday items such as groceries and personal care products, which are the focus of this report.