A recent study conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that the Saudi Arabian eCommerce market is projected to grow from USD 8 billion in 2021 to USD 18.7 billion by 2028. The market is anticipated to grow at a CAGR of over 12% over the course of next five years.
Increased Demand in Saudi Arabia’s E-Commerce Market
Saudi Arabia’s e-commerce business has experienced remarkable growth in recent years, with average annual sales witnessing a consistent increase. The Statista Digital Market Outlook indicates that during the coming years, the Saudi Arabian eCommerce market would continue to show an uptrend.
Fashion segment dominates the ‘By Type’ category, and is followed by Electronics & Media; Food & Personal Care; Toys, Hobby & DIY; and Furniture & Appliances. The wide array of international brands with multiple offers, and discounts have driven the growth in sales of the fashion industry in the Kingdom’s e-commerce market. In addition, the increasing demand for electronic and media products is proliferating. The rising number of real estate projects along with government measures is likely to accelerate the Furniture and appliances industry in the e-commerce market.
Customers can easily and securely make one-click purchases online thanks to advanced payment systems. With new payment options like e-wallets and blockchain, standard online card payments are improved as well. All of these can be connected to an expanding range of financial services, from customer loans to delayed payment plans. Business owners can also have a seamless experience thanks to technology that makes easy, practical solutions possible. An e-commerce platform with a payment gateway option is offered by international players like Shopify. In the Middle East, Meta Business Partners are developing localized, similar solutions where they provide an integrated “purchase” button with a payment solution on a store’s social media site.
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Through sophisticated distribution systems, purchases get to clients faster than ever before. Within ten minutes of making an online grocery purchase, German companies Gorillas and Flink deliver goods to cities. Customers can also select the most practical delivery location, such as their house, place of employment, or a particular pick-up site with intelligent lockers. A startup in Europe, Lockers can be used by Bloq for a variety of tasks, including product drop-off, temporary personal storage, and exchange locations.
Market players like Amazon are testing delivery from central warehouses to customers using autonomous cars and drones.
Customers can inspect things and ship them back to the seller at no additional cost if they choose thanks to hassle-free online return policies. Due to the centralization, reach, and complexity of the main online businesses, the level of after-sales care with e-commerce actually tends to be considerably higher than that of traditional merchants. Chatbots and other forms of technology, such as artificial intelligence (AI), improve the customer experience while cutting expenses. Since the vast majority of adults (75 percent) prefer texting to other types of connection with businesses, firms can successfully use chat platforms, which are used by millions of people every day, for after-sales communication and service.
Saudi Arabia’s E-commerce market is segmented on the basis of devices. In the expanded market, mobiles are the most demanded device and captured the biggest share in the market. Consumers are moving towards gaining knowledge, knowing trends, and more. Due to the rising penetration of smartphones on various e-commerce platforms, the market has witnessed a decline in shopping desktops.
Impact of COVID-19 on Saudi Arabia’s E-Commerce Market
As more consumers shop online as a result of the Covid-19 epidemic, e-commerce use has surged. According to a Mastercard poll, almost 77% of consumers in Saudi Arabia are purchasing online more frequently now than they did before the outbreak. According to a recent e-commerce study by Mastercard, the percentage of online shoppers in the kingdom exceeded the 73% average for the Middle East and Africa area. Despite its rapid growth, the market is still in its infancy. According to the survey, Saudi Arabia’s online sales made up only 8% of all retail sales in the country, far less than the 30% to 40% posted by the world’s top e-commerce countries and the global average of 18%. However, despite its infancy, the “tremendous” potential is already clear, and developing a strong e-commerce ecosystem in the next few years will bring several economic and social benefits.
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