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: 1/22/2020

The Saudi Communications and Information Technology Commission’s (CITC) 2018 annual report revealed a notable growth in the eCommerce market, reaching $7.63 billion.  Around $8 million in purchases were made through electronic applications and websites in 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 the rate of female users of the e-commerce market is higher than for males, with fashion constituting the largest segment of the market volume at $1.7 billion.  The apparel segment dominates Saudi Arabia’s fashion market with many international brands present online.  This is followed by personal care products and luxury goods with 44 percent of market share.

E-commerce faces several challenges.  Consumers favor cash payments on delivery rather than credit card payments at the point of sale on the Internet.  Saudi e-commerce business-to-consumer (b2c) websites must overcome this challenge in order to significantly increase their 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 create greater consumer trust in e-commerce transactions.

Almost half of all Saudi Internet users report purchasing products and services online. The SAG has passed several regulations to control and monitor electronic transactions to combat cybercrime.  Additionally, the government has allocated close to $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.  This program will enable the implementation of individual e-government services by ministries and agencies and provide best practices in implementing pilot services.

The SAG has undertaken several initiatives and strategies to further develop this market.  The main objective is to diversify the economy and boost GDP as these strategies will create jobs, strengthen local industry, generate investment, foster entrepreneurship, and spur innovation.  To achieve these objectives, the SAG needs to address the following challenges in the e-commerce system. These fall under two categories;

  • Increase demand and adoption
    • Consumer awareness and confidence
    • Connectivity and broadband coverage
    • Card payments for online shopping
  • Logistics ecosystem
    • Developing a supply side ecosystem
    • Retail industry transformation
    • E-payment ecosystem
    • Startup and funding ecosystem
    • Technology enablement

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

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.