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Why is Saudi e-commerce still in its infancy? What are the necessary conditions for development?

source:Cross-border News 2021-12-10 17:22:52 8

According to a new report from the Boston Consulting Group (BCG), entitled “Saudi Arabia’s 50 billion riyal e-commerce opportunity”, the report highlights how Saudi Arabia continues to advance its 2030 vision and is driving e-commerce growth.



In 2020, online sales in Saudi Arabia accounted for approximately 8.0% of total retail sales, compared with 18% globally. This figure is also far lower than the leading e-commerce market where penetration rates easily exceed 30% or 40%.


Compared with some of the larger e-commerce markets in China, the United States, and the United Kingdom, Saudi Arabia’s e-commerce market is small in scale, but its huge potential is still in its infancy, but its huge potential has already emerged, and it will continue in the next few years. In 2010, a strong e-commerce ecosystem will bring many economic and social benefits.



From an economic point of view, the growth of retail spending nationwide in Saudi Arabia will become one of the most prominent trends. This trend is almost certain because more products are available to a large audience and foreign retail spending is also captured.


At the same time, the development of the e-commerce industry in Saudi Arabia will generate a large number of jobs requiring different qualification levels, including technical positions in management and technical work functions. Many jobs are attractive and provide viable employment channels for local residents in Saudi Arabia. At the same time, due to the low barriers to entry for professional participants, the booming e-commerce sector will support entrepreneurial activities.



Consumers are increasingly turning to online shopping, and e-commerce sales in all industries are soaring. Saudi Arabia is now more closely connected with the rest of the world than ever before, and Saudi consumers are also asking for a new relationship with brands. It can be seen that users in Saudi Arabia communicate with each other in creative ways, and enterprises of all sizes are using e-commerce to promote domestic and global growth.


In addition to using the existing ecosystem to carry out activities with limited investment, e-commerce can also promote entrepreneurship by providing effective market access for new consumer products.



The development of a diversified pattern of technology service providers will also promote the widespread adoption of technology solutions, and possible social impacts include the availability of goods and services in rural areas of Saudi Arabia, increased product delivery due to greater geographic coverage, and more Good consumer prices.


There are several necessary conditions for accelerating the development of Saudi Arabia's e-commerce industry:


1. Improve the quality and speed of transportation and delivery services, especially in urban areas outside major metropolitan areas

2. Incentive and promote healthy competition and innovation in the delivery field

3. Utilize advanced and extensive digital infrastructure and modern payment solutions through regulatory powers and changing customer concepts

4. Ensure the smooth flow of cross-border goods in accordance with Saudi Arabia’s strategic priorities

Create a system for cultivating entrepreneurship and local talents to cultivate the growth of local enterprises

5. Encourage the localization of global e-commerce, while promoting fair competition to help the development of domestic e-commerce in Saudi Arabia.


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