The megatrend of ecommerce proliferation is visible across the world, and over the past year it has been booming in Middle East.
A 2016 study by Gartner suggests that only 15% of Middle Eastern businesses had an online presence. Online commerce contributes to only 2% of the total retail sales in the region. 10% of these online transactions are from the Gulf region and the rest are purchases that require international shipping. This can be attributed to a sense of reluctance and the inability to trust online transactions.
Even though the Middle Eastern trend highlights ample scope for growth in ecommerce retail, Saudi Arabia was known to have the second highest levels of internet, smartphone and social media penetration after UAE in the region. So Saudi was still ahead in the game. But much like all other global trends, the Saudi Arabian retail landscape changed in 2020. News reports from July 2020 suggested that ecommerce in the Kingdom posted a record growth of 74% during March and April 2020.
Changing Consumer Behaviour in Saudi Arabia
The stark change was not only how ecommerce sales shot up but also what was being bought. Saudi Arabians, who were using online platforms to buy fashion, beauty, and electronic products, took to the internet to buy groceries and home goods.
With the hesitancy towards online payment, Saudi Arabians were stuck with the cash on delivery option until 2020 came. Due to Covid-19 and the social distancing norms, consumers were forced to finally end the decade-long streak of cash on delivery usage and choose a cashless payment option. This shows a new-born confidence in the medium as many Saudi Arabians shopped online more than ever before.
The Kingdom has also seen the most digital Ramadan celebrations of all time. Ramadan 2020 caused more use of gadgets for both festive shopping and connecting with family, leading to a big leap in online sales in May 2020.This jump in online shopping is expected to stay. In a recent survey by the global consultancy firm Kearney Middle East, 69% of the respondents from Saudi Arabia confirmed that they would maintain their current shopping behaviour after the pandemic. On the other hand only 48% of UAE respondents answered yes to the same question. Could that mean that one day Saudi Arabia might surpass UAE in the ecommerce growth?
Opportunities: What Retailers Should Keep in Mind
Retailers must not miss out at a time when the consumer optimism is growing. The huge potential of ecommerce was already unlocked in 2019, when the Saudi government introduced a new ecommerce law that aimed to boost ecommerce activities and transactions. While we have understood the growth prospects of the region, let’s take a look at some areas of focus for ecommerce players – what should they keep in mind before starting up in Saudi’s online shopping world?
- Improving online transactions: Saudi Arabians are still warming up to the various payment methods available online. So retailers need to create an approachable space through phone call or Whatsapp support. Ability to track orders, a generous return policy and free return shipping will reduce anxiety and boost customer loyalty.
- Longer purchase duration: Istizada claims that 44% online shoppers in Saudi Arabia took more than a day to make a decision on their purchase. So with this in mind, brands need to have a remarketing strategy in place so that consumers do not bounce off to another seller. Online players can also focus on displaying popular products on their websites to help customers find what they are looking for.
- Localized websites: Even though English is prevalent in Saudi Arabia, a majority of the users prefer writing and reading Arabic on the internet. Arabic is also the 4th most used language in the world. So it is important to have an Arabic version which is well-translated. Poor translation could lead to a higher bounce rate.
- Social media promotion: Retailers can utilize the incredible opportunity of promoting their online stores on popular social media. Brands can run clever marketing campaigns directly where the target audience spend their time – Youtube, Instagram, Facebook and Twitter. Apart from this, brands can also include social media commerce in their selling strategy, where the entire shopping experience happens without the customer leaving the social media site.
- ‘Giving Back’ during Ramadan: Generosity is one of the principles in the month of Ramadan, and ecommerce consumers are curious about how the brand will follow this value of giving back to the community. A survey by the US Saudi Business Council shows that 57% of the respondents were more interested in a brand after finding out about its donation campaign. The right kind of campaigning during Ramadan could help player gain more repeat customers.
- Omnichannel loyalty: Retailers can opt for omnichannel loyalty to drive purchases in their online platforms. A suitable loyalty program can address challenges such as high bounce rate and cart abandonment, and brands can also introduce interesting schemes like gamification and free delivery for members.
Kingdom of Ecommerce: A Promising Future
Saudi Arabia is the most attractive market in the Middle East to for an ecommerce retailer to venture. Thanks to the young population that is eager to their gadgets for mobile shopping. The previous challenges of reluctance towards online payments has now dissolved due to the covid-19 situation, pushing many consumers to permanently use ecommerce platforms. With the ecommerce revenue projected to $8,697m by 2025, don’t miss this treasure hunt in the flourishing Kingdom of Saudi Arabia!