State of Ecommerce in Saudi Arabia 

Despite a high Ecommerce readiness index, the Kingdom of Saudi Arabia never really experienced significant growth in online sales for the longest time. To put it into perspective, KSA’s Ecommerce penetration in 2017 was 1.4%, this was less than half of that of the US’ in 2005. But that narrative has been steadily changing in the last two years –  with eCommerce growth rate exceeding 32% and online sales in the Kingdom expected to hit 9 billion USD by 2025. 

According to a ystat report, by 2020, Saudi Arabia is expected to outpace UAE as the largest online retail market in the (GCC).

Until now, the protagonist in Saudi Arabia’s Ecommerce growth story has been its wealthy, tech-savvy population which ranks among the highest in the world in smartphone penetration (expected to reach 66.6% by 2022) and social media consumption (currently at 59%). However, while the initial traction was around the sale of high value and luxury items – primarily driven by the Kingdom’s affluent population – the trend has now spilled over to a larger audience and across a wider category. With the government going all out to improve digital payments, streamline licensing, and activation of affordable e-commerce enablers, the Ecommerce growth in KSA is expected to grow at an even faster pace over the next few years. 

  • KSA’s similarities to Emerging Ecommerce Markets

While starkly different in terms of Internet penetration, population demography, and infrastructure, the Kingdom’s Ecommerce growth shares certain similarities to emerging Ecommerce markets like India and Brazil. The commonality lies in the region’s preference for Cash on Delivery payment option.

64% of online shoppers in Saudi Arabia prefer to pay cash on delivery

This is primarily driven by two reasons – limited credit card penetration amongst key segments like females, youth and lower-socio economic demography and an overall mistrust in online payment systems. The other similarity with emerging markets is in the nature of category adoption – while the initial momentum was driven by electronics, fashion and travel, the next phase of Ecommerce growth in Saudi Arabia is expected to be driven by fast-moving goods, groceries and personal care items.


Consumer Behaviour in KSA

  • Digital Penetration in Saudi Arabia 

Among the GCC countries, Saudi Arabia boasts of some of the highest internet penetration and mobile usage. In 2018, 9074.81 percent of the population were internet users. This share is projected to grow to 96.44 percent in 2023. An impressive 88% of Saudis use the internet at least once a day and 59% of the population has a presence in at least one social media platform.  Around half of the Kingdom’s population owned a computer, although the majority said they preferred a laptop or tablet for connecting to the Internet. According to a survey by General Authority for Statistics (GASTAT), mobile phone usage in KSA hit 99.16% in 2018.  The average time spent online per day by consumers in Saudi Arabia is 6 hours and 45 minutes, which is 15 minutes more than the average American consumer.


Decoding Saudi Arabia’s Digital Consumer 

  • Demography, Motivators & Shopping Patterns : 

While the level of internet penetration and smartphone usage in Saudi Arabia is comparable to other countries in the GCC, the country is an outlier when it comes to consumer demographic.  With a GDP per capita of USD 20,028 and a median age of 29 years, the typical Saudi consumer is wealthy and tech-savvy. It’s also the only country in the GCC where the locals account for 72% of the population.

While Ecommerce adoption is rapidly increasing amongst all demographic segments, the fastest growing segments are females and millennials. This can be attributed to the recent relaxation of rules around driving, entertainment industry, licenses for gyms and fitness centers for women etc, all of which has resulted in more financial empowerment and employment opportunities for women. For Saudi customers, price and convenience are the prime factors for making an online purchase. For apparel and electronics, pricing was the major reason to shop online while groceries and personal care online sales were majorly motivated by convenience.

Shoppers in Saudi Arabia tend to lean more towards being Finders (consumers who have decided on the brand they will purchase before visiting a store/website). 

Around 74% of online shoppers in Saudi Arabia are 18 to 34 years old and mostly purchase electronics and household goods. The majority of Saudi consumers are skeptical of online shopping due to previous bad experiences, concerns about the online payment process, the lack of touch/feel factor and delivery deficiencies. Brands will need to deliver an omnichannel experience – by blending the best of online and offline worlds to win the Saudi consumer. 

  • Payment Preferences

Cash on Delivery and Digital Payments are popular payment modes amongst females and younger millennials, while credit cards remain the preferred payment option for older segments, and male shoppers. The low credit card penetration means 66% of transactions are made using cash on delivery. 

There is still a lot of reluctance for credit card payments amongst the Saudi population which is a barrier for ecommerce penetration. However, as mobile wallet technology and digital payment ecosystem improves, consumer adoption is expected to increase. This would allow Ecommerce players to offer broader delivery options and increase profitability.

  • Top Ecommerce Categories

The total ecommerce revenue in Saudi Arabia across all product categories is expected to hit 9 billion USD by 2025. Fashion is currently the leading product segment in the Kingdom and accounts for 1.91 billion USD sales, followed by Electronics, which generates 1.85 billion USD. However, in terms of category penetration, Electronics leads with 25%, followed by Fashion (23%) and Personal Care (18%). By 2025, electronics is expected to remain the most developed vertical with an online retail penetration of 33%,  followed by fashion and consumer appliances with an expected online retail penetration of 28%, while online spend on food and beverages is set to reach 1.3% in line, which is similar to US penetration levels today. While physical stores have a major advantage over online stores when it comes to groceries and fast moving goods, the category still holds a high growth potential in the future. 


Top Ecommerce Sites in Saudi Arabia

The following are top ecommerce sites in the Kingdom:


Factors Spurring Ecommerce Growth in Saudi Arabia

  • Government Impetus to Ecommerce

Ecommerce was recognized as one of the pillars of Saudi Arabia’s Vision 2030  under the National Transformation Program and is expected to contribute 80% of the retail sector by 2020. The Saudi Arabian government is planning an investment of over $100 billion in the development of logistics infrastructure to boost ecommerce growth in the region. The Vision 2030  national development strategy also states that the Kingdom aims to provide job opportunities for an additional million Saudis by 2020 in a growing retail sector that attracts modern, local, regional, and international brands across all regions of the country.

In July 2019, the Kingdom’s cabinet passed a new Ecommerce regulation that will dictate the terms, conditions, and liabilities between all entities involved in an online sale. The law is expected to enhance the reliability of online transactions, offer stimulus Ecommerce activities and protect the consumer against fraud, misinformation, and deception.

 Here’s a  brief summary of Saudi Arabia’s  new Ecommerce regulation from a retailer’s point of view:

  1. The Ecommerce seller or provider of services will provide consumers a clear and understandable statement on the contract’s terms and conditions
  2. The seller must provide all the steps involved for a consumer to purchase a commodity or service
  3. Ecommerce sellers should be transparent and upfront regarding service provider, description and prices of the services/goods. This includes any additional fees, payment and delivery arrangements and implementation. 
  4. The service provider/seller should submit an invoice to the consumer showing the price of the product or service.
  5. All sellers should submit information regarding his/her registered organization, the applicable professional title, the country in which this title was granted and any other information the Ministry of Commerce and Investment considers important for consumer protection.
  • Affluent, Tech-savvy Population

Saudi Arabia ranks in the top 20 richest countries by spending power, according to the World Bank and the region’s youth are extremely tech-savvy and heavy users of social media. The internet and smartphone penetration are critical components of the ecosystem which will accelerate ecommerce growth. Also, they play a crucial role in the research, discovery and purchase lifecycle of ecommerce. 

  • Socio-economic Reforms 

Prince Mohammed has made several economic changes, mostly aimed at reducing the country’s dependence on oil revenue. He has also brought in several socio-economic reforms like dismantling the strict controls over women like lifting the driving ban, and allowing women to study at university, undergo surgery or get a job without the need for a guardian. These reforms around empowering women will likely have an impact on Ecommerce sales and growth in the region as it opens up a whole new segment of customers.


Opportunity for Retailers

  • Higher Basket Value

According to a report by Bain & Company, the Average Basket Value for consumers in Saudi Arabia ($150) is similar to shoppers in the UK, US and China, however, the frequency of purchase is less frequent.

  • Rise of Digital Payments 

Online and digital payments were part of the Vision 2030 reform plan and the Kingdom expect to achieve an e-payment target of 70 percent by 2030. In this regard, the Saudi Arabian Monetary Authority (SAMA) had been encouraging electronic payments and settlements in order to reduce the reliance on cash. Over the last two decades, SAMA has introduced several digital payment systems like Saudi Arabian Riyal Interbank Express and the online bill payment portal SADAD. Mobile wallets have been gaining traction in the region, with global tech players, telecom operators and local banks rolling out solutions and driving merchant and user adoption. Apple Pay was introduced in the Kingdom at the beginning of 2019, increasing the choice of cashless payment methods available to Saudi consumers.

  • Bricks to Support the Clicks

Saudi Arabia has a robust offline retail sector that online retailers can leverage for a great omnichannel play. This complementary nature of retailing where brick and mortar stores are supplementing online retail will negate trust issues around payment, product quality and delivery.

  • The Disparity in Category-wise ecommerce Sales

There is a major variance in maturity levels and volume of sales amongst product categories in KSA. While apparel, and electronics have almost comparable sales to that of developed markets, grocery and fast moving goods are lagging far behind. This indicates a significant headroom for growth across categories.

  • The resurgence of the Economy

The economic recovery, supported by higher oil prices and other internal social changes like expanded women’s rights, are further expected to have a positive impact in shaping consumption and market dynamics in the coming years.  Brands that can crack economies of scale, and provide value-add or greater convenience, will reap the rewards.

  • Open Market

Since the eCommerce market in Saudi Arabia is still in its nascent stages, it’s the perfect time for new entrants. This is especially true in emerging product categories like grocery and appliances where there are no clear dominant players.

  • Social Commerce

Consumers in Saudi Arabia are active social media users, with Facebook, Twitter and Instagram ranking among the ten most visited websites in the country. As a result, all major retailers, as well as independent sellers use these platforms for advertising and promotional activities. Between one-third and one-half of online shoppers in Saudi Arabia made purchases from social media sites, according to a survey from early 2017 cited by


Key Takeaways  

  1. Ecommerce has been growing at an impressive rate in Saudi Arabia, thanks to rise of digital payments and allowing key segments like females and youth higher accessibility.
  2. Discounts and offers are the primary factors that entice shoppers towards Ecommerce platforms. This is especially prevalent for products like Electronics and Fashion.
  3. Saudis are increasingly purchasing small value, fast-moving goods like personal care and groceries from online stores. However, retailers must focus on speedy and timely deliveries to capture loyalty and business growth in this segment.
  4. Retailers need to be cognizant about how Saudi Arabian consumers behave differently depending on the audience segment, product preferences and categories. For instance, groceries and electronics see higher impulse-driven purchases while apparel sales are premeditated.
  5. Personalization and offline customer engagement will be a critical factor in influencing purchase decisions and brand loyalty
Dominic Machado