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E-commerce in Saudi Arabia is quite intriguing. Revenues in the Kingdom soared to USD 12.5 billion in 2023, marking a 12% year-on-year growth. With 98% internet penetration and a smartphone usage rate of 97.6%, Saudi Arabia has made its mark as a regional leader in the retail landscape.
The pandemic was a game-changer, accelerating adoption rates and boosting e-commerce by a record 74% during March and April 2020 as consumers turned to online platforms. Despite this incredible progress, e-commerce still accounts for a relatively small share of total retail sales in the region, leaving plenty of room for improvement.
With initiatives aligned with Vision 2030, Saudi Arabia is setting the pace for a thriving digital economy. The opportunities in e-commerce in Saudi Arabia are vast, making it the perfect space for enterprises to drive customer engagement and retention strategies!
The stark change was not only how e-commerce 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. With the advent of the pandemic and 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. During Ramadan 2023, the Middle East and North Africa (MENA) region experienced a 33% increase in consumer spending compared to the previous year. In the UAE, online shopping activity surged, with digital payment transactions growing by 8.5% during Ramadan. A survey by Toluna revealed that 91% of UAE consumers planned to give Eid presents, with 64% choosing to gift children, 52% parents, and 45% friends. Could that mean that one day Saudi Arabia might surpass UAE in the e-commerce growth?
Retailers must not miss out at a time when consumer optimism is growing. While we have understood the growth prospects of the region, let’s take a look at some areas of focus for e-commerce players – what should they keep in mind before starting up in Saudi’s online shopping world?
Saudi Arabians are still warming up to the various payment methods available online. So retailers need to create an approachable space through phone calls or WhatsApp support. The ability to track orders, a generous return policy, and free return shipping will reduce anxiety and boost customer loyalty.
Istizada claims that 44% of 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.
Retailers can opt for omnichannel loyalty to drive purchases on 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.
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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 that is well-translated. Poor translation could lead to a higher bounce rate.
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 spends 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.
Generosity is one of the principles in the month of Ramadan, and e-commerce consumers are curious about how the brand will follow this value of giving back to the community. The right kind of campaigning during Ramadan could help players gain more repeat customers.
Saudi Arabia is the most attractive market in the Middle East for an e-commerce retailer to venture into. Thanks to the young population that is eager to their gadgets for mobile shopping. The previous challenges of reluctance towards online payments have now dissolved due to the COVID-19 situation, pushing many consumers to permanently use e-commerce platforms.
As Saudi Arabia makes its mark as a regional e-commerce powerhouse, the opportunities for enterprises to build lasting customer loyalty are immense. With evolving consumer behavior, rising digital adoption, and initiatives aligned with Vision 2030, the Kingdom is primed for robust loyalty strategies that cater to its unique market dynamics.
Leveraging cutting-edge AI, Machine Learning, and Generative loyalty solutions, Capillary facilitates not just enterprises across Saudi Arabia but across the GCC to create robust loyalty programs.
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E-commerce in Saudi Arabia has seen a significant transformation, with a shift from traditional cash-on-delivery to cashless payments and an expansion in product categories beyond fashion and electronics to include groceries and home goods.
The pandemic accelerated the adoption of e-commerce, with consumers embracing online shopping more than ever before due to social distancing norms and the increased convenience of cashless payment options.
Saudi consumers have diversified their online shopping habits, moving beyond fashion and electronics to buy groceries and everyday essentials. Additionally, there’s growing confidence in digital payment methods, with many transitioning away from cash-on-delivery.
Ramadan 2023 saw record-breaking digital participation, with the MENA region experiencing a 33% increase in consumer spending. Digital payment transactions surged by 8.5% in the UAE, reflecting a shift toward cashless transactions during festive periods.
With rapid digital adoption, increasing consumer confidence in online payments, and a growing e-commerce infrastructure, Saudi Arabia has the potential to rival or even surpass the UAE in e-commerce growth in the coming years.
October 28, 2024 | 6 Min Read
As Saudi Arabia makes its mark as a regional e-commerce powe