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The e-commerce miracle in Saudi
Saudi is on-track to overtake China ecommerce penetration
mohamed zaghoo
May 18, 2024
Sunday May.19, 2024
Hala Shakers,
Saudi is on-track to overtake China in e-commerce retail marketshare
If you have been following the tech scene in KSA, there is NO bigger story than the transformation the kingdom underwent in the retail sector. This might sound boring for those fixated on the next hype: either it be gen-AI models, drone-delivery,...etc. However, the reality is that in 4 years, digital penetration of online-retail went from 4% to an astounding 27% in 2023!
To put this into perspective, China’s e-commerce percentage of total retail, which is the world’s highest, is 27.6%. Saudi is on-track to take over China as one the world’s highest digital penetration of retail or online payments by 2025.*
Never mind that online transactions via the local debit network, MADA, were only made possible by late 2018-early 2019. This is probably one of the most remarkable achievements of the vision 2030, and a no small feat for the payments (fintech), logistics ecosystem. It is no wonder that most of the Saudi newly minted unicorns: Hungerstation, Jahez, Tamara, Tabby, soon-to-be SALLA are all the in the ecommerce/payments sector.
Highlights: In 2023, consumers in Saudi Arabia spent more than 500 Bn SAR in in-store shopping, and almost 136 Bn SAR online. If you are interested on where this money was spent, there is another post for that. But for now, this means that the average adult in Saudi spent more than 5,400 online, and 18,500 Riyals offline.
Despite the more Riyals spent offline, the average online transaction is 2.62 higher than offline ones.
Data compiled from SAMA annual Statistics reports
There is no denying that COVID was the great accelerant for this exceptional growth. However, the rapid change in consumer behavior is also remarkable. The whole retail market grows, by double digits for 3 consecutive years. Contrary to other developed markets, online shopping also increased in-store growth, especially in the clothing, footwear and furniture sectors.
Data compiled from SAMA annual Statistics reports
Takeaway💥
The current consumer trends shows no signs of abetting, especially as inflation stabilizes, last-mile infrastructure improves. Saudi’s penetration of ecommerce now leads the US, India, and a lot of major European markets.
We expect to still see double digit growth in online commerce for the next few years!!
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