Since the implementation of restrictions from last year’s outbreak, the digital commerce sector within the GCC has grown exponentially, with many more people, previously isolating or in lockdown, continuing to turn to digital platforms to purchase products and services.
Increases in online sales in the final two quarters of last year saw many logistics companies in Saudi Arabia adapt in response to the surge in demand. The steep increase in sales saw logistics firms rapidly streamline their operations whilst continuing to assist suppliers by offering additional support and services.
As a result of the unprecedented growth, considerable investments have been made into the fledgling sector with investors aiming to develop the Saudi market and support local talent. As the market evolves, the sector continues to improve, achieving greater supply chain efficiency and further developing its digital payment capacity.
Under the issuance of the Saudi Arabian Monetary Authority (SAMA), initiatives like Fintech Saudi have supported the e-commerce sector in the Kingdom. The support has changed the way companies and individuals use and move money and has seen the number of Fintech firms offering services in the country jump from 19 in 2019, to around 60 as of early 2021.
Director of Fintech Saudi, Nejoud Al Mulaik, considers 2019 / 2020 to have been a pivotal period for e-commerce in Saudi Arabia. He says, “Despite the challenges of COVID-19, we have seen progression in regulations, infrastructure and an increasing number of investment rounds in fintech companies, which have built a solid foundation to support the emergence of a growing fintech industry in Saudi Arabia that will contribute in a meaningful way to Saudi Arabia’s Vision 2030”.
The Kingdoms digital commerce revenue, across all products, is on track to reach $9.41 billion by next year, growing from just over $6 billion in 2017. The KSA market offers significant growth potential to online retailers, with user penetration of the digital marketplace expected to reach 92.5% within the next 5 years. Electronic goods are the most commonly sought-after products online in Saudi, with online fashion retailers seeing marked increases in sales. Although user penetration is not as considerable as that of some of its neighbors, pandemic restrictions have inadvertently encouraged a change in the shopping habits of many in the Kingdom.
Despite the concept of e-groceries being largely at odds with mainstream Saudi tradition, sales online have more than doubled during the crisis. Coupling this with the Kingdom’s commitment to spurring growth, retailers have been quick to spot the ripening market and have acted accordingly, investing in developing digital sales channels and ramping up functioning capacity.
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