Riyadh’s E-commerce Sales Skyrocket to SR14.11 Billion in February
In a groundbreaking revelation, the Kingdom’s central bank disclosed that Saudi e-commerce sales using Mada cards surged to an impressive SR14.11 billion ($3.76 billion) in February, marking a whopping 25 percent annual increase.
The E-commerce Boom: A Shift Away from Cash
The surge in e-commerce transactions includes online shopping, in-app purchases, and e-wallets, excluding transactions by Visa, MasterCard, and other credit cards. The number of e-commerce transactions also witnessed a staggering 44 percent year-on-year increase, surpassing 84 million in February.
Post-COVID-19, consumer behavior has shifted significantly, fueled by regulatory reforms, robust internet infrastructure, and the continuous advancement of sophisticated e-commerce businesses. These factors have been instrumental in driving the shift away from traditional cash transactions.
The Rise of Online Sales in Saudi Arabia
Over the past three years, online sales in Saudi Arabia have seen a remarkable surge of nearly 60 percent across various categories, with significant growth observed in media products, apparel, and footwear segments. The average spend per e-commerce user in the Kingdom has also surged by over 50 percent.
The American International Trade Administration projects continuous growth, estimating Saudi Arabia to reach 33.6 million e-commerce users by 2024, reflecting a 42 percent increase from 2019. Factors contributing to this growth include the country’s high smartphone penetration rate, mobile broadband subscriptions, and ranking as the 10th country globally for internet speed.
Challenges and Opportunities in the E-commerce Sector
While the e-commerce sector in Saudi Arabia continues to thrive, challenges such as cybersecurity threats loom large. Strengthening cyber-security measures to combat malicious activities like phishing scams remains a key focus for industry players.
The COVID-19 pandemic has accelerated the shift to online shopping, transforming consumer behavior and impacting traditional retail outlets. E-commerce has emerged as a vital channel, providing digital access to products and enabling businesses to adapt to evolving market trends and consumer preferences.
Future Projections and Market Dynamics
Data from the Kingdom’s central bank reveals a significant surge in e-commerce sales, with sales through Mada cards reaching SR157 billion by the end of 2023. The top five online retailers in Saudi Arabia’s e-commerce sector for 2023 include jarir.com, nahdionline.com, amazon.sa, extra.com, and namshi.com.
Deloitte’s 2023 report highlights the utilization of data and analytics by these retailers to tailor offerings and enhance customer experiences. The Kingdom’s regulatory framework adjustments and government initiatives have paved the way for a thriving e-commerce market, with projected market volume expected to reach $23.46 billion by 2027.
The future of Saudi Arabia’s e-commerce landscape looks promising, with the number of e-commerce users projected to reach 34.5 million by 2025, signaling a significant increase in user penetration and market growth. With innovative technologies and regulatory support, the Kingdom is poised to become a hub for e-commerce excellence.