Growing tech-savvy population, increasing internet penetration, and government support for digital transformation are the success components of the eCommerce landscape in the Kingdom of Saudi Arabia (KSA). The market is expected to reach $16.84 billion by 2027.
The e-commerce market in Saudi Arabia is becoming increasingly competitive, with major players such as Amazon, Haraj, Noon A.D. Holdings Ltd, Nashi General Trading L.L.C., and AliExpress currently dominating the market. However, new companies and startups are entering the market and gaining market share by offering innovative products and services.
The rapidly growing and increasingly competitive e-commerce market in Saudi Arabia is a testament bringing about a number of benefits, including:
- Increased Market Reach
- Cost Efficiency and Reduced Operational Costs
- Enhanced Customer Experience
- Data-Driven Decision Making
- Regional Expansion Opportunities
This topic examines the impact of digital transformation on the Saudi Arabian e-commerce market over a 10-year period, from 2017 to 2027. The study finds that digital transformation is driving the rapid growth and increasing competitiveness of the e-commerce market, as evidenced by the data from 2022, which is used as the base year for estimation.
Digitalization and eCommerce in Saudi Arabia
The eCommerce in the KSA market is anticipated to reach a revenue of US$10.16 billion in 2023, with a projected annual growth rate of 13.47% from 2023 to 2027, resulting in a market volume of US$16.84 billion by 2027.
China is expected to contribute significantly to this growth, with a projected market volume of US$1,319.00 billion in 2023.
The number of users in the eCommerce market is expected to reach 28.5 million by 2027, with a user penetration of 65.5% in 2023, increasing to 73.0% by 2027. Additionally, the average revenue per user (ARPU) is expected to be US$419.50.
In the ever-evolving landscape of the Kingdom of Saudi Arabia’s (KSA) e-commerce industry, a profound analysis of business benchmark performance and sales trends reveals a compelling narrative. Between the years 2017 and 2022, the KSA ecommerce market experienced an impressive surge, with total revenue soaring to a staggering $40.6 billion. Within this lucrative market, specific sectors emerged as front-runners, setting remarkable benchmarks. Electronics led the charge with sales amounting to an impressive $12.41 billion, closely followed by the fashion industry, which contributed significantly with $11.4 billion. Additionally, the beauty and health sector carved its niche, achieving commendable sales figures of $9.66 billion. These sectors collectively defined the ecommerce landscape, portraying the dynamic consumer preferences within the KSA market.
The average revenue per user, a pivotal metric in understanding market dynamics, stood at a noteworthy $178, underlining the economic significance of the ecommerce industry to individual consumers.
Moreover, the market’s future trajectory is underscored by intriguing trends. Notably, the food and beverages sector is poised for substantial growth, with a projected increase of 33% between 2023 and 2024. This surge reflects changing consumer habits and an increasing reliance on ecommerce platforms for essential goods. An intriguing facet of the KSA ecommerce ecosystem is the dominance of offline sales channels, which commanded a significant 90%+ share of user purchase decisions during the period from 2017 to 2022. This intriguing pattern suggests a unique blend of traditional and online retail experiences, highlighting the diverse shopping behaviors within the KSA market.
Examining payment methods, it becomes evident that KSA consumers display a diverse range of preferences.
Notably, 33% of all purchase transactions were facilitated through payment cards, indicating a preference for secure and convenient digital transactions. Additionally, 20% of transactions utilized Cash on Delivery (COD) services, reflecting the continued importance of trust and convenience in ecommerce transactions.
E-wallets, a rising trend in the digital payment landscape, also played a notable role in the KSA ecommerce market, highlighting the market’s adaptability to new and innovative payment technologies.
In essence, the deep dive into KSA ecommerce business benchmark performance and sales trends paints a vivid picture of a thriving and multifaceted industry. With robust revenue figures, sector-specific highlights, and insights into consumer behavior and payment preferences, this analysis provides valuable perspectives for businesses, investors, and consumers alike, offering a comprehensive understanding of the intricate dynamics shaping the KSA ecommerce market.
A Deep Dive into KSA Ecommerce Landscape
Saudi Arabia’s ecommerce growing rapidly, with online sales expected to reach $55 billion by 2025.
This growth is being driven by a number of factors, including a young and tech-savvy population, rising incomes, the landscape of social media commerce in Saudi Arabia and the dominant role of social media in shaping consumer behavior during the period 2022-2024 and increasing internet penetration.
The FMCG, online retail, b2b commerce are among the largest and most important sectors in the KSA ecommerce market. These sectors account for a significant share of total online sales in the country.
FMCG
The FMCG sector is the largest sector in the KSA ecommerce market, accounting for around 35% of total online sales. The most popular FMCG products purchased online in the KSA include personal care products, household cleaning products, and packaged food.
The average order value for FMCG products in the KSA is around $50. The most popular KSA’s groceries that support online shopping purchased online in the KSA using the latest and modern online shopping trends like BNPL and BOPIS:
Al Sadhan online supermarket
Spar KSA online supermarket
Retail electronics
The retail electronics sector is the second-largest sector in the KSA ecommerce market, accounting for around 25% of total online sales. The most popular retail electronics products purchased online in the KSA include smartphones, laptops, and TVs.
The average order value for retail electronics products in the KSA is around $200. The most popular retail electronics brands purchased online in the KSA include Apple, Samsung, and Huawei.
Fashion
The fashion sector is the third-largest sector in the KSA ecommerce market, accounting for around 20% of total online sales. The most popular fashion products purchased online in the KSA include clothing, shoes, and accessories.
The average order value for fashion products in the KSA is around $100. The most popular fashion brands purchased online in the KSA include Namshi, Alshaya, and H&M.
Food and grocery
The food and grocery sector is the fourth-largest sector in the KSA ecommerce market, accounting for around 15% of total online sales. The most popular food and grocery products purchased online in the KSA include fresh food, packaged food, and beverages.
Food and grocery: The average order value for food and grocery products in the KSA is around $75.
High-Performing Ecommerce Brands in the KSA
A number of ecommerce brands have emerged as high performers in the KSA market. These brands are typically characterized by a strong focus on customer experience, a wide range of products, and competitive prices.
The report generated by ecommercedb.com shows the top 3 ecommerce brands in the KSA by 2022 sales are:
1. Amazon.sa $3.5 billion
2. Noon.com $2.5 billion
3. Jarir Bookstore $2 billion
In May 2023, Amazon opened its latest fulfillment center in Riyadh, Saudi Arabia. The facility is over 390,000 square feet and is expected to store over 9 million products. This investment will allow Amazon to offer a wider selection of products and faster delivery times to Saudi Arabian customers.
In April 2023, Noon A.D. Holdings Ltd (Noon E-Commerce) launched Noon One, a loyalty program that offers members unlimited free delivery on all app products. This program is designed to encourage members to shop more frequently at Noon.
Conclusion
The KSA ecommerce market is one of the fastest-growing in the world, and it is expected to continue to grow rapidly in the coming years. This growth is being driven by a number of factors, including a young and tech-savvy population, rising incomes, and increasing internet penetration.
The FMCG, retail electronics, fashion, and food and grocery sectors are among the largest and most important sectors in the KSA ecommerce market. These sectors account for a significant share of total online sales in the country.
Ecommerce businesses in these sectors need to focus on providing a superior customer experience, a wide range of products, and competitive prices in order to succeed.
Here is a summary of some of the key insights from the benchmark performance data for the KSA ecommerce market:
The average order value for FMCG products is around $50, while the average order value for retail electronics products is around $200. The average order value for fashion products is around $100, and the average order value for food and grocery products is around $75.
The most popular FMCG brands purchased online in the KSA include Unilever, P&G, and SAMACO. The most popular retail electronics brands purchased online in the KSA include Apple, Samsung, and Huawei. The most popular fashion brands purchased online in the KSA include Namshi, Alshaya, and H&M. The most popular food and grocery brands purchased online in the KSA include Nahdi Online, Extra, and Jarir Bookstore.
These insights can be helpful for ecommerce businesses in the KSA in a number of ways. For example, businesses can use this information to benchmark their own performance against their competitors. They can also use this information to identify new opportunities for growth and to develop strategies to attract and retain customers.
Overall, the outlook for the KSA ecommerce market is very positive. Businesses that are able to adapt to the changing needs and expectations of KSA consumers are well-positioned to succeed in this market.
