Saudi Arabia’s e-commerce market to hit SAR 50 billion by 2025

02 March 2022 4 min. read

Saudi Arabia’s e-commerce market has witnessed rapid growth in recent years, with sales increasing by more than 30 percent on average annually, according to a report by Boston Consulting Group and Meta.

The report, titled ‘The SAR 50 Billion E-commerce Opportunity in Saudi Arabia’, found that the market value of e-commerce increased from SAR 6 billion in 2016 to SAR 12 billion in 2019. During the Covid-19 pandemic however, the market’s growth accelerated, jumping by more than 100% across 2020 and 2021 to now stand at SAR 25 billion.

E-commerce in Saudi Arabia has seen rapid growth

Despite the exceptional growth, Saudi Arabia’s e-commerce is still in a nascent phase. In 2020, it accounted for just 6% of total retail sales, compared to leading e-commerce markets, whose global penetration reached 18% in 2020.

From a segment perspective, e-commerce in Saudi Arabia enjoys its strongest position in the electronics and appliances segments.

“The e-commerce market in Saudi Arabia is smaller in comparison to some of the bigger e-commerce markets, such as China, US, and the UK, however, its tremendous potential is already apparent despite its infancy, and the advancement of a robust e-commerce ecosystem in the years ahead will present a multitude of economic and social benefits,” said Pablo Martinez, Managing Director and Senior Partner at Boston Consulting Group.

E-commerce adoption has seen an increase in Saudi Arabia

Suha Haddad, Director of Agencies and Ecosystem Development for MENA at Meta, added: “Consumers are increasingly shifting their purchasing online, with e-commerce sales soaring across all industries. The Kingdom is now more connected to the rest of the world than ever before and Saudi consumers are also demanding a new kind of relationship with brands.”

The benefits of e-commerce

According to the report, e-commerce has the potential to add significant benefits to customers – among others through addressing the inherent disadvantages of brick-and-mortar retail. Benefits include:

E-commerce customer benefits

Access to a larger product assortment: Free from the restrictions of physical space, retailers can showcase their entire assortment online.

A tailored and personalized product offering: Advanced search engines and product reviews let consumers access relevant information and find products quickly, without having to sort through lots of items first

Competitive and transparent pricing: Customers can easily compare prices across retailers online. Price transparency leads to more competitive prices.

Quick and secure payments: Advanced payment systems let customers make seamless, one-click purchases online with enhanced security.

Fast and flexible delivery: Purchases reach customers faster than ever – in hours or minutes – through advanced distribution systems.

Convenient after-sales services: Hassle-free online return policies enable customers to examine products and ship them back to the seller at no additional cost if they wish.

Saudi Arabia has a huge potential in e-commerce landscape

The wider benefits

Beyond consumers, the growth of the e-commerce industry in addition will generate a windfall to employment and facilitate further technological adoption and progression in the wider e-commerce ecosystem.

“Looking ahead, job creation, entrepreneurship, and will be driven by the evolving e-commerce sector, collectively making invaluable contributions to the Kingdom’s economy and society,” said, Chris Biggs, Managing Director and Senior Partner at Boston Consulting Group, Global Leader of the firm’s Retail practice.

James Brindley, Managing Director and Partner at Boston Consulting Group, added: “The growth of the Saudi e-commerce market and the projections through 2025 illustrate enormous possibilities and potential for consumers, businesses, and the country. The sooner these imperatives are pursued and solidified, the substantial pace at which the sector is developing will accelerate further.”

“To achieve success in this direction, a sustainable business environment is essential, as are key enablers that will drastically improve the e-commerce business environment, namely last-mile logistics, cross-border training, e-payment adoption, incubators, and internet connectivity.”