RIYADH: Saudi Arabia's e-commerce sales using Madacard reached SR14.11 billion ($3.76 billion) in February, an annual increase of 25%, the Saudi Central Bank said.
This figure includes online shopping, in-app purchases, and e-wallet transactions, and excludes transactions made with Visa, MasterCard, and other credit cards.
The number of e-commerce transactions also increased by 44% year-on-year, reaching more than 84 million transactions in February.
Changes in consumer behavior post-COVID-19, supported by regulatory reform, robust internet infrastructure, and continued advances in sophisticated e-commerce businesses, are key drivers of the move away from cash.
Over the past three years, online sales in Saudi Arabia have increased by about 60% across various categories, with significant growth in media products, apparel and footwear, according to a commerce guide published in January by the US International Trade Administration. It is said that
Additionally, the average spend per e-commerce user in the Kingdom increased by more than 50%.
The group expects continued growth, predicting that e-commerce users in Saudi Arabia will reach 33.6 million by 2024, an increase of 42 percent from 2019.
Factors contributing to this growth include the country's 97% smartphone penetration rate, high number of mobile broadband subscribers, and ranking 10th in the world for internet speeds. .
Additionally, 72 percent of Saudis aged 15 and older own a bank account, highlighting the country's readiness for digital transactions and online commerce.
The organization emphasized the proliferation of local platforms and the introduction of new entrants like Amazon Prime, which debuted in January 2021.
Other factors include the government's efforts to strengthen the regulatory framework in the sector, with a focus on consumer and business protection, with the aim of increasing confidence in Saudi Arabia and facilitating the use of its platforms.
However, the organization also highlighted challenges in the sector, particularly the need to strengthen cybersecurity measures to counter malicious emails that pose risks such as phishing scams that reveal sensitive information such as passwords, financial details and personal data. emphasized.
The shift to online shopping has become evident in the wake of the COVID-19 pandemic, significantly changing consumer behavior and impacting traditional retail stores. The rise of e-commerce has proven essential in providing digital access to products and allowing businesses to adapt to changing market trends and consumer preferences.
This trend is reflected in data from the Kingdom's Central Bank, also known as SAMA, which shows a notable increase in e-commerce sales. In 2020, when the pandemic began, sales increased by 279%, jumping from 10.25 billion riyals in 2019 to nearly 39 billion riyals.
This momentum continued in 2021, with a further annual increase of around 91 percent to reach 74 billion riyals, followed by a 65 percent increase in 2022 to reach 123 billion riyals. By the end of 2023, e-commerce sales through Mada cards reached R157 billion, confirming the strong growth in this sector.
According to data from the German e-commerce database website, the top five online retailers in Saudi Arabia's e-commerce sector in 2023 are jarir.com, nahdionline.com, amazon.sa, extra.com, and namshi.com.
Jarir.com leads the market with sales of $452.8 million in 2023, followed by nahdionline.com with sales of $330.1 million and amazon.sa with sales of $328.5 million.
According to the database, these top three online retailers collectively account for 38.7 percent market share among the top 100 stores in the Kingdom's e-commerce market.
This ranking is based on the top-grossing stores in the market in 2023.
According to a 2023 Deloitte Digital report, these companies are leveraging data and analytics to gain deeper insights into their customer base and tailor their services to better meet their needs.
According to the company, Saudi Arabia has come a long way from a population that initially lacked trust in online retailers, limited payment options, and poor product diversity to what it now has the potential to become a growing e-commerce market. It is said that he has walked the path of
This transformation is particularly supported by the Saudi government implementing various initiatives aimed at increasing the contribution of the digital economy to Saudi gross domestic product.
The adaptability of the regulatory framework and its adjustment to market dynamics has created an environment conducive to the growth of e-commerce and the flourishing of innovative technologies.
As the industry evolves, new payment methods are emerging, prompting central banks to establish sandboxes to test and regulate these innovations. It serves as an important platform for the industry to experiment with and adopt new technologies.
Additionally, the Communications, Space and Technology Committee introduced a dedicated sandbox for distribution applications to streamline operations and improve efficiency for e-commerce businesses.
Regulatory efforts have facilitated the entry of large players such as STC, and partnerships such as the one between Aramco and Google Cloud have further supported and provided infrastructure to all participants in the e-commerce ecosystem, Deloitte said. I added.
Additionally, the establishment of free zones played a pivotal role in simplifying logistics and facilitating the movement of goods, strengthening Saudi Arabia's e-commerce landscape.
Deloitte predicts that this sector will surge significantly, reaching a market size of $23.46 billion by 2027. Furthermore, the number of e-commerce users in the Kingdom is expected to reach 34.5 million by 2025, and the user penetration rate is expected to increase from 66.7% in 2023. By 2027, this will increase to 74.7%.
