Seventy-four per cent of Saudi online shoppers expect to purchase more from local e-commerce platforms than from foreign ones based in China, other GCC countries, Europe and America.
This is according to a report that assesses the impact of cross-border e-commerce in Saudi Arabia by management consulting firms Kearney and Mukatafa.
However, more support should be provided to ensure a level playing field for all e-commerce players to protect consumer interests and promote local investments.
Currently standing at SR19.3 billion ($5.15 billion), the Saudi e-commerce market accounts for six per cent of the overall SR347.2 billion retail market and is projected to reach 7.5 per cent (SR34.7 billion) by 2026.
Cross-border e-commerce was responsible for 59 per cent of all e-commerce revenue in 2021. While this is forecast to decrease by about 10 per cent by 2026 as local and hybrid players gain steam, it remains resilient.
CEO of Mukatafa, Prince Waleed Bin Nasir Bin Fahad Al Saud, said: “It is a strong sign that local e-commerce businesses are gaining more traction in the market.
“We must make sure that these businesses are supported to thrive as well as cross-border accounts. There are suggestions in which we could help this happen successfully including, as seen in other international markets, a reduction in the minimum duty threshold and reviews of tax laws for foreign organisations and individuals.
“Thresholds on import quantities could be introduced and local quality standards could be mandated for cross-border players. It is these types of initiatives that will need to be addressed if we are to create a level playing field for all e-commerce players. As it stands current regulations in the market favour cross-border players, and until that changes cross-border sales will continue to hold a major share of the e-commerce market compared to local players.”
Consumers surveyed in the report have voted with their purses to date, with the majority preferring cross-border platforms due to lower prices. Forty-seven per cent were attracted by wider choice, while 35 per cent ranked convenience as the major factor and 31 per cent were lured by brand variety.
Partner at Kearney Middle East, Mohammed Dhedhi, said: “The e-commerce market in KSA has rapidly grown with the support of changing consumer preferences during Covid-19. This flourishing e-commerce ecosystem empowers citizens to use innovative digital payment options, in line with government initiatives under Vision 2030 to guide private sector investments to provide critical pillars for the sector’s growth such as increasing cashless transactions and expanding the geographical coverage of e-commerce delivery beyond the kingdom’s major cities.
“The growth of the local and hybrid e-commerce players will contribute to protecting consumer interest and promoting local investments with strong potential for job creation.”
