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Prince Waleed Bin Nasir Bin Fahad Al Saud

KSA ecommerce market set to drive the growth of retail sector

RIYADH, May 24, 2023

Some 74% of online shoppers in Saudi Arabia expect to increase their purchases from the kingdom’s ecommerce platforms compared to their purchases from China, GCC, Europe and US.
 
This is according to a report that explores the impact of cross border ecommerce in KSA by leading management consulting firm, Kearney and Mukatafa, a KSA organisation unifying the public and private sectors in the development of industry policy and standards.
 
However, further support will be needed to ensure a level playing field for all ecommerce players, thereby protecting consumer interests, and promoting local investments.
 
Market growth
Valued at SR19.3 billion ($5.15 billion), KSA’s ecommerce market is 6% of the overall SR347.2 billion retail market and this is expected to grow to reach 7.5% (SR34.7 billion) by 2026.
 
Cross-border ecommerce accounts for 59% of all ecommerce revenue (2021) and, while this is set to decrease (to potentially 49% by 2026) as local and hybrid players gain traction, it still dominates. 
 
Consumers have voted with their purses to date, with the majority opting for cross-border platforms due to lower prices (72%), wider choice (47%), convenience (35%), and brand variety (31%). 
 
Cross-border ecommerce
As of 2021, cross-border ecommerce accounts for 59% of all ecommerce revenue and, while this is set to decrease (to potentially 49% by 2026) as local and hybrid players gain traction, it still dominates. 
 
Prince Waleed Bin Nasir Bin Fahad Al Saud, CEO of Mukatafa commented: “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 ecommerce 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 ecommerce market compared to local players.”
 
Rapid growth
“The ecommerce market in KSA has rapidly grown with the support of changing consumer preferences during Covid-19. This flourishing ecommerce 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 ecommerce delivery beyond the kingdom’s major cities. The growth of the local and hybrid ecommerce players will contribute to protecting consumer interest and promoting local investments with strong potential for job creation,” added Mohammed Dhedhi, Partner at Kearney Middle East.-- TradeArabia News Service
 



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