E Commerce digital marketing in Saudi Arabia (KSA) what, why and How?

This series will help you understand the landscape of Saudi Arabia in terms of e-commerce.

Hi, I am Gaurav Agarwal and I am a founder of Imapro.in, It is a Digital marketing agency and we specialize in eCommerce marketing and marketing for real estate and other industries. Myself, I have more than 16 years of experience in marketing and mostly specialize in ECom sector.

I’m starting a series called e-commerce in Saudi Arabia. This is series will help you understand the landscape of Saudi Arabia in terms of e-commerce,

• What are the best websites? how they are doing? are they doing good or they are just investing, and it is the breeding stage right now?
  
• And other things are like, you have to first understand the landscaping in terms of the websites which are getting the most traffic in Saudi Arabia, why they are getting it.
  
• Then you need to understand what the top e-commerce websites are and what is their revenue model. Then if you are keen to open your own ECom business, then how you should proceed.
  
• So, there are a lot of things in the ECom business. And as the technology is rising, and it’s getting complex, the customer is on the forefront, you must take care of the cost, you must identify the product and niche to see whether the competitors are in the market or not.
  
• If you are an early entrant in that niche, how will you benefit out of that? how to set up CRM and logistics and a lot of things. So, we will be covering this in the whole series then I will be making videos one by one.
  

So, today in this video, we will be covering e-commerce statistics in Saudi Arabia. So, the video will be in five parts, and maybe it will extend. I will keep on posting these videos on YouTube.

Remember to subscribe and press the bell icon so that you keep on getting the notifications when I’m covering up the next research. Because it’s a long series and it will take time in researching, and I will be giving you a lot of tools which will help you if you’re going to open your own e-commerce store. Or if you need some help in marketing and you are having budgets to extend it to cover the whole country, then we will help you in scaling up the whole operations. Okay, let’s start.

So, e-commerce statistics in Saudi Arabia.

Some of the highlights are revenue in eCom. Most market amounts to an approximate $7.1 million in 2019. This is the current statistics. Revenue is expected to show an old growth rate CAGR 2019 to 2023 of 9.5%. What exactly is CAGR? You can search over the internet, but the most important thing is to analyze to get the volume in terms of numbers. the market volume of $10.2 million by 2023. So, currently, it’s 7.1 million, and it will reach up to $10.3 million in a span of four years. So, that’s a decent amount of money.

Market the largest segment is going to be of kids, remember? Toys, hobbies, and DIY. That doesn’t mean that you have to plunge in that segment, because it is showing by the statistics that this segment is going to be a hit. I mean, volume-wise, it’s going to be the hit, but if you are in a niche market then stick to it. Now, that particular market of toys, hobbies, and DIY is going to be approximately 2 million. I mean, it is right now 2 million in 2019. And it will grow with the same stats which is 9.5%.

So, user penetration is right now 65.5% in 2019 and expected to hit 68.6% in 2023. Now, these statistics can change as technology is very fast paced. And you don’t need to rely on the penetration figure itself, which is 65.5% to 68.6%. You need to understand that the user is getting educated in terms of technology, so they are using more and more. So, the point is, how many current users are turning into online buyers? that is an important metric and that is not there. But you need to understand, as the technology is growing, that number is going to shoot up.

So, the average revenue per user, which is ARPU, currently amounts to $319. Now I will delve into the statistics and will give you the details of each of them so that we can do some analysis.

So, here I am on the statistics window. Now, it’s showing me the statistics as for the major industry and let’s scroll from 2017 to 2023 to understand. So, fashion in 2017 was the highest grossing, and more or less fashion and electronics, they are the two sections, which are fashion is driven by females, and electronics and media are driven by males, so, they go 50/50. So, if you are in these two sectors, and if you have a very promising niche, then you can actually flourish.

So, this was like 1.5 million in 2017, and the current is 1.9 million in 1.97 million in 2019.

Electronics and media, a little less but nearly equal 1.8 million in 2019. Now, this particular section is ought to grow. This needs to be understood, most of the money will flow towards fashion, electronics will rise, but fashion is the clear winner. Toys hobbies, and DIY, it is going to be one of the important sectors which are going to be winning, and other sectors are out there. So, you need to understand the landscaping of the country also.

Right now, the Crown Prince is making your changes and the market is ought to open towards women. And when this change happens, you will see lots of demand generated on the fashion site. So, the platforms which are selling in fashion will definitely get a boost. And if you establish right now in the next two years in that particular section, then you are ought to get some benefit in the coming years.

Now you come to the user’s penetration rate. Like the way, I said, right in 2019, right? it’s 65.5, and in incoming 2023, it will be 68.6. You need to understand that the user is getting educated more and more towards technology. So, converting them from a user to a buyer will happen really fast.  if you see the most active users from 18 to 23 years of age with who are not earning right now, and they are the most active users. So, this kind of statistics gives you the penetration rate. And when those users become the breadwinners of the family and they start to earn, they become the buyers. So, the online buyer is going to increase a lot as compared to the penetration.

Now, this starts will reflect what I just said. 2019, the average revenue per user in e-commerce is $319. It is going to grow by more than 25%, it is like $412 dollars in 2023. Now, if you will compare these figures with other countries, it is a very bright figure. So, online buying, which is going to happen in KSA, will be much more in terms of quantity. And if you see average cart value of the product, value is going to increase.  That is a very important metric to keep in your mind because the market world is promising.

 This chart is an important chart in which you have to see users by age. I just mentioned that the maximum users who go on up the internet are from 18 to 24 and then 25 to 34, so, maximum range is 18 to 34. Now 18 to 24 is the range, which is recent and which is entered, which is using, but they are not buying. They don’t have access to credit cards, and they don’t have financial freedom. But 25 and 34 is the most active one which actually drives E-commerce in any country at any given time. So, in coming four to five years, this user which is in 18 to 24, they will convert to 25 to 34. So, the user, this current user is anyways buying They’re not going to go away.

then you will go by users by gender… okay, right now, the dominating gender is male. It is 53.8. And on the lesser count is female, 46.2, but this is going to change. This is going to reflect some other numbers in the coming years, as the change in the political landscape is going to happen. Plus, women are Ecom drivers. Never forget that. So, if fashion is going to rise, that’s all because of female, and if the female is going to drive the ecom then the whole industry will get an optimum boost.

Now users by income. The low-income group is also going to attract a lot of digital traction, they are going to become buyers with a low card value. Then the medium income group is the one who does the maximum shopping with the avg card value, but they do it. High-income users are little difficult to target because they are when you get the money you get finicky, so it goes side by side. So, you need to build trust to get maximum money out of the pockets of people. Saudi Arabia economy is having nearly 36% of high-income users, it’s definitely a win, win in a digital commerce market.

Coming on to the payment types, now, this is very interesting to see. Most of the economies, if you will consider your way then cash on delivery is the section which goes on a bigger spectrum. Like most, people prefer cash on delivery, which is more than 60%, and the same goes for India, the same goes for other under-developed nations. But in KSA, if you see the maximum, buying is being done through cards and which is very, very good, like in terms of metrics, in terms of tracking, and in terms of conversions. If the shipments are prepaid, then it’s definitely a win, win for any ecommerce company or venture.

So, this is going to increase now as cards are being replaced by other digital wallets so you will see a digital shift over them. The important thing is that most transactions are made through the digital system. So, by 2023, bank transfers are 13%, cards are 33.7%, which is still the dominating payment method. Cash on delivery goes on a lesser side or it is reduced, which is very good, which is the premium thing to consider right now. E-wallet is gaining a lot. So, e-wallet and cards go hand in hand, because whenever you are using e-wallet you are feeding that e-wallet with either credit card or bank account, you’re linking it. So anyway, these are the statistics which make the market of ecom very promising. So, this was the first part which covers the e-commerce statistics in Saudi Arabia.

I believe it has given you a broader macro-level understanding of the market. And if you are willing to enter in some niche, you have to see the macro categories and then the micro-categories, and then you understand the dynamics, how it will work in the market. So, if you don’t have the stats, you have to test the market first and then you have to move with a bigger investment if you want to make. And how will you test the market? how will you see whether your product or your niche is in demand and you will be going to be successful? That has a strategy. In a minimum investment, you can do one test with a small website and on. And once your test shows good figures and a promising future, then you can move ahead. So, for that, you can contact me anytime.

So, I’ll be continuing with this series with the other topics in which the next section is of the top 50 websites as per traffic in Saudi Arabia. You need to know this. If you are designing a digital strategy, which is going to benefit you, media buying is a must. And where is actually visitors aligned? where are they going? You need to understand that to strategize your media buying, how you will create the landscape of your marketing and get the maximum sales at a minimum cost.