Arab News, Sunday, Jun 04, 2023 | Thul-Qidah 15, 1444
74% of online shoppers prefer local e-commerce over cross-border platforms
Saudi Arabia:
Saudi Arabia’s retail sector is eyeing significant growth on the back of its
e-commerce market, as 74 percent of online shoppers in the Kingdom are expected
to shift from global to local platforms.
In its recent report, leading global management
consulting firm Kearney and Saudi consulting company Mukatafa noted that local
and hybrid players are making strong headway against their international
counterparts from China, the Gulf Cooperation Council, Europe and the US.
Valued at SR19.3 billion ($5.14 billion), the
Kingdom’s e-commerce market is 6 percent of the overall SR347.2 billion retail
market. It is expected to further grow to SR34.7 billion to reach 7.5 percent of
the overall retail market by 2026, according to the report.
An expanding e-commerce ecosystem will pave the
way for innovation, job creation and private-sector growth in line with the
Kingdom’s Vision 2030 objectives.
“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,” said Mohammed Dhedhi, partner at Kearney
Middle East.
He added: “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.” The report revealed
that cross-border online shopping is expected to generate less income as local
and hybrid companies gain traction.
Cross-border online shopping is likely to decrease
from 59 percent of all e-commerce revenue in 2021 to 49 percent by 2026.
The report noted that more assistance should be
provided to create a level playing field for all e-commerce participants,
safeguarding consumer interests and encouraging domestic investment.
“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,” Waleed
Al-Saud, CEO of Mukatafa, said. He added: “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 favor 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.”