E-commerce and retail trade



LAST July, the Council of Ministers approved the formation of the Kingdom’s first e-commerce council. The council will recommend policies and legislation related to e-commerce, motivate it and eliminate hurdles before it.

This step came as part of the objectives of Saudi Arabia’s Vision 2030, which calls for creating an attractive and conducive environment for investors.

It is expected that the volume of e-commerce in the country will double to reach SR60 billion in the next five years, especially with the increasing number of Internet users in the Kingdom, which is around 85 percent.

E-commerce is now a huge economic activity in the Kingdom. The use of e-stores and other online shopping platforms and applications is spreading in the country. It allows shoppers to see what they want and buy products or services without the need to physically visiting a shop or a mall.

The volume of e-business increased last year to more than SR30 billion, with an average spending of SR4,000 per shopper. It is expected that this will increase to SR60 billion in the next five years.

Recently, the Communication and Information Technology Commission published the results of the technology and communication market survey for 2018. The results showed that the percentage of shopping over the Internet increased to 50 percent in 2018, when it was 37 percent in 2017.

The survey showed that females were the majority when it came to shoppers online while the highest age group of shoppers was 20-24 years old.

Al-Jouf came on top of other Saudi provinces for online shopping. Clothes and shoes are the highest products sold online.

Studies show that online shopping will keep increasing in the next five years.

This statistics reflects the transformation of the market within a short span of time. It will directly affect traditional business, especially the retail sector.

Many commercial shops that used to spend huge amounts on annual rent, decoration, electricity, municipality fees, salary of employees, permits and many other costs are turning to e-commerce, which helped them to cut costs significantly. This strategy was adopted by many international retail brands. Giant chains such as Sears, JCPenney and others closed down hundreds of showrooms and went online to meet the growing demand for e-commerce.

Companies and institutions in the private sector need to keep pace with this transformation. They need to realize that the traditional way of doing business is fading away. We live in the age of technical revolution and knowledge economies.

Unless our traders keep pace with this transformation and change their old methods, they will face extinction.