RIYADH: Saudi Arabia’s e-commerce sector is witnessing robust expansion, with venture capital investments in startups hitting SR1.6 billion ($426.7 million) in 2023, official figures showed.
According to a report from the Small and Medium Enterprises General Authority, or Monsha’at, e-commerce platform users in the Kingdom are projected to reach 34.5 million by 2025, reflecting a 42 percent increase from 2019 to 2024.
This surge underscores the sector’s crucial role in the Kingdom’s economic diversification strategy.
The Saudi digital marketplace transformation is part of a broader national initiative to foster innovation and stimulate economic growth.
The establishment of the E-Commerce Council in 2018 was a key move to enhance the sector, focusing on advancements in financial technology, payment solutions, and logistics.
These developments have positioned Saudi Arabia as one of the most dynamic e-commerce markets in the Middle East and North Africa.
In 2020, the sector accounted for 4 percent of the Kingdom’s gross domestic product, with 8 percent of goods and 25 percent of services purchased online, according to Muhannad Al-Mulhim, a consultant at the Ministry of Commerce.
Al-Mulhim said: “According to the E-Commerce Council, developments in several key sectors, including infrastructure and the legislative environment, have been driven by programs under Saudi Vision 2030, such as the e-commerce stimulus program. This led to the issuance of the e-commerce system by the Ministry of Commerce.”
He added: “Additionally, the financial sector development program, in cooperation with the Saudi Central Bank, has resulted in a comprehensive development of the financial technology sector and prompted several transformations in the logistics services sector.”
By the end of this year, e-commerce revenues are expected to reach SR211 billion, he added.
Despite this rapid expansion, e-commerce sales currently make up only 18 percent of total retail sales in the Kingdom, suggesting substantial room for growth.
By 2025, the sector’s contribution to GDP is projected to reach 12 percent, supported by a targeted 15 percent compound annual growth rate from 2020 to 2025.
Looking further ahead, 80 percent of transactions in Saudi Arabia are expected to be conducted electronically by 2030, aligning with the broader objectives of Vision 2030.
As the Kingdom continues to implement its ambitious agenda, the e-commerce sector is set to play a critical role in driving economic diversification, innovation, and new business opportunities.
