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"Saudi Arabia in the Middle East is rich as hell." When it comes to Saudi Arabia, many people can't help but think of this impression. As one of the richest countries in the world, Saudi Arabia's GDP reached 111 million US dollars in 2022, and its per capita GDP reached 30,400 US dollars. However, behind the consumption capacity at the level of developed countries, this wealthy land has been in a closed state for a long time, with a weak industrial base and extreme dependence on imports. For this reason, many people jokingly call Saudi Arabia "so poor that only money is left." However, this also provides broad opportunities for those going abroad to enter the local market. Since Saudi Arabia implemented reform and opening up, from being closed to being open to the world, the whole world has been competing for orders from the "oil guys". Chinese sellers, who are at the forefront of making money, have already picked up their sickles and rushed to the Middle East to reap the wallets of Saudi tycoons. Today, Saudi Arabia's e-commerce market is booming, showing a thriving scene. According to a recent forecast by the U.S. International Trade Administration, the number of e-commerce users in Saudi Arabia will continue to grow, reaching 33.6 million in 2024, a 42% increase from 2019. The Saudi Central Bank revealed that as of February 2024, Saudi Arabia's e-commerce transaction volume also increased by 44% year-on-year to more than 84 million transactions, and per capita online consumer spending increased by more than 50%. Deloitte, a market consulting firm, is also very optimistic about the development prospects of Saudi Arabia's e-commerce. According to its forecast, Saudi Arabia's e-commerce market will show sustained and significant growth, and the market size is expected to reach US$23.46 billion by 2027, with user penetration rising from 66.7% in 2023 to 74.7% in 2027. As Saudi e-commerce enters the fast lane of development, it is time for cross-border merchants to reap this tremendous wealth. In Arabic, Saudi Arabia means "Happy Desert". This desert country borders the Persian Gulf to the east and the Red Sea to the west, and occupies 70% of the land of the Arabian Peninsula. But the vast Saudi Arabia was once in a closed state for a long time until the third leader, Salman After coming to power, he launched a series of drastic reforms, and Saudi Arabia's gold rush door gradually opened to the world. For Chinese companies, 2022 is an important node for Saudi Arabia to transform itself into a hot spot for overseas expansion. 34 investment agreements were signed at the China-Saudi Arabia summit, and cooperation between the two countries reached a historic height. In order to increase the contribution of the digital economy to Saudi Arabia's GDP, the Saudi government has implemented various measures to create an environment conducive to the development of e-commerce for local companies; at the same time, it has strengthened support for cross-border e-commerce and relaxed ownership and market access restrictions. In addition to policy dividends, the Internet penetration rate of up to 98% and the population structure with an average age of 29 have also created the prerequisites for the take-off of Saudi e-commerce. Because of the large young population and their enthusiasm for surfing the Internet, Saudi consumers have a strong demand for online shopping and are very dependent on convenient online consumption channels. The wealthy people who have nothing to do just open their mobile phones and start shopping.
Of course, more importantly, due to factors such as the geographical environment, Saudi Arabia's light industry base is relatively weak, the local production level is low and the consumer market structure is single, so it is extremely dependent on imports. In contrast, the inexpensive and high-quality Chinese products are naturally widely favored. According to reports, 90% of Saudi Arabia's clothing and textiles come from China. As the exchanges between China and Saudi Arabia become closer, Saudis' acceptance and recognition of Chinese products and brands are increasing. The rich, diverse and cost-effective Chinese products are quietly harvesting the wallets of Saudi "oil men". Against this background, going to Saudi Arabia is almost a natural thing. Saudi Arabia, a wealthy country that is gradually moving from a closed economy to an open one, is bursting with huge potential and business opportunities. In this land full of opportunities and gold mines, global e-commerce giants gather and compete to grab a share of the market. Due to its rich variety of products and cost-effectiveness, the Saudi e-commerce market has long relied on international e-commerce platforms to meet consumer demand. Currently, international platforms account for about 59% of sales in Saudi Arabia. It is learned that Amazon entered the local market in 2017 by acquiring the Chinese e-commerce leader Souq. As a local platform, Souq mainly covers three major sites in Egypt, Saudi Arabia and the UAE. However, it was not until 2020 that Amazon Saudi Arabia officially announced its opening to Chinese sellers. With the rapid growth of e-commerce in Saudi Arabia in recent years, Amazon has continued to invest heavily in Saudi Arabia, carrying out a variety of investment activities to support the local acceleration of digital development vision, while strengthening the construction of logistics infrastructure. As of now, Amazon has established 2 distribution centers, 3 sorting centers, and more than 25 self-owned and third-party distribution stations in the country. Compared with Amazon's shortcut of acquiring local giants, the four little dragons that went overseas chose to confront the enemy head-on and joined this "war" without the smoke of gunpowder one after another. SHEIN SHEIN was the first to target the market potential of this market. After Saudi Arabia launched the "Vision 2030" plan in 2017, SHEIN quickly entered the Saudi market the following year. As a newcomer, SHEIN keenly anchored the "lifeline" of local consumers and plunged into the deep cultivation of localization strategy: establishing a local operation team and supply chain, and creating clothing products that suit local consumption characteristics according to local conditions. With forward-looking strategic vision, after gaining a firm foothold in the North American market, SHEIN has taken over the Middle East market in one fell swoop. According to reports, in 2017, SHEIN's annual revenue exceeded 10 billion yuan for the first time, and now it has long been at the top of the Saudi Arabia shopping app download rankings. Temu, which has a very similar positioning and strategy to SHEIN, also extended its tentacles to Saudi Arabia in September last year. In order to quickly enter the market, Temu continued its usual low-price strategy, offering multiple preferential activities such as large-amount discounts and free shipping. Among the four little dragons going overseas, TikTok Shop Although it has not taken the lead, its development momentum is very rapid. In May last year, TikTok Shop officially started the full hosting mode, and Saudi Arabia was one of the test sites. It is reported that Saudi Arabia's entertainment industry is relatively backward, so social media has become one of the important channels for entertainment and leisure, which also provides a natural adaptation soil for the growth of social e-commerce. Currently, Saudi Arabia has become one of the countries with the highest TikTok coverage and the greatest consumption potential. In the recent fully managed Ramadan promotion, sales of clothing, fashion accessories, household goods and other products in Saudi Arabia have exploded, and a large number of sellers have achieved GMV breakthroughs by leveraging the popularity of Ramadan and TikTok's social traffic. CEO Zhou Shouzi It also attaches great importance to Saudi Arabia. On March 6, it attended the Middle East Technology Exhibition LEAP held in Saudi Arabia and revealed that it will continue to increase investment in the Saudi market on the basis of supporting as many as 175,000 local companies in Saudi Arabia at this stage. It can be seen that today Saudi Arabia's e-commerce industry is highly competitive, and several doors to gold mining are slowly opening to Chinese sellers. But Saudi Arabia, which is extremely rich and offers vast opportunities, is not something that can be easily taken down. First of all, in sharp contrast to the developed economic level, high income and high consumption is the backward local infrastructure level. Data from Wamda Capita shows that Saudi Arabia's logistics costs can be up to 20 times higher than in China. In terms of terminal delivery, Saudi Arabia's logistics infrastructure still needs to be improved, with problems such as a lack of delivery outlets and insufficient express delivery capacity. It is reported that it may take two to three weeks or even two to three months for goods to be delivered from China. Secondly, Saudi Arabia's e-commerce payment environment also faces many challenges. Electronic payment is not common in Saudi Arabia at present. According to Statista data, cash payment still dominates the Saudi consumer market. Although Saudi Arabia is promoting the construction of payment infrastructure and introducing new payment systems and services, the application and popularity of e-commerce payment in Saudi Arabia is still relatively low. This is undoubtedly a major difficulty for cross-border e-commerce transactions that rely on online payment. Finally, there is the insurmountable difficulty of localized operation. Saudi Arabia has a conservative religious culture and there are many barriers in geography, language, customs and habits. To this end, if Chinese sellers and brands want to successfully enter the local market, they must have a deep insight into Saudi Arabia’s cultural environment and consumption characteristics, and based on this, formulate differentiated marketing strategies and create a localized operating ecosystem. A vivid negative example is Jollychic , a cross-border platform that once led the Middle East market. However, due to its failure to properly manage the platform's business environment and lack of in-depth understanding of the local market and culture, it eventually went bankrupt. Therefore, for cross-border sellers, although Saudi Arabia has unlimited potential, it does not mean that they can make money without doing anything. Only by deeply understanding the local market, creating diversified products with local characteristics, carrying out localized marketing activities, and establishing a localized team can they better adapt to the market and seize certain growth. Saudi Crown Prince Salman once declared: "Saudi Arabia will be the greatest success story of the 21st century." In this rich and mysterious land, opportunities for the whole world are booming. |
