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RIYADH: ������Ƶ’s e-commerce sector is poised for unprecedented growth, with the market projected to surge to $708.7 billion by 2033, nearly triple its current size..

In its ������Ƶ E-commerce Market Report, market research firm IMARC said this remarkable expansion, fueled by artificial intelligence, frictionless digital payments, and a young, tech-savvy population, is transforming how Saudis shop while creating new economic opportunities across the Kingdom. 

The convergence of multiple powerful trends is accelerating ������Ƶ’s transition to an e-commerce powerhouse. 

Widespread internet access, with over 98 percent of the population now online, combined with one of the world’s highest smartphone penetration rates, has created ideal conditions for digital retail to flourish. 

The COVID-19 pandemic served as a catalyst, accelerating the shift to online shopping, but the growth trajectory has only steepened in its aftermath. 

Government initiatives under Vision 2030 are providing crucial support, with digital transformation at the heart of the Kingdom’s economic diversification strategy. 

This policy backing, coupled with a demographic dividend — more than half of Saudis are under 30 — has created a consumer base that increasingly prefers the convenience and choice of online shopping. 

Mohammed Dhedhi, partner at consumer and retail practice at Kearney, highlighted the structural factors driving this growth. 

“������Ƶ’s e-commerce surge is underpinned by proactive government support and a tech-savvy infrastructure that outpaces many peers,” he told Arab News.

Dhedhi added that the 2019 e-commerce law and Vision 2030 reforms have boosted online consumer trust and eased digital business. 

“In addition, moves across the ecosystem, from widespread digital payments to new fulfillment centers remove friction in online shopping, whereas other emerging markets often grapple with patchy connectivity and cash-heavy systems,” he said.

The Kearney partner highlighted how ������Ƶ’s young savvy population are “enthusiastically embracing online retail,” and noted that the Kingdom’s structural fundamentals are propelling e-commerce growth faster than in many developing markets, “which is why we see the growth forecast for the market at 12-14 percent per year for the next five years.” 

The new retail reality 

Mobile commerce now dominates the landscape, according to IMARC, with smartphones becoming the primary shopping device for millions. 

Social media platforms have evolved into vibrant marketplaces, where 35.33 million users discover products through influencers and make purchases without leaving their favorite apps. 

Mohamed El-Ansari, CEO of Trendyol Gulf, a Turkish e-commerce platform, emphasized the role of social commerce in reshaping shopping habits. “The country has one of the youngest and most connected populations in the world, with nearly 100 percent Internet penetration, and it is increasingly shopping online in a retail market that still has plenty of room for growth.”

He added: “For Gen Z and millennials especially, the shopping journey often starts with a scroll, and inspiration can turn into intent in seconds.”

Live shopping events and instant checkout features are becoming routine parts of the consumer experience. Payment systems have undergone their own revolution. The digital payments market reached $1.16 billion in 2024, with options such as buy now, pay later plans and mobile wallets reducing reliance on cash. 

El-Ansari noted the shift in payment preferences: “Cash on delivery still matters in Saudi, but digital payments are growing quickly, especially with younger, digital first shoppers.”

The CEO highlighted the Kingdom’s national payment card system, Mada, saying that it “remains a core local payment method.” He added that Apple Pay has also become extremely popular in the Kingdom and across the region. 

Mada supports both debit and prepaid services within its network, the cards utilize near-field communication technology for contactless payments, enabling secure transactions at both physical retailers and online.

In 2024, e-commerce sales using Mada cards in ������Ƶ reached SR197.42 billion ($52.64 billion), a year-on-year growth of 25.82 percent, according to data from the Kingdom’s central bank. These figures include payments for online shopping, in-app purchases, and e-wallet transactions, but exclude transactions using credit cards such as Visa and MasterCard.

Enhanced security measures and streamlined checkout processes have helped overcome initial consumer hesitations about online transactions. 

Behind the scenes, AI is personalizing the shopping journey like never before. Sophisticated algorithms analyze browsing patterns to serve up tailored recommendations, while chatbots provide instant customer service. Augmented reality allows shoppers to virtually try on clothes or visualize furniture in their homes before purchasing. 

El-Ansari explained Trendyol Gulf’s approach to localization and personalization. “When we entered the Gulf, we avoided a one-size-fits-all strategy,” he said. “We spent time listening to shoppers and sellers, learning what mattered most locally, and building from there.”

He added: “Cultural relevance, from pricing expectations to seasonal product curation, has proven essential to long-term loyalty. This means building local teams, curating region-specific collections, and partnering with Saudi SMEs.”

El-Ansari went on to explain: “It can include modest fashion edits for Ramadan, beauty imagery that reflects diverse skin tones, or packaging that feels premium enough for gifting. These are the kinds of details that make a big difference in creating a trusted, relevant experience.”

Winners and growth sectors 

The electronics category continued to lead, with Saudis increasingly turning to online platforms to purchase smartphones, laptops, and accessories. The sector, valued at $13.5 billion in 2024, benefits from detailed product information, user reviews, and competitive pricing available through e-commerce channels.

But the real growth stories are emerging in previously offline sectors. Online grocery shopping has taken off, with consumers appreciating the convenience of doorstep delivery for everyday essentials. 

Healthcare e-commerce is expanding rapidly, while fashion retail has found new life through social commerce and virtual fitting technologies. 

Small and medium enterprises are proving particularly adept at capitalizing on these trends. The low barriers to entry in digital marketplaces allow SMEs to compete effectively with larger players, often by carving out specialized niches or offering personalized service. Government programs supporting digital entrepreneurship are helping these businesses thrive. 

Taking on the giants

Kearney’s Dhedhi added insights on how SMEs can leverage partnerships to compete with global players, saying: “Many local businesses are teaming up with major platforms, for example, e-commerce enabler Zid integrates with Amazon Marketplace, TikTok Shop, and other channels, giving homegrown merchants access to wider customer bases, sophisticated logistics, and marketing tools that the giants provide.”

He added that by co-selling on international marketplaces, joining global fulfillment networks, or co-branding product lines with established retailers, Saudi SMEs can leverage the infrastructure of these marketplaces. 

“These collaborations allow small merchants to focus on their niche products and local customer knowledge, essentially turning would-be competitors into growth partners and leveling the playing field with international brands.”

Transforming the Kingdom’s economic future 

The implications of this e-commerce boom extend far beyond retail. The sector is creating thousands of jobs, from tech development to last-mile delivery. It’s enabling Saudi entrepreneurs to reach national and regional markets with unprecedented ease. Perhaps most significantly, it’s serving as a cornerstone of the Kingdom’s economic modernization efforts under Vision 2030. 

Dhedhi explained the broader economic impact saying that this e-commerce boom is contributing to the non-oil economy. 

“Online sales accounted for only about 6 percent of the Kingdom’s $92.6 billion retail market in 2023, but served as an accelerator by invigorating sectors like retail and logistics, retail led non-oil GDP (gross domestic product) growth of 4.2 percent in 2024, and stimulating other industries,” he said.

The Kearney’s partner also explained that this boom can be a strong channel to support and further develop localization initiatives across the Kingdom. 

He said that the ecosystem benefits from e-commerce growth, as online shopping boosts demand for warehousing, delivery, digital payments, and tech startups, supporting Vision 2030’s diversification goals.

On the logistics front, El-Ansari addressed concerns about oversupply. “Oversupply isn’t the core issue; it’s smart utilization,” he said, adding: “The real key to speed and reliability is controlling local infrastructure and using it well.”

Dhedhi discussed sustainable solutions for last-mile logistics, pointing to the Kingdom’s goal for 30 percent of all vehicles in Riyadh to be electric by 2030.

He noted that coupled with AI-driven route optimization, these measures significantly shrink the carbon footprint per package. “A blend of electric mobility, smart technology, and new delivery models are being scaled up to make the e-commerce last mile ‘cleaner’ and more sustainable.”

As Saudi consumers grow increasingly comfortable with digital commerce, and as technologies like AI and AR make the experience ever more seamless, the $708 billion projection may prove conservative.