Amazon opens in Saudi Arabia

Last week, on June 17th, Amazon launched its marketplace in Saudi Arabia by replacing Souq.com with Amazon.sa. The company launched in the United Arab Emirates a year ago, replacing Souq there too.

Souq.com is regarded as the largest e-commerce platform in the Arab world with a Global Net sales of $230 million in 2019. Amazon acquired Souq.com for $580 million in 2017.

Ecommerce in Saudi Arabia

There are key factors which would align with Amazon’s interest in the country as part of their global expansion. According to Statista, Saudi Arabia’s ecommerce is projected to reach over $6 million revenue in 2020, a growth of 23% in comparison with 2019. This growth rate is far larger than anything seen in more mature markets such as the US and UK, and early entrants tend to secure a successful position as the market matures. Souq had already secured a prominent position in the ecommerce arena in the Region and the rebranding to Amazon will only reinforce it.

Other key points about the ecommerce in the country:

  • Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 7.1%, resulting in a projected market volume of US$7,992m by 2024.
  • The market’s largest segment is Electronics & Media with a projected market volume of US$1,998m in 2020.
  • User penetration will be 73.5% in 2020 and is expected to hit 91.2% by 2024.
  • The average revenue per user (ARPU) is expected to amount to US$237.50.

What does this means to Amazon sellers?

Before Amazon opened in UAE, it started recruiting sellers in Europe and the U.S. The company has not done the same in Saudi Arabia and appears to rely on local businesses, having about 8,000 sellers in the ranks. Most of the products offered on Amazon.sa now are supplied by sellers, with a few selection of products from Amazon U.S.

It is likely that Amazon will incorporate Amazon.sa to its Amazon Global Selling program but this is yet to be confirmed. Selling in Saudi Arabia now would require a local representation in the country.