Saudi Arabia (KSA) has been the world’s biggest crude oil exporter for decades. However, despite such a prominent export portfolio, the Kingdom hasn’t been able to become a large economic hub. However, things are getting better, and foreign investors are being encouraged to venture into the Saudi market for various reasons.
Saudi Arabia’s young ruler is driving economic reforms similar to the UAE, making the country more attractive to investors. Meanwhile, expert e-commerce Importers of Record have simplified market entry for small to medium-sized enterprises in the Middle Eastern market.
If you want your business to venture into the Saudi market and ship goods there, then continue reading. We will share information you must know as a prospective importer, investor, or e-commerce entrepreneur who wants to work in the Kingdom of Saudi Arabia. Learn More about Importer of Record in Saudi Arabia
1) Saudi Arabia KSA Is The Top E-Commerce Market for Your Business Growth
Experts agree that e-commerce is the best import channel to SAUDI ARABIA KSA. The e-commerce landscape in the Kingdom is still shaping up. So, there is a lot of potential and room to establish your e-commerce operations in the country.
There are multiple reasons why SAUDI ARABIA KSA is the best place to go with your e-commerce imports.
More than 70% of the SAUDI ARABIA KSA Population Is Online
One of the simplest ways to tell if a countrywide market is ready for e-commerce imports is to look at the percentage of its online population. The SAUDI ARABIA KSA is doing quite well in this domain. More than 70% of its population is connected to the web. Meanwhile, 65% of Saudis use smartphones.
These statistics tell us that the Saudi market has more than enough room to welcome e-commerce imports. The other good bit about this online population is that it is primarily comprised of young people who are willing to break out of the traditional brick-and-mortar shopping experience and want to use the online medium for shopping.
If you’re importing electronics and fashion accessories, Saudi Arabia is a goldmine. Simply find an e-commerce Importer of Record to handle procurement to Saudi destination ports.
Sustained Buying Power in SAUDI ARABIA KSA
When shipping items overseas, it’s crucial to consider the economic situation and buying capacity of the destination country. Even with reduced logistical costs through an e-commerce Importer of Record, imports won’t succeed if the country’s economy is struggling.
As mentioned earlier, the SAUDI ARABIA KSA’s economy has been performing steadily ever since the exploration of oil. Similarly, the buying power of an average consumer in the Kingdom is also quite good even though the majority of them belong to the immigrant working class.
Consumers Are Adapting to New Payment Methods
Many importers who directly sell to end customers often face payment hiccups, especially when they operate in far-off countries. Even though there are now many universal ways of payment, different local marketplaces are still behind on that front.
The good news is that Saudi consumers are on the right track regarding payment methods. Credit card transactions are increasing in comparison to Cash-on-Delivery (COD) payments. Moreover, electronic payments are also becoming more common. All these changes in consumer behavior regarding payments indicate that importers running B2C businesses and wanting to venture into the SAUDI ARABIA KSA are in for good fortune.
Social Media Is Booming
E-commerce and social media go hand in hand. There is no way an e-commerce enterprise anywhere in the world can thrive without having any social footprint. Different statistics suggest that more than 90% of customers of any online store dealing in any niche come through Facebook, Instagram, and Twitter. For the very same reason, a booming social media presence in a region is considered a green signal for an e-commerce venture eyeing to develop its consumer base there.
Here, Saudi Arabia also shows encouraging signs for importers and overseas e-commerce operators looking to team up with seller IORs. There are roughly 16 million and 14 million active Facebook and Instagram users in SAUDI ARABIA KSA, respectively. This means you have a lot of potential consumers to reach out to through social media in the Kingdom.
2) Establishing Your Own Company Still Entails a Lot of Work
Despite Saudi Arabia’s efforts to improve its ease-of-doing-business index, progress is still being made. If you’re an importer or e-commerce entrepreneur planning to enter the Saudi market soon, it’s unlikely you’ll immediately benefit from the ongoing reforms.
Saudi Arabia is bound to the rulings of the World Trade Organization and thus has to devise a transparent and objective import licensing system. However, the ground situation doesn’t reflect that so much. You still need to take care of a laundry list of unnecessary documents.
Similarly, the language barrier is another problem that importers still face in SAUDI ARABIA KSA while working independently. For instance, in certain instances, you still need an Arabic translation of the radiation certificate and many other documents.
Overseas businesses are caught in a catch-22 here. On the one hand, SAUDI ARABIA KSA’s online landscape is fully ripe for foreign e-commerce enterprises to venture into, but on the other hand, it is still a lot of work to register your business there formally.
To bypass bureaucratic hurdles, hire an experienced e-commerce Importer of Record (IOR). An IOR will handle your shipments, customs, and duties, ensuring your goods reach Saudi warehouses without needing an on-ground representative.
3) Significant Capital Needed for Setup
You’ll need significant investment to capitalize on Saudi Arabia’s e-commerce opportunities and business-friendly policies. Unlike the UAE, Saudi Arabia still requires substantial funding to establish warehouses and offices, especially in major cities like Riyadh and Jeddah.
Bringing in a huge investment is not such a problem for big, established importers. However, the majority of medium and small-scale businesses just shrug off the idea of entering the Saudi market because they can’t afford the hefty upfront cost it entails. If you are also one of those businessmen who are letting go of this opportunity due to capital restraints, then you should consider working with a seller IOR.
If you are running a B2C business, then the services of an experienced seller, IOR, are enough to run your business from overseas without having any physical presence in the country. For instance, an online store can put its entire product catalog on the Saudi digital market with the help of e-commerce IORs that also work in the capacity of a seller on different platforms.
Amazon (Souq) and Noon are two of the biggest e-commerce marketplaces in the Kingdom, and you can work on both of them from overseas without registering your business in the country. You also don’t need to set up offices and hire people to sell on these two marketplaces. All of this can happen if you are working with an importer of record who has an approved Amazon IOR and a Noon IOR.
With a single service fee, you can save yourself from all the hassle of establishing a business overseas and all the hefty expenses it entails.
4) There Is an Opportunity in SAUDI ARABIA KSA to Expand
The other catch of entering the Saudi market with your business is you don’t have to restrain yourself. After cementing your position in the Saudi marketplace, you can also expand to the neighboring economies. Besides the UAE, you can also find a lot of room for growth in Jordan and Egypt.
If this expansion is already in your mind, then it would be better to start looking for an e-commerce Importer of Record that can cover the entire MENA region with a seller status on different online platforms. Having an experienced IOR in your team will streamline and expedite your expansion plans.
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