4 Things to Know Before Importing to Saudi Arabia KSA
SAUDI ARABIA KSA has been the world’s biggest exporter of crude oil for decades. However, the Kingdom hasn’t been able to become a large economic hub despite such a prominent exporting portfolio. However, things are getting better, encouraging foreign investors to venture into the Saudi market for various reasons.
On the one hand, the de-facto young ruler of the Kingdom has set off a series of economic reforms on the lines of the UAE to make the country attractive to investors. On the other hand, expert e-commerce Importers of Record has made it quite easy for all the small to medium-scale enterprises to venture into the Middle Eastern markets that were once considered difficult to get to.
If you want your business to venture into the Saudi market and ship goods there, then continue reading. We are going to share information that you must know as a prospective importer, investor, or e-commerce entrepreneur who wants to work in the Kingdom of Saudi Arabia.
1) SAUDI ARABIA KSA is A Large, Untapped E-Commerce Market That is Waiting for You
Experts are in agreement that e-commerce is the best channel for importing to the 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 your importing goods involve electronics and fashion accessories, then the SAUDI ARABIA KSA is going to be a goldmine for your business. You just need to find an e-commerce Importer of Record that can procure all those items to the Saudi destination ports.
Sustained Buying Power in SAUDI ARABIA KSA
For a business that wants to ship its items overseas, it is really important to factor in the economic situation of the country and the buying capacity of the individuals. You won’t be able to make your imports a successful transaction if the importing country is performing badly on the economic front no matter how much you cut back on your logistical costs by hiring an e-commerce Importer of Record.
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 are directly selling to end customers often face payment hiccups, especially when they are operating in far-off countries. Even though there are now many universal ways of payment, but 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 getting more common. All these changes in the consumers’ behavior regarding payments indicate that importers running B2C businesses and want to venture into the SAUDI ARABIA KSA are in for a 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 too, Saudi Arabia 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 the 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
Even though the SAUDI ARABIA KSA’s young leadership has been insistently working on improving the ease-of-doing-business index of the Kingdom, but they still need to come a long way. If you are an importer/e-commerce entrepreneur who wants to enter the Saudi market in the next six months or a year, then it is very unlikely that you can immediately reap the benefits of 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 documents that seem unnecessary.
Similarly, the language barrier is another problem that importers still face in the SAUDI ARABIA KSA while working on their own. For instance, you still need to have an Arabic translation of the radiation certificate and many other documents in certain instances.
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 in, but on the other hand, it is still a lot of work to register your business there formally.
But there is a way to get out of this predicament. Get an experienced e-commerce Importer of Record onboard and get around all the bureaucratic overwork needed to establish your enterprise on the ground. An e-commerce IOR will procure your shipments to Saudi ports while taking care of all the customs requirements and duty payments. You can actually get your imports to the Saudi warehouses without hiring a single representative on the ground, given that you are working with an e-commerce IOR that has ample experience of working in the Middle East in general and the Kingdom in particular.
3) You Need a Considerable Amount of Capital for Setting up There
If you want to make the most of the country’s promising e-commerce market and business-friendly policies, then you need to spend a considerable amount of money to set up there. The real estate recession that impacted the UAE hasn’t affected the Kingdom. In the SAUDI ARABIA KSA, you still need a lot of investment to set up warehouses and offices formally, particularly in the big cities of Riyadh, Jeddah, etc.
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 that 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 that is an approved Amazon IOR and as well as Noon IOR.
Within 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.