In the wake of the Coronavirus pandemic, online shopping gained a massive boost. Amazon, the king of online shopping, has been leading the trends. In June 2020, Amazon started operating in Saudi Arabia and it launched a website for Saudi shoppers. The website is a rebrand of souq.com, a Middle East e-commerce platform Amazon acquired in 2017. The re-branded site is now amazon.sa which transferred shoppers’ personal information from souq.com. Some of the critical information to be carried over into the new website included customer profiles, customer support inquiries, and payment methods. All this information will be a good starting point for the future marketing and strategic planning of the new business. The re-branding follows a previous restructuring of the souq.com website in the United Arab Emirates (UAE) in 2019. Having witnessed significant success with the UAE site, the re-branded Amazon Saudi should also expect significant growth and stability. Further, the continuation of the operating business (souq.com) that Saudis were used to is likely to draw less resistance because of the existing clientele and the reduced marketing burden.
Saudi Arabia’s demographics and technology adoption give Amazon a high chance of succeeding. Saudi Arabia’s population exceeds 35 million people as of January 2021 (www.worldometers.info), thereby presenting a sizable market for the new Amazon.sa. Saudi Arabia has a high smartphone penetration rate at 65.2%, while the internet penetration growth rate is 6.9%. These statistics show that the country has an encouraging consumer behavior and the necessary infrastructure to support e-commerce, thereby granting Amazon a greater probability to thrive.
E-commerce has gained significant growth in Saudi Arabia in the last decade. Turnover has increased by 11% in recent years. As of 2017, e-commerce revenue was approximately US$ 6 billion, with the growth projected to rise to $9 billion by the end of 2021. Approximately 13 million internet users regularly purchase goods online. The figures are increasing, and that presents Amazon with a great chance of flourishing in Saudi Arabia.
Amazon will face some significant competition in Saudi Arabia, but they have high chances of overcoming that competition. The most popular e-commerce sites used to be haraj.com and souq.com. Since Amazon acquired souq.com, which will thereby minimize the competition. Other competing online retailers operating in the Saudi marketspace include AliExpress, Alibaba, Apple, Extrastores.com, Opensouq.com, and eBay. All these and many others claim small market shares. Amazon stands to become the biggest online retailer in Saudi Arabia, given its financial muscle, wide variety of products, speedy deliveries, and excellent customer service.
Amazon has a big chance to succeed in Saudi Arabia, considering the pandemic impact on online shopping. In late March, when the Coronavirus pandemic began to spread to most of the world and lockdowns set in, BinDawood Holding, a local Saudi online retailer, reported that their average 10-day sales increased by 200%. In addition, the order transactions rose by more than 50% while installations of its shopping app increased by 400%. Amazon, the world’s leading online retailer, has also witnessed massive growth since March due to mainly Covid-19. Saudis have shown a willingness to continue shopping online, presenting a ready and growing market for Amazon as it enters the Saudi market.
The Saudi government had deliberate and concrete plans to support the growth of e-commerce as part of Vision 2030. Under a program known as the Financial Sector Development Programme, the Saudi government is committed to the increase online payments by more than 70% by the year 2030, which is way higher than the 20% target set for 2020. This means that Amazon is likely to benefit from the support structures that the Saudi government has put in place for online retailers and other businesses involved in e-payments.
Amazon has an immense opportunity in the Saudi market because they started by offering a huge 34 categories of products that customers anywhere in the world demand the most. These categories include fashion, grocery items, electronics, books, home appliances, and beauty products. Although a conservative culture, Saudi society is changing significantly and adopting some western ways in fashion, food, and lifestyle, thereby giving Amazon a foot into this growing market.
Amazon Saudi has a chance of prospering because it has embraced Arabic and English languages, which are the two major languages in the kingdom. The amazon.sa site and the shopping app offer services in both Arabic and English; the platforms also offer customer support in these languages.
Amazon.sa plans to offer free next-day deliveries for shopping worth more than SR 200 ($53). In some areas around Riyadh, Amazon plans to offer paid same-day deliveries. Speedy payments and free deliveries are likely to win Amazon many clients and retain them because there are not many online sellers offering such a speedy service. Amazon has also made it simple for its existing customers in Saudi Arabia to transition to Amazon.sa. Such clients do not need to download a new app, but they can simply change to “Saudi Arabia” and “Arabic” in the “Country and language” part instead. In this regard, they will be directed to shop from the Saudi store! This means, on top of those customers Amazon retained upon acquiring souq.com, it can merge all their clients in Saudi Arabia under amazon.sa.
Amazon will conquer the Saudi marketspace because it has established strong relationships with strategic partners. It has partnered well with the Saudi Post to help with the deliveries throughout the kingdom. Additionally, Amazon has collaborated with businesses to establish 14 warehouses in strategic areas around Riyadh and other major cities. This broader operational network is set to cover all major areas with the potential to act as a launching pad for Amazon. Further, Amazon has recruited a sizable and yet sustainable workforce of more than 1,400 to serve the Saudi market.
Amazon’s hefty goals of achievement in the Saudi market are high because of its strong position on SWOTT (Strengths, Weaknesses, Opportunities, Threats, and Trends). Amazon is a substantially popular brand in online shopping worldwide and in Saudi Arabia. They have a strong financial base and extensive experience in operating in diverse cultures, among other strengths, to help them dominate the Saudi market. The company constantly works on its weaknesses, such as having an easily imitable business by introducing better customer service, better technology adoption, and a wider product offering. Amazon can also overcome threats related to currency fluctuations and government regulations with relative ease due to its experience, economic influence, reliance, and customer demands. Regarding trends, Amazon has been a major leader of the technological revolution in the world. Its operations as an online retailer and a tech giant help the company harness massive data on current trends, thereby tailoring its services and product offerings to every market. All these issues mean that Amazon has a high chance of succeeding in Saudi Arabia and the entire Middle East.