Arab News
Arab News, Wed, Feb 05, 2025 | Shaaban 6, 1446
E-commerce share in Saudi Arabia’s retail sector to hit 46% by 2030: Visa official
Saudi Arabia:
Saudi Arabia’s consumer retail spending is
projected to experience significant growth in the coming years, with e-commerce
expected to account for 46 percent of the overall retail sector by 2030,
according to a Visa executive.
Speaking to Arab News at the Retail Leaders Circle
in Riyadh on Feb. 4, Ali Bailoun, regional general manager of Visa, highlighted
that Saudi Arabia currently represents 44 percent of the total retail spending
in the Gulf Cooperation Council region.
Bailoun’s remarks reflect Saudi Arabia’s
ongoing shift toward a more diversified, digitally-driven economy, where
e-commerce plays a pivotal role.
E-commerce in Saudi Arabia
Earlier this month, data from the Ministry of
Commerce revealed that Saudi Arabia’s e-commerce sector continues to show strong
growth. As of the fourth quarter of 2024, the Kingdom now has 40,953 registered
e-commerce businesses, marking a 10 percent year-on-year increase.
“In line with Vision 2030, we see Saudi growing or
doubling the payment volume by 2030. Even if you look at e-commerce, we expect
e-commerce to grow to 46 percent by 2030. So, we see growth and we see
potential. And you can see this on the ground,” said Bailoun.
He added: “Today, you can go anywhere in Saudi
Arabia, and you can use your card and make any payments in any retail shop.”
Bailoun noted that e-commerce in Saudi
Arabia currently accounts for 29 percent of all consumer retail payments in
2024, and is projected to rise to 46 percent by the end of this decade.
He also highlighted that cross-border transactions
represent 15 percent of consumer retail payments in Saudi Arabia for 2024.
Supporting these insights, a September 2024 report
from Saudi Arabia’s Small and Medium Enterprises Authority indicated that the
Kingdom’s retail sector is poised to double between 2020 and 2025, with an
annual compound growth rate of 15 percent.
Furthermore, a December report from Statista
projected that credit card penetration in Saudi Arabia will reach 46.83 percent,
continuing a trend of growth observed over the past 15 years.
Technological advancements
Bailoun suggested that data should be used
wisely by retailers to enhance the growth of cross-border business.
“My recommendation always to retailers is data.
You need to find a way to collect and optimize your data and then customize
these solutions,” said Bailoun.
He added: “You need to work with data, not only
yourself. You need to look at the market. You need to look at the region and
start building up on the data you have to customize the solutions or build up
these solutions.”
The Visa official further said that the
implementation of advanced technologies like Artificial Intelligence is also
crucial to elevate the growth of both physical and e-commerce retail sectors.
“Today when you look at social media, sometimes
you like something and you read more about it. Then it becomes it pops up in
different areas. It is all AI,” he said.
A recent report by market research firm IMARC
echoed similar sentiments, emphasizing the growing role of technology in shaping
the e-commerce retail sector.
According to the report, the increasing use of
data analytics and AI algorithms to personalize shopping experiences is a key
driver of the market. “The expanding use of data to recommend products based on
a user’s browsing and purchase history is making it easier for customers to
discover items they may be interested in,” the report stated.
IMARC also highlighted that Saudi Arabia’s
e-commerce market was valued at $22.9 billion in 2024, with projections
indicating it will reach $708.7 billion by 2033, reflecting a compound annual
growth rate of 12.8 percent.
Visa’s Saudi operations
He also talked about Visa’s close cooperation with
STC Bank, which recently received a non-objection certificate from the Saudi
Central Bank to commence its banking operations in the Kingdom.
“We are a payment technology network. We work and
we enable all players in the ecosystem; be it a traditional bank, digital bank,
a wallet, a merchant, or maybe a telco provider. We work and we operate and
enable the whole ecosystem,” said Bailoun.
He added: “STC was a wallet. They’ve converted to
become a digital bank. We’ve been working with them when they were a wallet, we
will continue working with them when they become a bank again. We enable them to
do payment credentials, which means they can issue a card under the Visa brand,
and they go and do payments anywhere and everywhere in the world.”
Calling Saudi Arabia one of the strategic markets
of Visa, Bailoun also outlined some of the major initiatives taken by the
payment card services company in the Kingdom.
In October 2024, Visa opened its fifth innovation
center globally in Riyadh in the King Abdullah Financial District.
“Today, if you have a problem statement. If you
have anything you want to solve or cater for, we sit down together with many
partners, we co-create and come up with a solution in that innovation center,”
said Bailoun.
He added: “In addition, we have some best
practices and some experiences that we’ve taken from around the world; be it on
the gaming, on AI or gen AI. We have something on urbanization. In the
innovation center, we have also added something that will cater for the new
cities the likes of Neom, the likes of Qiddiyah.”
Bailoun also detailed Visa’s major
partnerships in the Kingdom with retailers including Cenomi Retail and Marriot
Bonvoy.
“With Cenomi, we have signed a deal to work on two
parts; the loyalty platform and we have also worked on something called
co-brand. So, Cenomi will have a co-brand credit card. The more you spend on
their card, the more loyalty you get, and then you can redeem within the group,”
said the Visa official.
He added: “Marriott Bonvoy is a group of hotels.
It’s a loyalty platform, one of the big platforms globally. The card is issued
in partnership with Visa and Bonvoy. So, the more you spend, the more you will
get points to redeem in Bonvoy hotels.”