Saudi Arabia e-commerce sales using Mada cards reached SR18.34 billion ($4.89 billion) in October — an annual increase of around 37 percent, recent data revealed.
According to the Kingdom’s central bank, also known as SAMA, this figure includes online shopping payments, in-app purchases and e-wallets, and excludes transactions by Visa, MasterCard and other credit cards. Mada cards are Saudi Arabia’s national payment cards, offering debit and prepaid services within the network.
They use Near Field Communication for contactless payments, allowing secure transactions at retailers and online, and play a key role in supporting the country’s cashless economy.
The number of e-commerce transactions also increased by 29.3 percent on a year-on-year basis to reach around 101 million in October. The prevalence of smartphones, with a 98 percent penetration rate according to the Kingdom’s Fashion Commission, highlights the digital readiness of Saudi consumers compared to advanced markets like the US, which has a 90 percent rate, and the UK with 80 percent.
The Kingdom’s youthful and increasingly affluent population is embracing online shopping, spurred by rising disposable incomes and growing awareness of e-commerce benefits like convenience and cost savings. Saudi Arabia’s per capita gross domestic product is on a steady rise, with the IMF forecasting a 15.95 percent increase by 2029, reaching $38,124.66.
This growing individual income is enhancing purchasing power, spurring demand for fashion, apparel, and other consumer goods. Combined with government initiatives to promote cashless transactions and local brand development, these trends are creating ripe opportunities for e-commerce players.
Fashion’s role in e-commerce growth
According to a study by Mordor Intelligence the fashion and apparel sector is a major driver of the Saudi online retail sector. Saudi Arabia’s fashion e-commerce market was valued at nearly $4 billion in 2023 and is expected to reach $7 billion by 2028, according to a 2024 report by the Kingdom’s Fashion Commission.
This growth is driven by increased digital exposure, evolving consumer sophistication, and strong government initiatives aimed at fostering a robust digital economy.
The Kingdom’s Fashion Commission’s 100 Saudi Brands initiative exemplifies this effort, spotlighting local designers and promoting Saudi craftsmanship on a global scale.
By addressing consumer pain points and integrating innovative technologies like virtual try-ons, fashion brands can further capitalize on this thriving market. With a combination of local and international collaboration, the Kingdom’s fashion e-commerce sector is poised for sustained growth in the coming years.
The report highlighted that 65 percent of the population is under 40, a demographic renowned for their online shopping preferences.
These groups are among the most active online shoppers globally, turning to social media platforms and brand websites for fashion inspiration and purchases.
Adding to the allure of the Saudi market, the Kingdom is home to nearly 130,000 millionaires, a figure projected to rise to 226,000 by 2030. This affluent demographic, known for their financial confidence and affinity for luxury, is poised to increase local spending as high-end international brands expand their Saudi presence.
Notably, these high-income consumers spend significantly more than their global counterparts, with 30 percent planning to boost their expenditures, reflecting a strong appetite for premium clothing and accessories, according to the Fashion Commission.
Social media platforms, particularly Instagram and Snapchat, have emerged as critical sources of inspiration for shoppers in the Kingdom.
The Saudi Fashion Commission noted that 50 percent to 60 percent of women use these platforms to discover new trends, while men often rely on
YouTube for fashion insights. This underscores the importance of influencer marketing and targeted digital campaigns in driving brand awareness and engagement within the Kingdom.
Transforming digital infrastructure
According to Mordor Intelligence, Saudi Arabia has invested over $24.8 billion into its digital ecosystem over the past six years, significantly enhancing internet quality and coverage.
As a regional leader, it was among the first in MENA to deploy 5G networks, with 77 percent nationwide coverage – well above global averages – and 94 percent coverage in Riyadh, cementing its position as a global frontrunner in connectivity. Global companies are seizing opportunities in Saudi Arabia’s expanding e-commerce market. In October, Mastercard introduced local processing for e-commerce transactions, bolstering secure and efficient payment options.
Similarly, TBS Holding announced plans to use artificial intelligence technologies to support digital transformation efforts in Saudi Arabia, reflecting the Kingdom’s broader ambitions for a thriving digital shopping ecosystem.
According to online platform Setup in Saudi, the Kingdom’s e-commerce market is led by six major players, including Noon, backed by the Public Investment Fund, Amazon, which entered via Souq.com, and Jarir Bookstores, a local retail giant with a strong online presence. Other key companies include Namshi, which caters to regional fashion, while Extra Stores focuses on electronics and home appliances.
AliExpress has a shrinking share as local platforms expand. These leaders exemplify the sector’s rapid growth and evolving consumer trends.
The Fashion Commission highlighted the seamless integration of digital and physical retail as the rise of e-commerce does not signify the decline of brickand-mortar stores.
Instead, the Saudi market is embracing an omnichannel approach, where online and offline experiences converge. Approximately 75 percent of fashion-buying behavior in Saudi Arabia is influenced by digital channels.
This includes 38 percent who research online with purchases made offline and 25 percent doing pure online transactions Challenges like uncertainty about sizing and fit remain key barriers to greater e-commerce adoption, with 40 percent of consumers citing this as a primary concern.
Key challenges for this sector as highlighted by the Fashion Commission include delivery lead times, return processes, and lastmile logistics. While 30 percent of Saudi consumers expect delivery within two to three days, this demand can only be met through local fulfillment centers. Historically, products were shipped from the UAE or Europe, causing delays and higher costs.
To address this, initiatives like Riyadh’s Special Integrated Logistics Zone support localized operations, helping reduce delivery times. Companies like Chalhoub, Apple, and Amazon have already set up fulfillment centers, enhancing distribution efficiency. For example, Farfetch has notably improved its delivery times.
On payments, the government introduced e-payment regulations in 2018 to increase consumer trust and aims to shift 70 percent of transactions to digital methods. Solutions like BNPL providers Tabby and Tamara, alongside mobile wallets like Apple Pay, are accelerating this transition.
The market remains fragmented, with the top three e-commerce platforms Shein, Namshi, and Centrepoint holding a combined 22 percent market share.
Luxury fashion remains underrepresented, presenting opportunities for growth as brands like Farfetch and local players like Level Shoes expand their presence.
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