Saudi Arabia’s e-commerce sector is poised for explosive growth, projected to nearly triple in value to reach $708.7 billion by 2033, according to a new market report from the IMARC Group. This expansion, representing a compound annual growth rate (CAGR) of 15% over the next eight years, is being driven by the powerful combination of artificial intelligence, the widespread adoption of digital payments, and a uniquely young and tech-savvy population.
The AI and Digital Payment Engine
At the heart of this transformation is the integration of AI technologies into e-commerce platforms. AI is enabling highly personalized shopping experiences, smarter product recommendations, and predictive analytics that help retailers anticipate consumer needs. This technological shift is complemented by the rapid adoption of digital payment systems, which are fundamentally altering how Saudi consumers transact online. While challenges remain, the move towards a cashless economy is a key pillar of the sector’s future growth.
A Young and Connected Consumer Base
The Kingdom’s demographic landscape provides fertile ground for digital commerce. With internet penetration at 99% and one of the highest smartphone usage rates globally, connectivity is near-universal. Critically, over half of the population is under 30, meaning Gen Z and Gen Alpha consumers are at the forefront of the online shopping revolution. “The country has one of the youngest and most connected populations in the world, and it is increasingly shopping online in a retail market that still has plenty of room for growth,” noted Mohamed El-Ansari, CEO of Trendyol Gulf. While electronics currently dominate online sales, the report forecasts significant growth in groceries, fashion, and healthcare e-commerce.
Overcoming Growth Hurdles
Despite the rapid progress, obstacles such as high service fees and security concerns continue to slow the full adoption of digital payments, with many consumers still preferring cash-on-delivery. However, the Saudi government is actively addressing these barriers to accelerate its digital transformation agenda, in line with Vision 2030. Initiatives like the $40 billion AI investment fund are designed to bolster the digital economy, while bilateral cooperation with international partners aims to expand digital infrastructure and build consumer trust in digital transactions.
Regional Synergies in Digitization
The push towards a digital-first economy is a region-wide trend. In the neighboring UAE, for instance, major entities like Emirates and flydubai have partnered with Dubai’s Department of Finance to advance the Dubai Cashless Strategy. This broader Gulf-wide commitment to leveraging AI and digital payments underscores the strategic importance of these technologies in driving economic diversification and positioning the region as a global digital hub.
About IMARC Group
IMARC Group is a leading market research company that offers management strategy and market research worldwide. The company partners with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses.
Source: MEA TechWatch
