Ecommerce revenues in Saudi Arabia are staggeringly poor compared to countries where the sector is more established.
In 2016, ecommerce companies in Saudi Arabia generated an estimated $4.872 billion in revenue, not an insignificant number, but it’s clear ecommerce in the kingdom still has a long way to go.
At Uxbert, we regularly run UX research projects with Saudi users about their ecommerce behaviour, drawing data from usability tests on live websites, apps and prototypes, eye-tracking research for testing UIs, and ethnographic in-depth interviews for more exploratory research. These have helped us gain insights from real users in Saudi Arabia about their attitudes and behaviours with ecommerce.
We’ve found that there are some common friction points - delivery and trust being two - which are causing the sector some pain.
1. Lack of trust towards local brands' ecommerce capability
Saudis have an embedded pessimism towards local ecommerce brands. People don’t think local brands are dependable when it comes to online payments and delivery services, two core concepts of successful ecommerce sectors.
Even if a user had had no previous experience with the brand in question, they tended to start from a position of scepticism. Often this was due to their low expectations of the level of customer service provided by local brands based on previous experience. This in turn converted into low expectations of the brand’s ability to deliver the product on time or keep the customer’s payment details secure.
Even in cases where users had a successful offline experience with the brand, they were still hesitant to trust that the order would be delivered correctly or that their payment would be secure, if they purchased a product or service online.
While these are issues that apply across the board in ecommerce in Saudi Arabia, it seems that the local brands have a much higher mountain to climb than established international ones. International brands seem to benefit from an inherent expectation of better customer service and reliability purely due to the nature of them being a global brand.
That said, it’s important to note that in our research comparing international and local ecommerce brands, the international brands we used were all western companies. It may be the case that international ecommerce retailers from non-European or North American countries don’t automatically receive the same degree of trust.
2. Online payments need to be easier
Online payment is clearly still the biggest obstacle for users in Saudi Arabia. Of the users we tested and interviewed, 90 percent preferred cash on delivery to online payment.
There are two reasons for this.
First of all there is the issue of security, many users still have doubts about the security of online payments and believe their bank details are not secure when they use them online. Interestingly, for specific products and services such as flight tickets and hotel bookings, even the most risk-averse user seemed to have no problem using online payment.
In addition to the issue of security, there’s also the practical difficulty of having a card that has online payment capabilities. Obtaining a credit card in Saudi Arabia can be a time-consuming and difficult process. And while in most other countries a debit card is good enough for online payment, many banks in Saudi do not allow for online purchases to be made with debit card.
3. Arranging and managing delivery is a pain
Almost every user we’ve come across had at least one story of being let down by delivery services. We divided delivery model complaints into two segments: the pain involved in getting their delivery done, and their lack of trust in the delivery service itself.
Saudi Arabia has introduced a formal address system but it hasn’t yet been widely adopted. As a result we found that most users don’t actually know what their official home address is.
And even when they have the correct address, users often told us that “it doesn’t really matter if I get the address right, I know that they’re going to call me anyway”. Having to provide directions to the delivery driver (where language often makes communication harder as many delivery companies employ non-Arabic speaking drivers) even after tediously filling in delivery details is a consistent source of user frustration that pushes potential customers away.
There’s also the inherent lack of trust in the delivery itself being completed in good condition. Many users refused to order higher-priced items because of concerns about the final condition of the item and whether it would arrive at all.
The other issue was delivery time. In one of our studies, every single user specifically searched for an estimated delivery time, saying that this heavily influenced their decision to buy a product.
4. User reviews should be localized
User reviews are an established tool for driving online sales.
In our research, we found that Saudi users didn’t just expect to see user reviews, they wanted to see them written in Arabic and what’s more they had a preference for reviews that were written by Saudis.
Reviews go a long way in providing users with an ‘informational social influence’ (social proof) that convinces them to buy a product and are an expectation in ecommerce around the world.
Reviews, written by Saudis in Arabic, added a sense of authenticity as well as providing the user with reinforcement that the product in question was what they were looking for.
5. Browse on mobile. Buy on laptop
Saudi Arabia ranks second highest in screen minutes viewed on smartphones globally and mobile penetration in the kingdom has seen a 23 percent increase in the last three years with 86 percent of Saudis currently owning a smartphone.
Yet despite being clearly comfortable with interacting on mobile, most users chose laptop or desktop as their primary method of making a purchase online, particularly for high value transactions. Even if they chose to do their browsing on mobile, the actual purchase and payment would be on their laptop or desktop.
Users prefered to make high valued transactions on a desktop or in person rather than on their mobile phones because they held an automatic assumption that mobile sites had less product information than desktop versions.
None of these obstacles are insurmountable and it seems that Saudi Arabia is moving in the right direction. Ecommerce in Saudi Arabia is steadily growing and is estimated to reach $10.8 billion in 2020.
In the past six months credit card usage has shot up to 64 percent of ecommerce customers and cash on delivery dropped to 38.1 percent.
In addition, the introduction and now fast-growing adoption Sadad account, a governmentally mandated payment system, has proven to be a game changer for the ecommerce industry in Saudi. The system, introduced in 2004, makes it significantly easier for users to purchase online without needing a credit or debit card.
The ecommerce industry in Saudi Arabia is growing and will keep growing as users become more comfortable and confident with online payments, delivery services become more streamlined and most importantly, as businesses deliver a better user experience.
Just being online and offering ecommerce services isn’t enough any more. With increased competition and consumers who know what they want, the experience you deliver to your customers matters.