Saudi’s Young & Tech Hungry Consumer

Saudi’s Young & Tech Hungry Consumer

By Erika Masako Welch, 23 March 2023
Saudi’s Young & Tech Hungry Consumer

We spoke to dozens of the most active investors and VCs in the Kingdom as well as the region to ask them “what’s driving the start-up ecosystem in Saudi Arabia today?” The response was unanimous: Saudi’s tech-savvy consumer base with favourable consumer spending behaviour and a willingness to pay for value-add services. Couple that with the scalability of a market with a population of 35 million, and you get a magical combination for startup success.

Saudi Arabia is a large emerging market consisting of a young, tech-hungry consumer base with great infrastructure in place to satiate that appetite. In the past 10 years Saudi Arabia has dramatically improved its internet penetration rates, growing from 54% in 2012 to reach 98% today. This makes internet penetration higher in Saudi Arabia than in many other leading economies around the world like the UK (95%) and the USA (90%). In 2021, the Kingdom ranked 7th globally for the fastest mobile internet speed, giving way to even higher smartphone penetration rates. Perhaps this speaks to Saudi’s love of social media. 79% of the Saudi population are social media users and spend on average 3 hours and 16 minutes on social media platforms, signifying an online presence higher than that of leading e-commerce markets. 

Watch Video: The Tech-Savvy Youthful Population Is Driving E-Commerce Growth In The Kingdom

 

KSA Young & Tech Hungry Consumer  Base: Saudi Arabia's Population by Age and Gender 2021.

Saudi Arabia's Internet Penetration Rate and Growth Benchmark (2012-2020) Compared to Leading Countries

Saudi Arabia: Time Spent on Social Media 2022 Statistics

Saudi Arabia’s Attractiveness for Consumer-Tech Startups

Speaking with many startup founders, venture capitalists, eCommerce and retail entrepreneurs, they tell us that Saudi’s strong and consistent consumer-base is what attracts startups from across the region. Saudi Arabia has the largest population in the Gulf, being home to 35 million people. Saudi Arabia relies less heavily on expats compared to neighbouring UAE, 39% of Saudi’s 35 million are expats, while 91% of the UAE’s population are non-Emirati. This means that the Saudi population is more homogenous, less transient, and - according to some investors - more reliable for retail, F&B and consumer-oriented businesses. Investors comment on how summers can be a “dead period” for consumer-tech startups in Dubai while expats escape on summer holidays, while revenues remain a bit more consistent in Saudi Arabia in comparison. 

Watch Video: Saudi Arabia is the GCC’s most attractive market for consumer-tech start-ups

The UNCTAD’s B2C e-commerce index value measures a country’s competence and readiness to support online shopping. Saudi Arabia ranked second in the region after UAE in 2020 and has jumped 20 points since 2016, showing tremendous improvement compared to leading countries. E-commerce also relies on postal development and Saudi Arabia ranked 55th out of 168 countries in the Postal Development Report 2021 up from 73rd in 2018. In 2020, the Kingdom’s e-commerce sales were only 8% of total retail sales, which is much higher than the Middle East & Africa average (at 2.7%), but when compared to more mature markets like the USA (14%), the UK (31%), and China (45%), it indicates substantial room for growth.

KSA B2C E-Commerce Index Value (Saudi Arabia) by UNCTAD Data

KSA E-Commerce Sales as % of Retail Sales in 2020, compared to Leading CountriesKSA E-Commerce Penetration Rate and Users' Age in Saudi Arabia

 

Read Next: Who Are the Key Stakeholders and Supporters of Entrepreneurship in Saudi Arabia?

 

Learn more about the successful and the emerging Saudi’s startup and its ecosystem, in the most comprehensive report on the topic to date, The Evolution of Saudi Arabia's Start-Up Ecosystem 2010-2022.

Related Report

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The Evolution of Saudi Arabia Startup Ecosystem 2010-2022

As the KSA Startup Ecosystem continues to evolve, this report serves as an indispensable guide for investors, entrepreneurs, and stakeholders eager to navigate its complexities. The first comprehensive overview of Saudi's startup ecosystem, its history, and its future. The Special Report hosts perspectives and insights from many of the country’s most active investors, highlights new investment trends, critical milestones hit by the Kingdom’s fast-growing startup ecosystem, and spotlights a handful of interesting startups coming out of the Kingdom. It is packed full of insights, data, and opinions from the thought leaders and market-makers in the Kingdom. Readers will gain a deep understanding of the unique factors driving Saudi Arabia's entrepreneurial spirit, the challenges faced by startups, and the opportunities that lie ahead. This report serves as an invaluable resource for anyone looking to navigate and invest in this vibrant and rapidly evolving market.

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