The firms said it is currently impossible to give an accurate figure for the size of Saudi Arabia’s online grocery market, but toDoorstep estimates the total addressable market is around US$115m, very approximately. The sector is expanding dramatically, with 35% month-on-month growth in the last six months.
In terms of shopping patterns, around 80% of Saudis’ online grocery purchases are food, with fresh fruit and vegetables making up 23% of online sales, canned and dry food making up 18%, and dairy and eggs 15%. Snacks formed 8% of sales, with beverages on 6% and bakery on 4%.
Quality and quantity needed
In contrast, fresh meat and fish only made up 2% of sales. Payfort and toDoorstep suggested this was because shoppers were not confident in the quality of fresh meat, and still preferred to buy it in person.
The research also found that shoppers needed at least 90% of their preferred products to be available online, or they would not use the service – as they would need to physically travel to a shop anyway.
“We have found out also that convenience isn’t everything. Consumers will shop for groceries online only if the offer is right: they’re not willing to sacrifice the price, quality, and range of products that they’ve grown accustomed to in the supermarket, and they won’t put up with inconvenient delivery or pickup arrangements,” said Amira Abou Shousha, online marketing manager at Payfort on an online blogpost.
Shoppers are young and female
Unsurprisingly, the demographics of online shoppers in Saudi Arabia tended towards the young, with 28% of shoppers aged between 18 and 24, and 46% aged between 25 and 34. Also unsurprising was the skew towards women, who made up 58% of online grocery shoppers – driven, as the research suggests, by being unable to drive themselves.
On the retailer side, most online grocery vendors in Saudi Arabia do not have their own inventory, and simply buy products and add a 10-15% margin. The largest product selection stretches to 4,500 products, while the smallest is 1,500 products.
“Big retailers are starting to realise the importance of first mover advantage and started to look for partners or start their own operations. Most of the players are in Jeddah and we see the service expanding to Riyadh and Eastern Province. We might see competition on convenience by offering on demand orders where customers receiver their groceries within two hours,” said the research.