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One stop solution to complex challenges of trading on the lucrative Amazon Saudi Arabia market

By Chris Dawson October 29, 2020 - 11:00 am

Earlier this year ecommerce businesses around the world welcomed the news that Amazon was launching in Saudi Arabia. This move is an opportunity for many online businesses across the world to extend their offering into the Kingdom.

The ecommerce market in Saudi Arabia has shown some remarkable growth in the past few years and it is one of the fastest growing markets which is expected to rise even more in the coming years. According to a research company, Statista, the Saudi Arabia’s market is expected to generate revenues worth US$6,311m in 2020 and is expected to see a CAGR of 7.1% between 2020 and 2024 resulting in a projected market volume of US$8,290m by 2024.

The recent launch of Amazon Saudi Arabia in June 2020 has indeed remarkably opened a window of opportunity for global businesses to tap into the Kingdom’s fast growing market. The ecommerce giant launched with close to 8,000 sellers. However most of these are local. Many ecommerce businesses wanting to tap into this promising market find themselves facing so many hurdles because of Saudi Arabia’s unique challenges of establishing or doing business there.

Despite the lucrative ecommerce market, research has shown that Saudi Arabia remains a tough place to do business. Establishing a business is a multi-step process and it can take several months from the date of submission of application to the Saudi Arabia General Investment Authority (SAGIA).

In order to start a business in Saudi Arabia one should either be a citizen or one of the owners should be a citizen. For a 100% foreign owned business, the process is very expensive. A capital requirement of SAR 30 million and commitment to invest at least SAR 200 million over the first five years. Compared to annual company tax of 5% for locally owned businesses, foreign businesses pay 20%.

A trade license is needed for all businesses operating in Saudi Arabia. This includes all businesses selling on Amazon Saudi Arabia.

For a business to start selling on Amazon Saudi Arabia a Trade License is required. To acquire this license one must apply through the relevant government ministries in Saudi Arabia. The lead time and complexities to establish legal entities and obtain these licenses from appropriate ministries is a big challenge. So a physical presence is very important when establishing a business in the kingdom.

According to Ahmed Soliman, the director of UK based ecommerce business, Eazynet, an easy solution to this complex process is to partner with an established business registered in Saudi Arabia to facilitate the selling process in the country.

“Eazynet offers global businesses partnership opportunities to access the fast growing Saudi Arabia market. Eazynet Limited has a subsidiary called Technology Flame in Saudi Arabia to serve the Middle East region. The business has been delivering world class services in the region partnering with well-known global brands.

By partnering with Eazynet, not only will your products be sold on Amazon Saudi Arabia, they will also be delivered with a quick turnaround time. Our partners will also share the benefits of Amazon Prime.”
– Ahmed Soliman, Director, Eazynet

Ahmed assures businesses that Eazynet Limited will act a consultant to facilitate in importing and selling products in Saudi Arabia.

“With Technology Flame warehouse in Saudi Arabia, the logistics and delivery of goods in the country is simplified. When required we can also help with FBA. This helps you scale your business and reach more customers”
– Ahmed Soliman, Director, Eazynet

However, one might argue that buyers in Saudi Arabia are able to browse and buy products from Amazon internationally as much as they do on Amazon Saudi Arabia.

Ahmed agrees that keeping your products in your warehouse where your business runs from to ship into Saudi Arabia is an option.

“However, it comes at a high price for a business and its buyers. Many Saudi Arabia buyers are attracted to Products listed on Amazon Saudi Arabia because of advantages like quick delivery time and not dealing with customs hurdles.

There is also the a pricey cost of internationally shipping products individually when sales which usually adds up way more than if these products are shipped in bulk and stored in a partner’s storage facility. On top of that there is also the issue of 3rd party storage and distribution to consider.”
– Ahmed Soliman, Director, Eazynet

Although the prospect for the ecommerce market in Saudi Arabia is huge, due to the fact that country is in the top 20 wealthiest countries by spending power, high internet and smartphone use penetration, access to educational programs and awareness building of ecommerce, there are still many obstacles if a business is not registered or has a trading partner in Saudi Arabia.

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