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What is the total market size e-commerce sales now and by 2020 for office supplies and accessories in Saudi Arabia?
Saudi Arabia has one of the highest Internet usage rates per capita in the world, with an estimated 72% of the population engaging in eCommerce by 2020. This has opened a large market opportunity for eCommerce startups, including the sectors of computers, office supplies and accessories. Consumer electronics such as laptops and desktops, currently possess an eCommerce market volume of US$1,252m, while this is expected to see an annual growth of 9.8% through 2020. Office supplies, under the category of Hobby and Stationery supplies sales, has a current eCommerce market value of US$527m, with a projected annual growth of 10.1%, reaching US$750.5m in 2020. The market share information shows that the overall eCommerce sector is rapidly expanding and this growth has extended to the sale of computers, office supplies and accessories.
eCommerce in Saudi Arabia
eCommerce is a booming sector in Saudi Arabia as the current market has a revenue of US$5,446m in 2017. This market is expected to continue to grow, with an estimated annual growth of 11.5%, resulting in a market of US$9,405m by 2022. Currently, 11.1 million people in Saudi Arabia use eCommerce, while this number is expected to grow to 17 million users by 2020, representing 71.9% of the total population. It s expected that the average user will be spending $641 USD through eCommerce by 2020.
Consumer Electronics and Office Supplies
Electronics and Media currently makes up the second largest share of the total eCommerce market, as revenue in this sector totaled US$1,667m in 2017. Similarly, the Electronics and Media market is expected to continue to grow at a rate of 9.8%, thereby enlarging the market to US$2,261m by 2020. More specifically, the largest segment of this market is Consumer Electronics, which commanded revenue of US$1,252m in 2017. The Consumer Electronics sector includes such products as TVs, DVD Players, desktop computers, laptops, cell phones and tablets.
In 2017, the eCommerce revenue for Hobby and Stationery supplies reached US$527m, with Office Supplies being included within this data. The market size for this sector is expected to grow by 10.1% annually, to an estimated market volume of US$750.5m in 2020. Investors estimate the market for school supplies and stationary to be approximately $540m, while the market for bags and accessories sits at $202.5m. This results in a total market (both eCommerce and traditional markets) of school supplies, stationary and accessories of $742.5m, as of 2015.
Economic Trends
A drastic fall in oil prices has precipitated slower consumer spending, which does not bode well for the Saudi economy as private consumption accounted for 41% of the country's GDP in the 3rd quarter of 2015. Total consumer spending is still growing due to the consistent market of essential goods, but products such as electronics and office supplies have felt the negative effects, having undergone a sharp downturn in sales.
eCommerce Case Studies
Jarir Bookstore proves to be an apt case study, as they offer many of the products in question, namely computers, office supplies and accessories. In 2015, the company made a net profit of $221 million, which was up 11.2% from 2014. However, the first quarter of 2016 saw a downturn in consumer spending and Jarir's sales saw a corresponding 25% decrease in sales. The company also launched an eCommerce option in January 2016, but saw less than 1% of their sales come from the online platform.
Despite the troubles of Jarir's eCommerce bid, Saudis are one of the highest internet users per capita in the world. There are many eCommerce startups that have taken advantage of this market, including Jordan-based company Souq.com, who offers many products that overlap with Jarir's catalog. Souq.com has raised $390 million since 2012 and the company is reportedly valued at $1 billion. While Jarir has had little success in developing an eCommerce platform, Souq.com has seen rapid growth. This indicates that if done correctly, there is certainly room for success in the eCommerce sector of computer, office supplies and accessories sales.
Conclusion
There is a large market available for the eCommerce sale of computer, office supply and accessory sales in Saudi Arabia. More and more people are using eCommerce, with an estimated 17 million users by 2020, which represents 72% of the country's population. The overall eCommerce market in Saudi Arabia is expected to expand by 11.5% annually until 2022. Currently, the eCommerce market for Consumer Electronics sits at US$1,252m, while this is expected to grow by roughly 9.8% annually until 2022. The market for Hobby ad Stationery supplies, of which Office Supplies are a subset, currently sits at US$527m and is expected to have annual growth of 10.1%, reaching US$750.5m by 2020. Industry leader Jarir Bookstore recently attempted to implement an eCommerce platform, but has experienced difficulty in achieving success. On the other hand, Souq.com has seen rapid growth in the eCommerce sector, while selling an overlapping catalog. The market share data and case studies seem to indicate that there is certainly potential in the rapidly expanding eCommerce sector for the sale of computers, office supplies and accessories.