Landmark logistics to test Saudi online battle between Amazon and noon

Retailers in Saudi Arabia face a new online challenge with the arrival of noon.com, the regional rival to Amazon. (Reuters)
Updated 18 October 2017
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Landmark logistics to test Saudi online battle between Amazon and noon

RIYADH: In a country where postal codes are rarely used, most people pay in cash, and shopping is done in giant air-conditioned malls, building an online retail business is no easy task.
But two powerfully-backed companies are trying to do just that, betting a young, tech-savvy population will eventually deliver up a large slice of the Arab world’s largest consumer market.
After months of delays, Noon.com launched in the UAE on Oct. 1 and said it would enter the Saudi market “within the coming weeks.”
That will start a race for dominance in a largely untapped market against Dubai-based Souq.com, which is already present in Saudi Arabia and poised for expansion after its acquisition this year by Amazon.
Both companies are well armed for the fight.
Investors in Noon.com, including Dubai billionaire Mohamed Alabbar and Saudi Arabia’s sovereign wealth fund, have put $1 billion into the project. The business also plans to leverage existing assets from Alabbar’s Emaar Malls, Aramex delivery service and Namshi and JadoPado online marketplaces.
Souq.com was known as the “Amazon of the Middle East” even before its purchase by the world’s biggest online retailer, having built up a following and brand relationships since its launch in 2005.
“Amazon and Souq.com will benefit from early-mover advantage in our view,” said Josh Holmes, a consumer analyst at market researcher BMI.
But with online sales in Saudi Arabia expected to surge to $13.9 billion by 2021 from a projected $8.7 billion this year, he said there would be plenty for Noon.com to play for.
“While the rivalry between Amazon/Souq and Noon.com will be intense, we believe there is more than enough room for both players to thrive in Saudi Arabia and the wider region,” Holmes said.
Shifting retail online would be a sea change for commerce in the Middle East, where Internet sales now represent less than two percent of total retail, twelve times less than in the UK, according to a Boston Consulting Group report.
In Saudi Arabia, which has lagged behind regional leader the UAE, it is only 0.8 percent of the total, and both Noon.com and Souq.com will have to adapt to the particular challenges of the market to prosper.
One is getting deliveries right. Currently, delivery companies in Saudi Arabia regularly ask for landmarks rather than addresses, with drivers often requesting WhatsApped locations.
Then there is payment. With less than half the population owning credit cards, e-commerce businesses often have to offer cash on delivery options, increasing their risks.
There are other dangers too. High unemployment among the kingdom’s millennials could cap spending power in the long term.
Yet analysts point to the young population, high rate of technology adoption and high-quality transport networks as reasons for optimism. Some companies are already thriving.
E-commerce now represents more than 40 percent of logistics provider DHL’s inbound parcel business into Saudi Arabia, said country general manager Faysal ElHajjami, forecasting this would continue to grow.
Start-ups are also developing ways to accommodate the kingdom’s last-mile delivery quirks.
Dubai-based Fetchr, for example, operates an app that allows users to identify their location by using GPS, like Uber.
“We realized nobody in Saudi really has a formal address, but everybody has a smart phone attached to their hip,” said co-founder Joy Ajlouny, speaking with partner Idriss Al Rifai.
Over the last year, Fetchr has grown its presence in the kingdom from three to 84 cities, with plans to tackle another 25 by the end of the year, and now employs about 1,000 people.
Ajlouny and Rifai estimate market growth of 20 to 30 percent per year over the next five years, but caution that a five percent value added tax, planned for introduction next year across the Gulf, could check that forecast.
As planned, the tax would be applied each time a product crosses a border, they said, which could be a 15 percent total by the time a customer receives the parcel and 20 percent if he or she decided to return it.
“It would be a huge hindrance,” said Ajlouny. “Everybody is talking about the growth of e-commerce, but this would completely cripple that growth.”


MODON inks $453m in private sector deals to expand Saudi industrial cities

Updated 25 December 2024
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MODON inks $453m in private sector deals to expand Saudi industrial cities

JEDDAH: Saudi industrial cities are set for further growth as the sector's authority revealed it has signed 23 development contracts with the private sector, valued at over SR1.7 billion ($453 million). 

The agreements, announced by the Saudi Authority for Industrial Cities and Technology Zones, or MODON, encompass a wide range of projects aimed at boosting industrial capabilities.  

These include the expansion of industrial cities, the construction of ready-made factories, the enhancement of MODON’s safety and security systems, and initiatives aligned with the National Industry Strategy.  

Additionally, the projects will address water and irrigation needs, improve water treatment facilities, upgrade electricity services, and expand road networks. 

MODON’s latest contracts highlight the growing role of the private sector in supporting Saudi Arabia’s ambitious Vision 2030 goals, which emphasize economic diversification, local production, and the creation of an attractive environment for both domestic and foreign investment.  

The projects are expected to enhance the competitiveness of Saudi industrial cities, foster greater investment, and improve operational efficiency for businesses. 

The agreements will also contribute to regional development, improve environmental sustainability, and promote vegetation growth, MODON stated in a post on its X account. 

The development of these projects is in line with Saudi Arabia’s broader efforts to build a dynamic and innovative economy. 

This move follows a previous round of agreements in July, when MODON signed nine contracts valued at SR1 billion to enhance infrastructure and service facilities across various industrial hubs. Key initiatives from that round included the development of infrastructure in Makkah’s and Jeddah’s industrial cities and the installation of 132-kilovolt overhead power lines in Tabuk’s industrial city. 

Looking ahead, MODON plans further expansion with projects that will improve electrical services, such as the construction of 115-kV overhead power lines in Hafr Al-Batin’s industrial city. The authority is also focusing on enhancing infrastructure networks for the first and second phases of Dammam’s Third Industrial City. 

Since its establishment in 2001, MODON has overseen the development of 36 industrial cities and is responsible for managing both operational and under-construction industrial lands across the Kingdom.  

In the first quarter of 2024, MODON attracted SR3.4 billion in private sector investments, signed 142 new industrial contracts, and registered a total of 6,758 factories. 

As part of its commitment to sustainable growth, MODON also planted over 576,000 trees and finalized 335 logistics contracts, underscoring its broader environmental and economic development objectives.


2.25m freelancers in Saudi Arabia join national economy

Updated 25 December 2024
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2.25m freelancers in Saudi Arabia join national economy

  • The 25— 34 age group is particularly active in freelancing
  • 62% of freelancers hold bachelor’s degrees

JEDDAH: Freelancing is emerging as a key contributor to Saudi Arabia’s economy, with over 2.25 million individuals registered on the freelance platform by September.

This growth reflects the rising popularity of flexible work, supported by the Ministry of Human Resources and Social Development’s launch of the “Future Work” company in 2019 to enhance the freelancing ecosystem by promoting modern workstyles, including remote work and flexible-hour freelancing.

The company’s mission is to create more job opportunities, empower Saudi talent, and develop a labor market that complements traditional employment while aligning with global trends, according to the Saudi Press Agency.

Freelancers make a notable contribution to Saudi Arabia’s economy. In 2023, the sector contributed SR72.5 billion ($19 billion) to the gross domestic product, representing 2 percent of the Kingdom’s total output. This highlights its role in diversifying income sources and strengthening the national economy.

The initiative, along with other efforts, has contributed to reducing the Kingdom’s unemployment rates. Saudi Arabia has revised its unemployment target to 5 percent by 2030, down from the previous goal of 7 percent, as part of Vision 2030’s ambitions.

The progress was highlighted by Minister of Human Resources and Social Development Ahmed Al-Rajhi during a panel discussion at the Budget Forum 2024 in November, where he detailed the Kingdom’s strides in improving employment figures. Al-Rajhi said that the unemployment rate among Saudis was 12.8 percent in 2018, and it has recently dropped to 7.1 percent.

The Ministry of Human Resources and Social Development issues freelance certificates to individuals specializing in specific fields, enabling them to work independently in activities approved by the ministry through the official freelance portal.

A recent report from Future Work highlights the sector’s rapid development and its alignment with Vision 2030. The report also emphasizes the diverse nature of freelance activities, with trade and retail leading at 38 percent, followed by industry at 13 percent and business services at 11 percent. The diversity demonstrates the sector’s adaptability to meet various economic needs.

Freelancing accommodates individuals with different educational backgrounds. According to the report, 62 percent of freelancers hold bachelor’s degrees, while 31 percent have high school diplomas or less, and 7 percent possess higher degrees.

Technology plays a pivotal role in the sector’s growth, with digital platforms becoming indispensable for freelancers, especially in fields like technology, information, and finance. These tools enhance productivity and connectivity, fostering sustainability and success in freelance careers.

Geographically, the Riyadh region accounts for the largest share of freelancers at 27 percent, followed by Makkah at 22 percent, and the Eastern Province at 14 percent.

The 25— 34 age group is particularly active in freelancing, reflecting the younger generation’s growing interest in this flexible career path.

The report said that 3.2 million women have expressed interest in joining the freelance market, underscoring the effectiveness of initiatives aimed at enabling women to balance professional and personal commitments.

Government programs like Reef, the Social Development Bank, and the Human Resources Development Fund further support freelancers by fostering an environment conducive to their growth and success, SPA reported.


Saudi Arabia’s food & beverage sales drive $3.14bn in consumer spending

Updated 25 December 2024
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Saudi Arabia’s food & beverage sales drive $3.14bn in consumer spending

  • Restaurants and cafes topped the list with SR1.69 billion in transactions: SAMA data

RIYADH: Saudi Arabia’s consumer spending reached SR11.8 billion ($3.14 billion) in the week of Dec. 15 to Dec. 21, with the food and beverage sectors continuing to lead in sales, official data showed. 

Despite a slight overall decline of 8.1 percent from the previous week, key sectors, especially dining and food, showed consistent performance, according to data from the Saudi Central Bank, also known as SAMA.  

The restaurants and cafes sector topped the list with SR1.69 billion in transactions, despite a 13.9 percent weekly dip. Food and beverage spending followed closely, settling at SR1.69 billion as well, reflecting a 9 percent decrease. These categories, however, maintained their dominance in consumer expenditure. 

The overall decrease in consumer spending is attributed to the timing of salary disbursements, traditionally paid on the 27th of each month, which typically leads to lower spending in the preceding weeks.  

Additionally, the winter holiday season, during which many expatriates travel home, further influenced the dip in domestic spending. 

Other sectors saw more moderate drops. The value of clothing and footwear transactions fell by 5.2 percent to SR864.15 million, while construction and building materials recorded a small 0.9 percent decline, totaling SR355 million.  

The electronics and electric devices sector saw an 8.7 percent weekly decrease in value, while gas stations and health-related sales also experienced declines of 9.4 percent and 7.3 percent, respectively. 

Jewelry sales recorded a 14.4 percent drop in transaction volumes, with a slight 3.9 percent decrease in value. Miscellaneous goods and services saw a 9.1 percent reduction in sales, totaling SR1.4 billion. 

Regional breakdown  

Regionally, Riyadh remained the largest market with a POS value of SR4.2 billion, although this represented a 6 percent decrease compared to the previous week.  

Jeddah saw a 7.5 percent drop to SR1.6 billion, while Dammam recorded a slight 3.6 percent decline to SR617.5 million. 

Among smaller cities, Hail experienced the largest decrease, with spending down 14.8 percent to SR169.6 million, and a 12.2 percent reduction in transaction volumes. Makkah recorded a 4.4 percent decline in value, settling at SR502.8 million, while Tabuk saw a 12.8 percent decrease in transaction value to SR210.4 million. 

Despite the seasonal slowdown, the food and beverage sectors continue to drive the market, maintaining a steady pace as consumer behavior shifts with the winter season. 


Saudi Arabia leverages project management to achieve Vision 2030 milestones

Updated 25 December 2024
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Saudi Arabia leverages project management to achieve Vision 2030 milestones

RIYADH: In Saudi Arabia’s pursuit of the ambitious goals set out in Vision 2030, project management has emerged as a key enabler, ensuring that planning aligns seamlessly with execution to achieve transformative outcomes.

This vital discipline is playing a crucial role in turning visionary ideas into reality, as highlighted during a prominent forum held on Tuesday.

The event emphasized the central role of project management in realizing Vision 2030, a comprehensive framework launched in 2016 by Crown Prince Mohammed bin Salman.

The vision aims to diversify the economy and reduce the Kingdom’s dependence on oil. Currently, over 5,000 projects, valued at $5 trillion, are underway, signaling Saudi Arabia's substantial progress in reshaping both its economic and social landscapes.

“Project management is the bridge where vision meets ambition, converting plans into tangible results,” said Badr Burshaid, chairman of the Global Project Management Forum.

He also pointed to the Kingdom's significant investment in human capital, particularly through initiatives such as the Human Capability Development Program, which has placed Saudi Arabia among the top 10 nations globally in equipping professionals with essential business skills.

The forum highlighted the importance of strategic execution in driving economic transformation.

Badr Al-Dulami, deputy minister of transport and logistics services for roads affairs, described project management as the “pulse of transformation,” underscoring its role in fostering competitiveness and innovation.

“This summit is not just an event but a platform for uniting expertise and driving collaboration,” Al-Dulami said.

During the forum, excellence awards were presented to pioneering projects that exemplify Vision 2030’s focus on innovation, sustainability, and impactful outcomes.

Al-Dulami noted that these awards serve as an invitation to explore new horizons of creativity while staying aligned with national objectives.

Saudi Arabia’s success under Vision 2030 is evident across several key sectors. With 87 percent of initiatives either completed or on track, the Kingdom has made significant strides in improving its business environment, generating employment, and advancing major projects like NEOM and the Red Sea Project.

These achievements not only demonstrate Saudi Arabia’s strategic capabilities but also highlight its leadership in executing large-scale initiatives.

In closing, Burshaid urged participants to harness the insights and momentum gained from the forum to ensure continued progress.

“The seeds planted today will grow into achievements that inspire future generations,” he said, encouraging stakeholders to prioritize innovation and collaboration as Saudi Arabia moves forward.

With project management at the heart of Vision 2030, Saudi Arabia is setting a global benchmark for strategic execution and sustainable development, solidifying its role as a leader in transformative growth.


Egypt and Jordan discuss collaborations in natural gas

Updated 25 December 2024
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Egypt and Jordan discuss collaborations in natural gas

  • Two parties explored ways to exploit shared expertise and resources
  • It aligns with both countries’ national security and sustainable development strategies

RIYADH: Cooperation in energy and natural gas between Egypt and Jordan is set to grow as the North African country’s Minister of Petroleum and Mineral Resources Karim Badawi met with the Jordanian Minister of Energy and Mineral Resources, Saleh Kharabsheh.

The talks at the Ministry of Energy and Mineral Resources in Amman revolved primarily around diversifying energy sources and propelling natural gas projects, the Jordanian news agency Petra reported.

This aligns with both countries’ national security and sustainable development strategies.

During the meeting, the two parties explored ways to exploit shared expertise and resources to implement future projects that are projected to yield positive economic returns and further strengthen regional cooperation.

The meeting came during Badawi’s visit to Jordan, during which he assessed the plans and operations of the Jordanian-Egyptian Fajr Co. in developing the natural gas infrastructure in Jordan.

The visit underlined the strategic importance of the 500-kilometer main gas network stretching from southern to northern Jordan. 

Badawi also evaluated the progress in enhancing the network’s capacity and related facilities during his stay.

The Egyptian minister reviewed the current and upcoming projects by Egyptian petroleum sector companies planned for implementation in Jordan. 

He highlighted the importance of accelerating these initiatives to maximize the economic and environmental benefits of natural gas use across various sectors in Jordan. 

Badawi’s visit to Jordan underscores the strong ties and fruitful collaboration between the two nations.