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Boeing invests $450m in flying taxi developer Wisk

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Updated 24 January 2022
Reuters
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Boeing invests $450m in flying taxi developer Wisk

  • Boeing declined to give a date for what it terms the sixth-generation Wisk passenger vehicle
Updated 24 January 2022
Reuters

Boeing Co is investing a further $450 million in Wisk Aero to support development of future pilotless flying taxis, the US aerospace giant said on Monday.


California-based Wisk, owned by Boeing and Kitty Hawk — the air vehicle firm launched by Google co-founder Larry Page — is one of dozens of electric vertical takeoff and landing (eVTOL) makers but differs in focusing its efforts on autonomous flight.


"Our view is that is the big strategic advantage of Wisk, going straight to a self-flying aircraft, building those principles in at every level of the design and development," Boeing's Chief Strategy Officer Marc Allen told Reuters.


The decision to leapfrog a generation of piloted eVTOL aircraft being developed by independent startups and some aerospace groups entails a later entry to service than the target date of 2024 envisaged by most competitors.


Boeing declined to give a date for what it terms the sixth-generation Wisk passenger vehicle, but industry sources said the idea was to present it for certification in around 2028.


Boeing said it would be the first autonomous passenger-carrying vehicle to be certified in the United States.


In a statement, Wisk said the $450 million investment from Boeing would make it "one of the most well-funded" companies of its type, but gave no further details.


The fundraising follows a spate of billion-dollar SPAC mergers by competitors in a trend that has cooled recently.


Analysts say the timetable for certification remains the key source of uncertainty surrounding the industry, whose debuts include California-based Joby and Archer and European rivals Lilium and Vertical Aerospace.
Boeing owns an undisclosed majority stake in Wisk.


It is not the only aerospace company teaming up with Silicon Valley to share development costs and foster an agile approach to innovation as simultaneous leaps in electric, materials and processing technology bring aviation within reach of startups.


"The kinds of constant demand shifts that will accompany these emerging industries really do require broad collaboration across those in industry who bring different capabilities together," Allen said in an interview.


Beyond that, the debt-laden US aerospace giant is seen as selectively more willing to co-develop know-how on broad capabilities like autonomy and advanced production processes, rather than controlling all high-end technology in-house.


Asked if there could be other partnerships within Boeing's core aerospace activities, Allen said: "Wisk is just one great example. I am sure it will not be the only example."


Boeing's investment in the company could yield improvements that could be applied across Boeing's portfolio, he added.


 

Topics: economy Boeing flying taxi flying cars wisk

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Smart tech key to solving Middle East food security crisis

Updated 14 December 2024
Miguel Hadchity
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Smart tech key to solving Middle East food security crisis

  • Challenge of producing more food without further harming the environment intensifies
Updated 14 December 2024
Miguel Hadchity

RIYADH: Increasing the use of smart technology in farming is critical if the Middle East is going to truly achieve food security, experts have told Arab News.

As agricultural productivity in the region remains vulnerable to supply chain disruption, water shortages, and conflicts, the challenge of producing more food without further harming the environment intensifies. 

Add in the consequences of climate change, and the Middle East needs to act fast — and smart — to ensure food security.

Vertical farms, increased use of data, and cross-country collaboration have all been flagged up to Arab News as key ways to tackle the short and long term challenges.

Abdel Rahman Al-Zubaidi, CEO of Ivvest, a Saudi-based agricultural technology and indoor farming company, emphasized to Arab News how his firm addresses these challenges: “Vertical farming allows exponential multiplication for the amount that can be produced in farms, enabling us to utilize vertical space and changing the way we design the production capacity from two dimensions to three dimensions.” 

He added: “This is essential for getting the best out of our limited arable lands in the Middle East, where, for instance, Saudi Arabia’s arable land was just 1.6 percent in 2021.” Available in Saudi Arabia, Ivvest’s farming “Capsule,” is a smart container farming unit empowered with IvvestOS, an operating system that brings intelligence to the facility. Using this technology, farmers can produce more than 200 plants per sq. meter, all year long, without pesticides, and while consuming 90 percent less water and land, according to the company.

Sanjay Borkar, CEO and co-founder of FarmERP, talked up the importance of innovation in an interview with Arab News, stating: “Tools like drones, sensors, and data analytics — key components of precision agriculture — help farmers and agribusiness use resources wisely. By monitoring things like soil health and water levels in real-time, farmers can fine-tune the use of water, fertilizers, and other inputs, minimizing waste and maximizing yields.” Precision agriculture, soil health management, and improved water usage techniques are part of broader efforts to adapt to climate change and protect valuable resources.Many countries are adopting climate-smart agriculture, which integrates sustainable practices that improve resilience to environmental stressors while mitigating greenhouse gas emissions.

Water scarcity: A crisis across the region

Water scarcity is perhaps the most pressing environmental issue across the Middle East. Jordan is one of the countries most affected, facing severe water stress due to the combination of traditional irrigation methods and over-reliance on depleted water resources. The UN Food and Agriculture Organization and other international organizations are promoting precision agriculture techniques, such as drip irrigation and soil moisture sensors, to enhance water use efficiency and reduce wastage. 

Vertical farming allows exponential multiplication for the amount that can be produced in farms.

Abdel Rahman Al-Zubaidi, CEO of Ivvest

Ivvest’s Al-Zubaidi explained that “indoor farming isolates the farming environment from the outside, ensuring optimal conditions for crops and reducing water loss from evaporation.” 

He noted that these methods drastically reduce the need for pesticides, further increasing sustainability.

Conflict-driven food insecurity 

While water scarcity is a severe concern, the Middle East’s food security crisis is also driven by conflict.

In correspondence with Arab News, the FAO said: “The ongoing war in Gaza has significantly exacerbated food insecurity in the broader NENA (Near East and North Africa) region by intensifying the already dire humanitarian crisis.”

The organization revealed that this conflict has disrupted supply chains, with the latest reports indicating that 95 percent of Gaza’s population faces high levels of food insecurity and nearly 343,000 people are at catastrophic risk of famine.

Local initiatives, such as urban farming and community-supported agriculture, have provided some relief to conflict-affected populations.

The impact of the Russia-Ukraine war

The global grain market has been severely impacted by the Russia-Ukraine war, with the Middle East feeling the effects more acutely than other regions. Countries including Egypt, Lebanon, and Yemen, heavily reliant on imports from these two major grain producers, are grappling with shortages.

As the conflict continues, food prices have soared, compounding the challenges faced by already vulnerable populations. The FAO’s call for investment in domestic agricultural production and the adoption of sustainable farming practices is particularly relevant for these nations.

The FAO said that hunger in Arab countries reached 59.8 million people in 2022, a 75.9 percent increase since 2000, accounting for 12.9 percent of the population compared to the global average of 9.2 percent. 

Tools like drones, sensors, and data analytics — key components of precision agriculture — help farmers and agribusiness use resources wisely.

Sanjay Borkar, CEO and co-founder of FarmERP

Al-Zubaidi addressed how Ivvest can contribute to the region’s food security: “Our technology development started after a failed project with greenhouses, which ignited thorough research. We found that traditional greenhouses, while helpful, are resource-intensive and inefficient in hot climates like ours.” 

He pointed out: “To overcome these risks, we designed and manufactured a full end-to-end indoor farming solution.” Ivvest’s vertical farming system allows producing over 240 plants per square meter, drastically enhancing productivity compared to greenhouses.

Zulfiqar Hamadani, CEO of Tanmiah Food Co., echoed the importance of local production, noting that “we must prioritize sustainable local production and develop resilient supply chains to ensure that we can meet the nutritional needs of our growing population.” 

He highlighted Tanmiah’s commitment to Saudi Arabia’s Vision 2030 food self-sufficiency goals, adding: “Saudi Arabia is taking major steps, including significant investments aimed at enhancing food security and fostering innovation in food production.”

Innovative solutions: a path to resilience

In response to these growing challenges, several countries in the Middle East are investing in innovative agricultural solutions. The FAO emphasized to Arab News the importance of “sustainable and resilient farming practices, including soil and water conservation, waste reduction, and the implementation of nature-based solutions.”

Al-Zubaidi added that the key to sustainability in farming lies in integrating innovations into the broader supply chain. 

Hamadani pointed out that the Middle East must “invest in innovative agricultural technologies such as precision farming, which optimizes resource use and minimizes waste.” He also emphasized the importance of sustainable practices that enhance soil health and water conservation.

Collaboration for a sustainable future

The FAO emphasized that collaboration between regional governments, international organizations, and local communities is crucial for building resilient food systems.

“Promoting climate-smart agriculture, such as diversified cropping systems and sustainable pest management, is crucial for enhancing agricultural resilience,” said the organization.

Al-Zubaidi added that the importance of partnerships between technology providers, distributors, and governments in achieving food security, describing them as “essential for creating a robust and sustainable food security framework.”

Hamadani also stressed the need for government support, noting that “clear policy frameworks that encourage research and development, alongside financial incentives for sustainable practices, are crucial.” He advocated for policies that support sustainable agricultural practices and reduce barriers for startups.

Borkar further elaborated, saying: “Collaborative partnerships between governments, tech companies, and local farmers are essential to share knowledge and ensure technology is accessible.” Grassroots initiatives like urban farming and water-efficient farming techniques can also  empower communities and reduce their vulnerability to external shocks.

Topics: food security smart technology Middle East

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Economic impact of New Murabba: Riyadh’s futuristic urban marvel

Updated 14 December 2024
Reem Walid
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Economic impact of New Murabba: Riyadh’s futuristic urban marvel

  • Project set to transform capital by creating a new city district that acts as a portal to a whole new experience
Updated 14 December 2024
Reem Walid

RIYADH: Amid Saudi Arabia’s bold quest to break free from its oil dependency, transformative giga-projects are emerging as game changers, paving the way for a vibrant, diversified economy.

One development that stands out is the New Murabba project, which is set to transform Riyadh by creating a new city district that acts as a portal to a whole new experience.

Launched in 2023 by Crown Prince Mohammed bin Salman, New Murabba will cover 19 sq. km., creating a dynamic new city area in the Kingdom’s capital.

This project promises an exceptional blend of living, working, and entertainment, developing over 25 million sq. m. to include residential units, hotels, retail spaces, and community amenities. 

The sheer scale and ambition of this development are consummate with Vision 2030 and its far-reaching transformation of the Kingdom.

Amer Lahham, Partner of public sector practice at Kearney Middle East and Africa

Spearheaded by the New Murabba Development Co., it will also feature convenient transportation options and a prime location just 20 minutes from the airport.

“New Murabba is a bold project that will further Saudi’s vision in creating a vibrant economic ecosystem, attracting investments across sectors, emphasizing sustainable urban planning, creating advanced technical jobs, and further enriching cultural landscape of the Kingdom,”  said Karim Shariff,  head of Bain and Co.’s Europe, Middle East, and Africa Construction, Building Products, Real Estate and B2B Services sector.

“The opportunity to create an innovative integrated ecosystem is a one of a kind,” Shariff added.

New Murabba will see real estate distributed across 18 communities, with an estimated population exceeding 400,000. 

New Murabba is a bold project that will further Saudi’s vision in creating a vibrant economic ecosystem.

Karim Shariff, head of Bain and Co.’s Europe, Middle East, and Africa Construction, Building Products, Real Estate

This destination will serve as a model for urban planning, boasting seamless transportation and sustainable infrastructure.

It will accommodate over 100,000 homes, 9,000 hotel rooms, and 500,000 sq. m. of retail space. It will also feature various entertainment venues, educational institutions, health care facilities, and a 45,000-seat stadium.

The downtown area will be designed to ensure that green spaces and essential services are accessible within a 15-minute radius.

Central to the project is the Mukaab — designed to be a premier destination featuring a variety of retail, cultural, and tourist attractions, as well as residential and hotel accommodations, commercial areas, and recreational amenities.

Drawing inspiration from the Najdi architectural style, the cube shaped structure will add a new dimension to the Riyadh skyline. 

New Murabba aims to establish a central hub to drive innovation and provide a platform for attracting businesses and talent.

Camilla Bevilacqua, Partner at Arthur D. Little

Camilla Bevilacqua, partner at international management consulting firm Arthur D. Little, said: “The main objective of New Murabba is to enhance Riyadh’s competitiveness and create an iconic and enduring landmark that will help position Riyadh on the global map as one of the best cities to live and work in. New Murabba aims to establish a central hub to drive innovation and provide a platform for attracting businesses and talent.”

Amer Lahham, partner of public sector practice at Kearney Middle East and Africa added that “the sheer scale and ambition of this development are consummate with Vision 2030 and its far-reaching transformation of the Kingdom.”

He went on to say: “The anchor structure, the cube, can become a symbol of the capital, Riyadh, and the significant effect Vision 2030 has had on the city’s urban landscape and skyline. 

“As such, the development is promising to be one of Riyadh’s main touristic attractions, becoming a main contributor to the city and Kingdom’s tourism and hospitality sector.”

Opportunities created by New Murabba

The project is set to bring about several economic opportunities for local businesses and the broader Riyadh economy.

“New Murabba has the potential to become a hub for innovation and collaboration, serving as a magnet and launchpad for sectors like the creative industry. This will have a direct and indirect positive impact on Riyadh’s economy,” Arthur D. Little’s Bevilacqua said.

“By focusing on high-quality education, the project will attract talent and convert that talent into new business opportunities,” she added.

The partner went on to note that New Murabba could provide a platform for young entrepreneurs to create and commercialize innovative brands, retail concepts, and cutting-edge, entertainment-driven technologies that will generate significant footfall.

New Murabba project impact on economy, job creation

With the introduction of over 100,000 residential units and various commercial spaces, several types of jobs are expected to emerge, thereby impacting the economy as well as the local labor market.

From Bain and Co.’s perspective, Shariff said: “New Murabba project is poised to be a catalyst for economic growth and diversification. We anticipate over 300,000 direct and indirect jobs to be expected across a variety of sectors including construction, hospitality, retail, green technology, mobility, and innovation given the sheer scale of the development.”

He added: “The project will also foster partnerships between local and international firms, encouraging knowledge transfer, investment, and collaborative opportunities.” 

From ADL’s side Bevilacqua said New Murabba will “redefine living standards”, with a focus on integrating nature, health, and wellness to create an environment that attracts residents and visitors alike.

“Driven by unique products developed by creative minds, New Murabba will transform the city’s shopping and leisure experience,” she added.

On behalf of Kearney, Lahham believes that the “futuristic and unique nature” of the project should make for a differentiated product that will further elevate key economic sectors.

The Kearney representative believes New Murabba will result in the creation of a significant number of jobs, adding: “Property management should be an interesting space to monitor in this regard, with the new cube becoming a magnet for a sophisticated workforce that will operate and maintain the anchor asset, The Cube — a complex, highly digitized, experiential structure.”

Topics: New Murabba Riyadh Saudi giga-projects

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Tech-savvy Saudis push consumer fintech to new heights

Updated 14 December 2024
Nour El-Shaeri
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Tech-savvy Saudis push consumer fintech to new heights

  • More financial products tailored to meet needs of expanding market
Updated 14 December 2024
Nour El-Shaeri

RIYADH: Saudi Arabia’s tech-savvy population is pushing consumer fintech to new heights, with innovations such as buy now, pay later gaining significant traction, according to industry experts. 

In an interview with Arab News, Arjun Singh, partner and global head of fintech at Arthur D. Little Middle East, described the Kingdom’s consumer finance landscape as undergoing a natural evolution, with an increasing array of financial products tailored to meet the diverse needs of its expanding market. 

“There is no doubt that the market is maturing, and we are witnessing growth across multiple consumer finance segments,” he said. 

Types of personal lending

Singh pointed to traditional forms of personal lending and credit cards offered by banks and other financial institutions, which continue to grow, “albeit at a slower pace than was anticipated a few years ago.” 

Other segments include microfinance and microloans, targeting underserved populations such as small and medium-sized enterprises and low-income individuals. “These products seek to promote financial inclusion by extending credit access to underserved populations,” he said. 

Emerging fintech solutions are also playing a significant role. Singh noted the rise of peer-to-peer lending in Saudi Arabia, which, although still in its early stages, is gaining momentum. 

“P2P lending is emerging as an alternative to traditional banking credit, facilitating loans between individuals without intermediaries,” he explained. Several fintech players are currently operating within the Saudi Central Bank’s Sandbox, experimenting with new approaches to consumer finance. 

Earned Wage Access is another growing segment in the Kingdom’s evolving financial ecosystem. 

EWA solutions allow employees to access their earned wages before payday, offering much-needed financial relief.

“This service helps alleviate financial stress for workers, particularly during times of economic uncertainty,” Singh said, citing the recent partnership between Al Raedah Finance and Abhi as an example of this trend. 

In addition to these innovations, digital wallets and mobile payments, such as stc pay and Apple Pay, are reshaping how consumers access and manage their funds. 

While these solutions do not strictly fall under the consumer finance category, Singh noted that they have had a significant impact on behavior in Saudi Arabia. “They have changed the way consumers manage and access their funds,” he stated. 

The power of strong regulations

According to Abdulla Al-Moayed, CEO of open banking leader Tarabut, consumer lending growth is further supported by strong regulatory backing from the Kingdom’s central bank, which has played a proactive role in introducing frameworks that encourage fintech growth while ensuring consumer protection. 

As a result, Saudi Arabia now hosts a highly competitive consumer finance sector with a wide range of payment products offering transparency, flexibility, and ease of use. 

“We are seeing, today, a deeper focus on building a more personalized and accessible financial ecosystem,” Al-Moayed told Arab News. “Open Banking-enabled financing solutions, digital payments, micro-financing, and buy now, pay later are all coming to the forefront as customer demand focuses on digitized interactions and more intuitive and personalized financing services,” he added. 

There is no doubt that the market is maturing, and we are witnessing growth across multiple consumer finance segment.

Arjun Singh, Partner and global head of fintech at Arthur D. Little Middle East

These developments are promoting greater inclusion in the financial sector and streamlining services for consumers. 

Cultural and economic factors have also played a crucial role in the appeal of consumer lending compared to other financial options in Saudi Arabia. 

Powered by BNPL

BNPL has emerged as a prominent force in the Kingdom’s consumer finance landscape. 

Al-Moayed explained that BNPL aligns with the cultural and religious preferences of many Saudi consumers. 

“For many Saudi consumers, BNPL provides a more culturally acceptable alternative to traditional credit, as it is framed as a manageable, interest-free option rather than long-term debt accumulation,” he noted. 

We are seeing, today, a deeper focus on building a more personalized and accessible financial ecosystem.

Abdulla Al-Moayed, CEO and founder of Tarabut

This structure fits more comfortably within the guidelines of Shariah-compliant finance, making it a more attractive choice for consumers who might otherwise avoid traditional credit options. 

“We have been observing a surge in demand for BNPL spearheaded by the likes of Tabby and Tamara,” Singh said. 

According to Singh, the Saudi BNPL market is expected to grow from $1.4 billion in 2024 to $2.8 billion by 2029, at a compound annual growth rate of over 10 percent. 

Initially, BNPL targeted younger, digitally savvy consumers with flexible, interest-free alternatives to traditional credit options, particularly for discretionary purchases such as fashion and clothing. 

Trust and familiarity with BNPL services are also growing in the Kingdom. 

“As more local BNPL players enter the market and build partnerships with trusted brands, consumers are more willing to use BNPL services as a safe, reliable, and more accessible alternative to traditional payment options,” Al-Moayed said. 

The growing youth population in Saudi Arabia — who value transparency, convenience, and speed — are especially receptive to non-traditional financial solutions that provide instant gratification without long-term financial commitments. 

“BNPL offers digital-first, flexible, transparent, and accessible credit facilities,” he said. This demographic, known for being tech-savvy and financially conscious, has embraced BNPL as a key part of the ongoing transformation of Saudi Arabia’s financial services sector. 

Al-Moayed emphasized that future iterations of BNPL will likely be shaped by how the model leverages open banking, enabling it to democratize financial services further, enrich data for business growth, and empower consumers to take more control of their financial futures. 

Singh explained that BNPL’s user base is now expanding as the service evolves and is nowbeing offered in multiple variants across a range of sectors.

The model has even expanded into the business-to-business space, offering companies access to short-term, interest-free installment options without the stringent credit scrutiny that often accompanies traditional loans. 

“It solved the problem of liquidity which both consumers and businesses face from time to time,” Singh remarked. 

Al-Moayed also pointed to the ongoing digital transformation driven by the Saudi government’s Vision 2030 initiative, which is accelerating the shift to a digital-first economy across all sectors, including retail and finance. 

“The Saudi e-commerce market has been expanding rapidly,” he said, with BNPL’s integration into mobile apps and e-commerce platforms further widening its appeal. 

“BNPL’s integration seamlessly taps into an even wider consumer base, expanding its appeal across the board,” Al-Moayed concluded.

Topics: Start-up of the Week Savvy

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Rising geopolitical tensions impact global path toward net-zero emissions: WEF

Updated 13 December 2024
Zaira Lakhpatwala
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Rising geopolitical tensions impact global path toward net-zero emissions: WEF

Updated 13 December 2024
Zaira Lakhpatwala

DUBAI: Rising geopolitical tensions, such as those in the Middle East, impact the global path toward net-zero emissions by driving up energy prices and straining global supply chains.

This is one of the findings of the World Economic Forum’s latest edition of the Net-Zero Industry Tracker, which tracks the progress of energy transition in eight sectors — steel, aluminum, cement, primary chemicals, oil and gas, aviation, shipping and trucking — that account for nearly 40 percent of global emissions.

The tracker “highlights opportunities and challenges to further accelerate GHG (greenhouse gas) emissions reductions in eight industrial and transport sectors that all play fundamental roles in driving global economic activity and connectivity, and in which reducing emissions can be challenging,” said Espen Mehlum, head of energy transition intelligence and regional acceleration at the Centre for Energy and Materials at WEF.

These eight sectors “achieved an impressive 0.9 percent reduction in absolute emissions from 2022 to 2023, compared to global energy-related emissions, which rose by 1.3 percent in the same period,” he told Arab News.

The current rate of progress, however, is not enough to meet net-zero targets. This will require an estimated $30 trillion in additional investments by 2050, with 57 percent coming from industries other than the eight mentioned in the report, as well as “good policies, technological progress and demand for green products,” said Mehlum. 

The tracker highlights the role of data and artificial intelligence as powerful tools to support the transition to net zero.

The use of generative AI holds the potential to improve capital efficiency by 5-7 percent, reducing capital requirements by $1.5 trillion to $2 trillion in the eight sectors. 

However, the tracker cautions against the excessive use of AI, which is expected to raise electricity demand. 

The oil and gas sector represents 10 percent of global GHG emissions — the highest among the eight analyzed — and 14 percent of global carbon dioxide equivalent emissions.

Saudi Arabia was the second-most oil-producing country (12 percent) after the US (20 percent) in 2023.

The Kingdom also ranked second, followed by the UAE and Kuwait in third and fourth place, in terms of countries with the lowest CO2 emissions from oil production in 2022.

Methane emissions make up nearly half of all GHG emissions from oil and gas operations, so to achieve net zero in this sector, WEF suggests accelerating reductions in methane emissions, incentivizing these reductions, and increasing investments in electrification to help manage costs.

The report stressed the need for markets outside Europe and the US, which are already advanced, to ramp up efforts in scaling methane abatement policies.

It also spotlighted the importance of international collaborations such as the Oil and Gas Decarbonization Charter, a global industry charter dedicated to accelerating climate action within the industry, and the UAE-US Partnership for Accelerating Clean Energy.

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Saudi e-commerce sales using Mada cards hits $5bn milestone

Updated 13 December 2024
Dayan Abou Tine
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Saudi e-commerce sales using Mada cards hits $5bn milestone

Updated 13 December 2024
Dayan Abou Tine

RIYADH: Saudi e-commerce sales using Mada cards reached SR18.34 billion ($4.89 billion) in October – an annual increase of around 37 percent, recent data revealed.

According to the Kingdom’s central bank, also known as SAMA, this figure includes online shopping payments, in-app purchases and e-wallets, and excludes transactions by Visa, MasterCard and other credit cards.

Mada cards are Saudi Arabia’s national payment cards, offering debit and prepaid services within the network. They use Near Field Communication for contactless payments, allowing secure transactions at retailers and online, and play a key role in supporting the country’s cashless economy.

The number of e-commerce transactions also increased by 29.3 percent on a year-on-year basis to reach around 101 million in October.

The prevalence of smartphones, with a 98 percent penetration rate according to the Kingdom’s Fashion Commission, highlights the digital readiness of Saudi consumers compared to advanced markets like the US, which has a  90 percent rate, and the UK with 80 percent.

The Kingdom’s youthful and increasingly affluent population is embracing online shopping, spurred by rising disposable incomes and growing awareness of e-commerce benefits like convenience and cost savings.

Saudi Arabia’s per capita gross domestic product is on a steady rise, with the IMF forecasting a 15.95 percent increase by 2029, reaching $38,124.66.

This growing individual income is enhancing purchasing power, spurring demand for fashion, apparel, and other consumer goods. Combined with government initiatives to promote cashless transactions and local brand development, these trends are creating ripe opportunities for e-commerce players.

Fashion’s role in e-commerce growth

According to a study by Mordor Intelligence the fashion and apparel sector is a major driver of the Saudi online retail sector.

Saudi Arabia’s fashion e-commerce market was valued at nearly $4 billion in 2023 and is expected to reach $7 billion by 2028, according to a 2024 report by the Kingdom’s Fashion Commission.

This growth is driven by increased digital exposure, evolving consumer sophistication, and strong government initiatives aimed at fostering a robust digital economy.

The Kingdom’s Fashion Commission’s 100 Saudi Brands initiative exemplifies this effort, spotlighting local designers and promoting Saudi craftsmanship on a global scale.

By addressing consumer pain points and integrating innovative technologies like virtual try-ons, fashion brands can further capitalize on this thriving market.

With a combination of local and international collaboration, the Kingdom’s fashion e-commerce sector is poised for sustained growth in the coming years.

The report highlighted that 65 percent of the population is under 40, a demographic renowned for their online shopping preferences.

These groups are among the most active online shoppers globally, turning to social media platforms and brand websites for fashion inspiration and purchases.

Adding to the allure of the Saudi market, the Kingdom is home to nearly 130,000 millionaires, a figure projected to rise to 226,000 by 2030. This affluent demographic, known for their financial confidence and affinity for luxury, is poised to increase local spending as high-end international brands expand their Saudi presence.

Notably, these high-income consumers spend significantly more than their global counterparts, with 30 percent planning to boost their expenditures, reflecting a strong appetite for premium clothing and accessories, according to the Fashion Commission.

Social media platforms, particularly Instagram and Snapchat, have emerged as critical sources of inspiration for shoppers in the Kingdom. 

The Saudi Fashion Commission noted that 50 percent to 60 percent of women use these platforms to discover new trends, while men often rely on YouTube for fashion insights.

This underscores the importance of influencer marketing and targeted digital campaigns in driving brand awareness and engagement within the Kingdom.

Transforming digital infrastructure

According to Mordor Intelligence, Saudi Arabia has invested over $24.8 billion into its digital ecosystem over the past six years, significantly enhancing internet quality and coverage.

As a regional leader, it was among the first in MENA to deploy 5G networks, with 77 percent nationwide coverage – well above global averages – and 94 percent coverage in Riyadh, cementing its position as a global frontrunner in connectivity.

Global companies are seizing opportunities in Saudi Arabia’s expanding e-commerce market.

In October, Mastercard introduced local processing for e-commerce transactions, bolstering secure and efficient payment options.

Similarly, TBS Holding announced plans to use artificial intelligence technologies to support digital transformation efforts in Saudi Arabia, reflecting the Kingdom’s broader ambitions for a thriving digital shopping ecosystem.

According to online platform Setup in Saudi, the Kingdom’s e-commerce market is led by six major players, including Noon, backed by the Public Investment Fund, Amazon, which entered via Souq.com, and Jarir Bookstores, a local retail giant with a strong online presence.

Other key companies include Namshi, which caters to regional fashion, while Extra Stores focuses on electronics and home appliances. 

AliExpress has a shrinking share as local platforms expand. These leaders exemplify the sector’s rapid growth and evolving consumer trends.

The Fashion Commission highlighted the seamless integration of digital and physical retail as the rise of e-commerce does not signify the decline of brick-and-mortar stores.

Instead, the Saudi market is embracing an omnichannel approach, where online and offline experiences converge. Approximately 75 percent of fashion-buying behavior in Saudi Arabia is influenced by digital channels.

This includes 38 percent who research online with purchases made offline and 25 percent doing pure online transactions. Challenges like uncertainty about sizing and fit remain key barriers to greater e-commerce adoption, with 40 percent of consumers citing this as a primary concern.

Key challenges for this sector as highlighted by the Fashion Commission include delivery lead times, return processes, and last-mile logistics. While 30 percent of Saudi consumers expect delivery within two to three days, this demand can only be met through local fulfillment centers.

Historically, products were shipped from the UAE or Europe, causing delays and higher costs.

To address this, initiatives like Riyadh’s Special Integrated Logistics Zone support localized operations, helping reduce delivery times. Companies like Chalhoub, Apple, and Amazon have already set up fulfillment centers, enhancing distribution efficiency. For example, Farfetch has notably improved its delivery times.

On payments, the government introduced e-payment regulations in 2018 to increase consumer trust and aims to shift 70 percent of transactions to digital methods.

Solutions like BNPL providers Tabby and Tamara, alongside mobile wallets like Apple Pay, are accelerating this transition.

The market remains fragmented, with the top three e-commerce platforms Shein, Namshi, and Centrepoint holding a combined 22 percent market share.

Luxury fashion remains underrepresented, presenting opportunities for growth as brands like Farfetch and local players like Level Shoes expand their presence.

Topics: e-commerce Mada Online shopping

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