Saudi Arabia is a kingdom where postal codes are rarely used, most people pay in cash and shopping is done in giant air-conditioned malls. But, as Lucy Fielding reports, two powerfully-backed companies are trying to build an online retail businenss, betting on a young, tech-savvy population.
Two powerful companies are squaring up to do battle for Saudi Arabian online shoppers. Noon.com launched in the UAE this month, and will enter the Saudi market within weeks. It comes to the fight well-armed - investors include Saudi's sovereign wealth fund. That will spark a race with Dubai-based Souq.com, known as the 'Amazon of the Middle East', even before the world's biggest online retailer bought it this year. Online shopping is an untapped market laced with challenges, says Reuters' Katie Paul. (SOUNDBITE) (English): KATIE PAUL, REUTERS SAUDI ARABIA CORRESPONDENT, SAYING:. "Addresses aren't really used, so delivery people will have to call people up and ask them for landmarks, ask for directions, or even ask them oftentimes to send a whatsapp of their location, so that's quite an inefficient way of going about delivery. And then at the same time many Saudis prefer to pay in cash, and that shifts the burden of risk folding on to the company." Less than one percent of sales are online in Saudi - even less than the Middle Eastern average. Shopping in malls is popular - strict social restrictions in the Islamic kingdom mean there isn't a lot else to do. So both companies are punting on a huge retail shift, and on being there first when it happens. (SOUNDBITE) (English): KATIE PAUL, REUTERS SAUDI ARABIA CORRESPONDENT, SAYING:. "Both of these companies are really betting on the fact that Saudi has a really young population that's extremely tech-savvy, so some of the biggest users of Twitter and Facebook in the world, so they're betting that that millennial population in Saudi arabia will take to e-commerce even though it doesn't really exist there so far." Saudi Arabia is the Arab world's largest consumer market with online sales expected to surge to 14 billion dollars from 8.7 billion this year, the newcomers have all to play for.