Requirements to open an online store in Saudi Arabia | Complete starter guide
Jun 24, 2024
According to the report issued by the Ministry of Commerce in the fourth quarter of 2023, the Kingdom of Saudi Arabia ranks seventeenth globally as the most competitive and prosperous country in the field of e-commerce. It is one of the fastest-growing countries in this field due to its strong infrastructure, government initiatives supporting this sector in line with Saudi Vision 2030, and consumer reliance on online shopping, making it fertile ground for investment and establishing an online store to achieve profitability.
Let's explore the requirements for opening an online store in Saudi Arabia, whether you are a Saudi citizen or a foreigner, but before that, we will shed light on the e-commerce market scene in Saudi Arabia.
An Overview of the E-commerce Market in Saudi Arabia:
The e-commerce market in the Kingdom of Saudi Arabia is witnessing significant growth, driven by multiple factors such as the high rate of internet penetration, consumer reliance on online shopping instead of physical shopping in traditional stores, and government initiatives to enhance the adoption of digital technology by improving infrastructure and issuing regulatory laws and regulations. Here are some statistics that show the growth and prosperity of the e-commerce sector in the Kingdom:
The size of the e-commerce market in Saudi Arabia is estimated at about $13.61 billion in 2024, and is expected to reach $27.37 billion by 2029, with a compound annual growth rate of 15.01% during the forecast period (2024-2029).
Data issued by the World Bank indicates that more than 100% of the population in the Kingdom uses the internet, which indicates high consumer awareness of online shopping, and thus contributes to the rapid growth of the market.
The country recorded an increase in net individual income, supported by an increase in per capita GDP, which contributed to an increase in consumers' purchasing power and thus an increase in demand for various goods, especially fashion, beauty, and personal care products.
The revenues of this market come from the sale of various goods, including food and beverages, electronics, fashion and clothing, beauty and personal care products, furniture, etc.
These statistics explain the prosperity of the e-commerce sector in the Kingdom and that it is fertile ground for investment and achieving more profits.
But, what is an online store?
It is a website or digital platform that allows users to purchase products or services directly through the internet, and works to display products with their details of images, prices, and specifications, giving consumers the ability to shop anytime and anywhere without the need to physically visit the store. The online store is an essential part of digital commerce, and has become an effective way for entrepreneurs and companies to reach a wider audience, and reduce the operating costs associated with managing traditional stores. It also provides the customer with a flexible and easy shopping experience, including the ability to compare prices and view customer reviews before making a purchase decision, which enhances sales opportunities and increases customer satisfaction.
What is the importance of establishing an online store in Saudi Arabia?
The importance of establishing an online store lies in:
Reducing operating costs
Establishing an online store contributes to reducing the need to rent a physical location or pay large maintenance and operating costs as in traditional stores, as well as reducing the number of employees required, and controlling inventory more efficiently using electronic management systems, which makes the online store an economical and effective option, especially for start-up companies.
Reaching a wide segment of customers
With the rapid expansion of internet use in the Kingdom, and the increasing number of smartphone users, it has become easy to target a huge audience through online stores. Instead of relying only on local visitors, the online store can reach customers in various regions of the Kingdom, and even the Gulf countries, which increases opportunities for growth and sales.
Keeping pace with the government's trend towards digital transformation
Saudi Vision 2030 supports digitalization and innovation in the business sector, and the government has launched several initiatives to support e-commerce, such as the "Muras" platform to facilitate licensing procedures, and the "Maroof" platform to build trust with customers. Establishing an online store aligns your business activity with this vision, and gives you opportunities to benefit from government support and facilities.
Responding to changes in consumer behavior
The Saudi consumer has come to prefer purchasing online to save time and effort, especially with the availability of secure payment options and fast shipping services. Your online presence through an online store gives you a competitive advantage and increases the likelihood of the customer choosing your products instead of competitors who do not have a strong digital presence.
And if you are wondering how to open your online store in Saudi Arabia, the answer to your question is in this paragraph.
What are the requirements for opening an online store in Saudi Arabia?
To open your online store in Saudi Arabia, the following conditions must be observed:
First: Reserving a trade name for the online store:
This condition is one of the most important requirements for opening an online store in Saudi Arabia, as it guarantees the protection of your commercial identity and prevents others from imitating you or using a similar name in the future, and also grants you the right to legally pursue any party that attempts to violate the intellectual property rights of your store. Reserving a trade name for your online store requires several conditions, including:
It should not be foreign, ambiguous, have an unclear meaning, or refer to a non-Arab country or city.
It should not match any name previously registered.
The trade name should not include the type or characteristic of the commercial activity.
The name should not have a religious connotation or be one of the prohibited names.
We point out that you can carry out the process of reserving the trade name for your online store through the electronic services of the Saudi Ministry of Commerce and Investment, which may take about 60 days to complete.
Second: Issuing a Commercial Registration:
To give legal status to your commercial activity, it is necessary to issue a commercial registration, which will be your official permit to practice commercial activity in Saudi Arabia and guarantees you and your customers all rights in accordance with the regulating laws and regulations. The process of opening a new commercial registration in the Kingdom requires the availability of many conditions, including, for example:
The applicant must be at least 18 years old.
The applicant must be a Saudi national.
The capital for the commercial activity must not be less than 5,000 Saudi Riyals.
The applicant must not own another commercial registration with the same activity.
The applicant must not have final judicial rulings issued against them preventing them from practicing commercial activity.
Not working in government jobs, as government employees are not allowed to open commercial registrations to enhance transparency.
The trade name must be unique and not used by another commercial establishment.
The type of establishment must be determined, whether it is an individual establishment, a limited liability company, or a joint-stock company.
These are the general conditions that must be observed for issuing a commercial registration in Saudi Arabia, and there are other conditions related to each type of commercial registration that can be viewed on the Saudi Business Center platform.
Third: Registering your online store in the Commercial Register:
After issuing your commercial registration, it is necessary to add your online store to it as a necessary requirement for opening an online store in Saudi Arabia. Know that neglecting this condition means that your store is not legally licensed to operate in the Kingdom, so you must submit an application to register the online store through the Ministry of Commerce and Investment website, and enter the required data such as: the applicant's name, the type of commercial activity, the commercial registration number, and the description and address of the store.
Fourth: Obtaining a Freelance Document:
Obtaining a Freelance Document is a very important requirement among the conditions for opening an online store in Saudi Arabia, especially in the case of not issuing a commercial registration. This document aims to regulate freelance work and support entrepreneurs in various fields. In order to issue a Freelance Document, many conditions must be met, including:
The applicant must be a Saudi national.
The applicant's age must not be less than 18 years and not exceed 60 years.
The applicant must have an account on the Absher electronic platform.
It is worth noting that this document allows its holder to enjoy several advantages, including: benefiting from financing programs, opening a commercial bank account, and providing various digital payment solutions. The document also enhances the credibility of the online store among customers, and contributes to facilitating the legal and financial procedures associated with operating the store, ensuring the sustainability of the business.
Fifth: Documenting the online store:
This is also one of the requirements for opening an online store in Saudi Arabia that aims to enhance trust between consumers and online store owners, and ensure that online stores operate in accordance with local standards and laws, which protects consumer rights and reduces the risks of fraud. Documenting the online store also has many benefits, as it facilitates obtaining other licenses if necessary for commercial activities, and supports expansion in the local and international market. Documenting the online store requires observing the following conditions:
Submitting a valid commercial registration or freelance document.
Having a commercial bank account.
Providing detailed data about the project, such as the identity of the project owner, contact information, description of the store and its electronic link, names of authorized signatories, and any legal licenses related to the products or services offered.
After submitting the application to the Saudi Business Center and confirming it, the documentation statement is issued and your online store is included in the official database as a documented and legal store in the Kingdom.
Sixth: Clarifying store data and adopted policy:
Clarifying the online store's data and the terms of the sales contract is necessary to increase transparency and build trust with customers. The online store's data should include clear information such as the trade name, geographical address if available, and contact methods. A comprehensive and accurate description of the products or services provided should be presented using standard Arabic to ensure clarity of understanding for customers.
The terms and conditions governing the relationship between the store and the consumer should also be clarified. For example, the total cost of the purchase process must be clearly stated, including the product price, fees, taxes, and shipping costs. In addition to mentioning warranty details and its duration if applicable, and return and exchange policies, clarifying the associated conditions and costs. This helps in building a strong relationship with customers and ensuring a comfortable and smooth shopping experience.
From talking about the general requirements for opening an online store in Saudi Arabia, we move on to answering this question:
Can residents and foreigners open an online store in Saudi Arabia?
Of course, residents can open their own online stores in Saudi Arabia regardless of their nationality, but there are some conditions that must be observed, including:
Obtaining a foreign investment license, or partnering with a Saudi citizen.
The company practicing commercial activities permitted by the Saudi government for foreign investors.
The technical specifications of the products and production methods conforming to recognized Saudi, Gulf, or international standards.
The license applicant must not have final rulings or decisions issued against them related to essential violations, whether inside or outside the Kingdom, and must not have a history of financial or commercial violations.
Adherence to the conditions, controls, declarations, and pledges attached to the investment license application form, to ensure full compliance with laws and regulations.
By following these conditions and requirements, residents and foreigners can open an online store in Saudi Arabia and obtain the necessary licenses to practice commercial activity legally and safely in the Kingdom.
How to open an online store in Saudi Arabia
Opening an online store in Saudi Arabia requires going through several regulatory and technical steps to ensure compliance with regulations and achieve a successful launch:
The first of these steps is to obtain an electronic commercial registration through the Ministry of Commerce website, which grants the store a legal status and allows its owner to practice the activity officially.
It is also recommended to register on the Maroof platform, which enhances customer trust in the store by linking it to reliable data and real evaluations.
After completing the regulatory requirements, the merchant moves to the technical aspect by choosing a suitable electronic platform to create the store, such as WooCommerce, Shopify, or local platforms such as Salla and Zid".
Then work on linking the store with a licensed electronic payment gateway, and contracting with a local or international shipping company to ensure safe delivery of orders to customers within the specified times.
The launch is only complete by establishing a digital marketing plan that includes paid advertising and presence on social media, which helps attract customers and build a strong brand in the Saudi market.
How to obtain a commercial registration
To obtain a new commercial registration in Saudi Arabia, there are a set of basic conditions specified by the Ministry of Commerce that must be adhered to to ensure the acceptance of the application. These conditions include:
Legal age: The applicant must have completed 18 years of age.
Nationality: The applicant must be a Saudi national.
Capital: The capital for the commercial activity must not be less than 5,000 Saudi Riyals.
Duplicate activities: The applicant must not have another commercial registration with the same activity.
Judicial precedents: There must be no judicial rulings preventing the applicant from engaging in commercial activity.
Government job: Government employees are prohibited from opening commercial registrations to maintain neutrality and transparency.
Trade name: A unique trade name must be chosen that does not conflict with the names of other existing establishments.
Type of entity: The type of establishment must be determined, whether it is an individual establishment, a limited liability company, or other legal forms.
Paying the fees imposed according to the type of commercial registration.
What is the cost of establishing an online store in Saudi Arabia?
The cost of designing and establishing an online store in Saudi Arabia depends on a set of technical and operational factors that can raise or lower the total cost, and it differs from one project to another according to the required level of professionalism and the type of commercial activity. The following are the most prominent influencing factors:
● Store type and size
The size and nature of the store is a major factor in determining the cost. A small store that contains a limited number of products and a simple user interface can be established at relatively low costs, especially when using ready-made platforms such as "Salla" or "Zid". As for large stores that include hundreds of products and need multiple categories, and links with storage, shipping, and invoicing systems, they require higher investments that include a flexible design and advanced technical structure.
● Custom design and programming
If you want to design an online store with a unique interface and a user experience specially designed for your activity, with customized functions such as a points system or subscriptions, the cost will clearly increase. Custom design requires the assistance of professional developers and designers, which raises the cost of implementation compared to relying on e-commerce platforms.
● Store hosting and security
Hosting is what ensures the store remains connected around the clock, and its prices vary according to speed, capacity, and protection. For example, shared hosting costs less than 500 Riyals annually, while dedicated VPS or cloud hosting can reach more than 3,000 Riyals annually, especially if it includes protection services, backup, and performance optimization tools.
● Advertising campaigns and digital marketing
The success of the store is not limited to design, but requires a marketing plan to attract customers. Advertising campaigns through Google or social media platforms may require a budget starting from 500 Riyals per month for small stores, and reaching thousands of Riyals for stores that target a wide segment of the market or wish to launch new products quickly.
There are also additional factors influencing the cost of establishing an online store, including:
Electronic payment gateways, as some impose setup fees or a percentage of transactions.
The cost of product photography and content writing, which is important for attracting customers and enhancing trust.
Legal costs or special licenses, as is the case in some activities such as food or health.
How to open an online store in Saudi Arabia without a commercial registration?
To open an online store in Saudi Arabia without a commercial registration, you can rely on the Freelance Document as an approved solution by the Ministry of Human Resources and Social Development. This document grants you legal status to practice a number of commercial activities, including e-commerce and digital marketing, without the need to obtain a traditional commercial registration. It is suitable for individual and home-based project owners or those who work for themselves. To open an online store using the Freelance Document, you must go through several steps, including:
Accessing the Freelance platform via this link and logging in through the National Unified Access.
Choosing the appropriate activity, such as e-commerce, digital marketing, etc.
Filling in personal and professional data, including entering your name, ID number, mobile number, city, and store link (such as your website or Instagram page).
After completing the application, you immediately receive the Freelance Document in PDF format, valid for one year, and can be renewed for free.
We point out that the Freelance Document replaces the commercial registration for many individual activities, but it is not used to establish a company or institution with an independent legal entity. As the project grows, you can later issue a commercial registration to expand and deal with larger entities.
Strategic recommendations for success in establishing a professional online store
Determine the type of store precisely before starting
You should determine whether your store will sell your own products, products via dropshipping, or digital services, as this decision will affect the choice of the e-commerce platform, the method of inventory management, and the nature of the required technical structure.
Choose a reliable e-commerce platform suitable for your needs
Do not start with a custom design from scratch unless necessary, and use reliable platforms such as Salla, Zid, Shopify, or WooCommerce, which provide you with integrated tools for designing the store, managing orders, and adding products easily.
Choose a professional and easy-to-remember domain name
You should choose a domain name that expresses your commercial activity, is short, free of symbols or complexity, has an extension (.com or .sa), and is preferably available and easy to remember.
Design a simple and professional user interface
Make sure that the store design is responsive to smartphones, easy to navigate, with an organized arrangement of categories and products, to provide a smooth and clear shopping experience for the user.
Prepare content before launch
Write a professional description for each product, take high-quality photos, define shipping, return, and payment policies, and write them in clear and legal language that shows trust and credibility.
Choose reliable and secure hosting
If you are using an open-source system like WooCommerce, make sure to choose fast and reliable hosting with an SSL certificate to protect customer data and provide stable performance.
Activate electronic payment methods before launch
Coordinate with reliable payment gateways such as Mada, STC Pay, HyperPay, or PayTabs, and ensure that payment options work smoothly and have been well tested before launching the store.
Test the purchase experience from start to finish
Make sure to conduct a trial purchase yourself, to ensure the clarity of the steps and the smoothness of the procedures. You should test the shopping cart, payment page, confirmation messages, etc.
Prepare the legal structure of the store
Even before launch, make sure to prepare the terms and conditions, privacy policy, and return policy, as these elements are important for customer trust and store compliance with regulations.
Start with a soft launch
Do not launch the store completely immediately, but start with a soft launch with a small circle of customers, ask for their feedback, and then improve based on it before expanding.
Follow these tips to make your online store successful in Saudi Arabia
Choose a distinctive trade name that is easy to pronounce and remember, and make sure to choose a name that reflects the quality of the products or services offered.
Choose the appropriate e-commerce platform according to your needs and requirements, and compare the subscription costs, ease of use, available technical support, customization capabilities offered by each platform, and integration with the tools and services you intend to use to choose the ideal platform.
Ensure that your online store is responsive to different devices, especially mobile phones, and that the design adapts to different screen sizes and that all features and functions work efficiently on smartphones and tablets.
Pay attention to including keywords in content pages, product descriptions, and titles, and create a blog that contains useful and informational articles related to your products and industry to attract potential customers and help improve your site's ranking in search results.
Use simple and easy language to describe the products in an attractive way and focus on the main benefits of each product, and make sure to use high-quality images from multiple angles, and add explanatory videos if possible to help excite customers and motivate them to make a purchase decision.
Make the steps to complete the purchase easy and simple to avoid abandoning the shopping cart due to the complexity and abundance of steps.
Make sure to provide diverse payment options to enhance customer convenience, and use SSL encryption technologies to protect customers' payment data and prevent fraud.
Rely on innovative solutions to provide diverse shipping options that serve the various needs of consumers. For example, you can create a free account on Oto, the leading shipping gateway in the Arab world, and enjoy direct linking and dealing with more than 250 local and international shipping companies, providing multiple shipping options such as standard, express, refrigerated, and heavy shipping, and enjoying competitive shipping prices with discounts up to 90%, in addition to easily shipping, managing, tracking, retrieving, and analyzing your orders from a single, simple, and easy-to-use control panel.
By following these tips, you can enhance the chances of your online store's success and ensure an excellent shopping experience for your customers.
A final word
Establishing an online store in Saudi Arabia is a golden opportunity for investors and entrepreneurs to enter a prosperous market, especially with the great government support for e-commerce and the high rates of internet use among consumers. To ensure the success of this store, all the requirements for opening an online store in Saudi Arabia must be met from a legal perspective, and a comfortable and secure shopping experience must be provided to customers. We emphasize the importance of adhering to the laws and regulations regulating e-commerce in the Kingdom of Saudi Arabia, and ensuring the provision of high-quality products and services at competitive prices, while paying attention to providing excellent customer service to ensure the sustainability of the commercial activity and achieve the desired success.
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