Is it Legal to Do Online Business in Saudi Arabia?
When launching an online business in Saudi Arabia, it is important to know the legal requirements and regulations for doing so. The E-Commerce Law outlines the requirements for foreign retailers and services. Failure to comply can result in the company being shut out of the Saudi market.
Registration requirements for e-commerce sites
The Kingdom of Saudi Arabia has recently issued new regulations aimed at regulating and protecting e-commerce activity. These regulations cover a broad range of issues, including the establishment of a public register and monitoring and reporting of e-commerce activities. As a foreign service provider or retailer, you’ll need to comply with these regulations if you want to be part of the Saudi market.
First, you’ll need to register your e-commerce website with the Ministry of Commerce. This will allow you to advertise and provide products to customers, as well as exchange data about products. Once registered, you’ll need to submit certain information, such as the name and commercial registration number of your company. You’ll also have to notify the MOC of any changes to the information you provided on the registration application. The MOC will cancel your registration if you stop operating your e-commerce site in Saudi Arabia.
The MoCI’s regulations aim to protect consumers and increase consumer confidence. It also wants to encourage competition and innovation by addressing unfair practices. The regulations align Saudi Arabia’s e-commerce environment with other markets worldwide. Similar laws are in place in the EU and in other countries that regulate the behavior of e-commerce sites.
Market research
If you are planning to start a business in Saudi Arabia, it is necessary to know the local market and its unique characteristics. The eCommerce market in Saudi Arabia is competitive and has many variables to consider. A market research can provide meaningful insights into local trends such as per capita spending, acceptance of digital payments, and competitiveness. It can also help you analyze distribution channels and product-SKU performance. In addition, market research helps you understand the ease of doing business and the local infrastructure.
E-commerce is a major driver of retail globally and in the GCC region, and Saudi Arabia is no different. With its high digital affinity and relatively low brick-and-mortar retail infrastructure, the Saudi e-commerce environment is ripe for growth. With this in mind, COVID-19, a recent summit on online shopping in the GCC region, revealed that Saudi Arabia’s retail sector is poised to become a digital powerhouse and regional hub.
The new law will help startups and small businesses grow. It will also provide an opportunity for initiatives to experiment with customized solutions for Saudi consumers. This could help lower the rate of unemployment among the youth.
Sanctions for non-compliant platforms
The Ecommerce Law of Saudi Arabia requires service providers to safeguard electronic communications of customers and to maintain all customer data. Non-compliant platforms may be sanctioned. This law requires service providers to ensure the protection of customer information by ensuring that they comply with the PDPL. Furthermore, the law prohibits data controllers from disclosing personal data to third parties without the consent of the customer. In case of non-compliance, service providers must notify the Saudi Central Bank.
Non-compliant platforms in Saudi Arabia can be subject to hefty fines. The PDPL specifies penalties for violations and includes fines of up to three million Saudi Riyals. One million Saudi Riyals is equal to USD 266,539. The law also imposes penalties for unauthorised access.
The Office of Foreign Assets Control, which administers and enforces the U.S. sanctions, published its findings on November 12th, 2021. The agency identified a series of entities and individuals targeted by the sanctions. The sanctions include entities owned by the sanctioned parties, including platforms, companies, and financial institutions. Sanctions may not flow downward through the economy, but they may impact the companies’ operations.
Benefits of offering products from Saudi Arabian ecommerce categories
Offering products in Saudi Arabian ecommerce categories offers multiple benefits for your business. For starters, you can tap into the growing economy of the Middle East market. Saudi Arabia’s GDP is around 683,827 US$MM in nominal terms, making it a good choice for ecommerce business. Additionally, serving the Saudi Arabian market is beneficial to your sales channel and attracts new customers. Offering products in these categories gives you an edge over your competitors, allowing you to establish a presence in the market and start expanding your business.
Adding to your business, Saudi Arabian ecommerce consumers are increasingly sophisticated, bringing new entrants into the market. One of the categories seeing the most growth is fashion. Despite the strict social norms, interest in apparel, footwear, and accessories is soaring.
While Saudi Arabia’s ecommerce market is relatively new, it is already experiencing significant growth. The region’s digital affinity and relatively low brick-and-mortar retail infrastructure makes it an ideal market for ecommerce. The country is well-positioned to reap the benefits of the emerging market and become a regional powerhouse.