Advantages: There is a good number of advantages of e-commerce in the kingdom. Even though e-commerce is new to Saudis, the country showed great growth of the number of consumers that have made online purchases as compared to the neighboring countries. Saudi Arabia has gained almost 500 million dollars from online shopping in 2011, which is the beginning of e-commerce in the country (Aljefri, 2003). Saudi Arabia is in the lead of e-commerce market in the middle east due to the growing trust that Saudi costumers had for the secure payment methods and online businesses.
A study made by Mastercard in 2014 showed that almost half of the people participated used online shopping and were pleased with the quality of service and products they received. However, the study was made through non-Saudi websites, and it was found that Saudis prefer the domestic online shopping than the international. This indicates a very promising success in adapting the e-commerce concept in the country (Tan& Teo, 2000). There has been a great improvement in the services provided by telecommunication companies to adapt to the growing need for internet access and shop online.
The companies have offered new deals and services that include higher speeds upload and download from the web. Therefore, communications in Saudi Arabia grew and developed (Eastin, 2002). This has also impacted the awareness about security issues between business owners and costumers. There was a huge improvement and care toward encryption of consumer data, and third-party communication and information sharing.
Thus, the creation of safe payment methods proposed by The Saudi Arabia Monetary Agency (SAMA), and Society for Worldwide Interbank Financial Telecommunication (SWIFT) made sure that there was no leak in personal data in any transaction made worldwide (Bhimani,1996). Another advantage of adopting the electronic market is providing services to both genders without worrying about segregation and obeying Islamic laws. It is a known fact that women in Saudi Arabia need to be driven to and from any place they go, and that some families force their daughters to always have a male relative escort outside the house. The limitation of running errands and shopping will come to an end once the online market provides all types of merchandise needed by Saudi females. Also, this increase in meeting consumer demands through online businesses would improve the economy in Saudi Arabia.
It was found that the economy raised by 4.5% every year due to the establishing of websites for each of the private businesses in the Kingdom. These websites were found to be an effective way of marketing and drawing clients in which in turn refreshes the Saudi market and economy (Aljefri, 2003). The increase of websites gives the consumer the chance to find the right service and product for their needs. The consumers can also communicate with the business through these websites to discuss the products, collect information, and compare prices.
This has increased consumer satisfaction rapidly. The consumers can access products and services from around the globe instead of only local markets (Pavlou, 2002).In addition, the equal services and promotions provided to all consumers ensures that the company offers equal services for all customers. The creation of online services also, benefited the businesses to cut costs by offering the most services via hiring less employees (O’Hara, 1998).
Online shopping could prevent many issues such as overcrowding the streets, parking lots, and the stores in the malls before each holiday like the Eid. There have been many incidents regarding such overcrowding including traffic accidents and fights. Therefore, online shopping would provide each family with the preparations needed for every event without going through all the hassle (Petrazzini & Kibati 1999). The information collected from the online transactions could be found in the businesses’ websites, banks’ records, and consumers’ records. Therefore, the study of e-commerce will be easy with all the available data to further improve and develop the market base and the country economy (AboZaid, 2005). Disadvantages: There are many obstacles that faces Saudi online shoppers. One would be the language barrier; many websites offer their services in English which is not the first language in Saudi Arabia.
This could result in misunderstanding the policies, description, and the terms of the items and services offered by the business. More so, there are many consumers that do not prefer buying a good they have not inspected and touched. The lack of trust between the user and the seller has held back many consumers from using the online market.
If the trust does not exist or cannot be built the revenues from e-commerce will not continue to grow (Tan 2000). Also, the lack of background about the mechanism of using online markets or the technology could give the consumer a bad experience. If there are no tutorials about the whole process of online shopping some new users might face troubles when exploring the market, and hence decrease consumer satisfaction on some level. In addition, there are no complete or clear rules and regulations in Saudi Arabia against fraud. The consumer and the business might fall in the trap of fake transactions or identities, and end up with loss. This could put many businesses and consumers out of the online market (Bhimani, 1996).
More so, a new online business cannot perform its services unless it has a permission from the Ministry of Labor, and this process takes up to two weeks. More so, there are fees and terms to follow to keep the business legal in the kingdom, however, the rules and regulations are vague and under construction (Fillis et al, 2004). There is a higher competition in this sort of market because businesses compete on the international level with countries and businesses that might have better vendors or qualities and prices. The fierce competition due to globalization makes it hard for small businesses to succeed (Bose& Sugumaran, 2006). One huge disadvantage of e-commerce in Saudi Arabia is the mailing system.
There are no clear addresses or street names in the rural areas of the country. There have been problems with delivery services offered by online markets due to have no clear residential addresses. There has been a lot of cases where packages get lost in their way to the costumer, which is considered a great loss.