Online Purchase in Saudi Arabia:
Incidence, Products, and Driving Factors
Dr. Mourad Mansour
Dr. Alhassan G. Abdul-Muhmin
Department of Management and Marketing
King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia
Abstract
The E-commerce sector has witnessed a rapid growth during the recent years in Saudi Arabia due to the large diffusion of the use of Internet services and the increasing number of websites that facilitate E-commerce transactions. This paper investigates consumers’ behavior in purchasing online in Saudi Arabia.
Key Words: E-commerce, Internet, Online Purchase
1. Introduction
E-commerce transactions have been spreading quite rapidly in Saudi Arabia in recent years as a result of the increase access to Internet among the different sectors of the society. According to Madar Research Group (2002), Kuwait was the first to offer public Internet access in 1994, followed by UAE and Bahrain in 1995. Except for Kuwait and Saudi Arabia, the GCC moved straight in the Second Wave without having their academia connected first. A comparison of the Internet usage among GCC countries is shown in Table 1. Saudi Arabia population using Internet is surpassing 2.5 million and represents about fifty percent of the whole GCC users. According to a study, the volume of E-commerce in the GCC countries may reach 33.75 billion Saudi Riyals in the end of the year 2005 (Al-Watan, 2005). With the growth of the Internet use, it was natural that many customers in Saudi Arabia started using the web for conducting commercial transactions.
However, until now, there are few reported studies of the incidence and nature of online purchasing among consumers in Saudi Arabia. The purpose of the present study is to provide some insight into theextent of online purchasing, the types of products purchased and the reasons for purchasing online by consumers in Saudi Arabia.
Table 1: Internet Usage in the GCC Countries
Country / Population(2005 Est.) / Usage in
Dec. 2000 / Internet Usage
(Latest Data) / Use Growth
(2000-2005) / % Population
(Penetration) / (%) of GCC
Bahrain / 707,357 / 40,000 / 152,700 / 281.8% / 21.6% / 3.0%
Kuwait / 2.530,012 / 150,000 / 600,000 / 300.0% / 23.7% / 11.8%
Oman / 2.396,545 / 90,000 / 245,000 / 172.2% / 10.2% / 4.8%
Qatar / 768,464 / 30,000 / 165,000 / 450.0% / 21.5% / 3.2%
Saudi Arabia / 23.130,024 / 200,000 / 2.540,000 / 1170.0% / 11.0% / 49.9%
UAE / 3.750,054 / 735,000 / 1.384,800 / 88.4% / 36.9% / 27.3%
Total / 33.282,456 / 1.245,000 / 5.087,500 / 308.6% / 15.2% / 100.0%
Source:
2. Literature Review
There has been substantial research interest in understanding consumers’ online shopping behavior. As such, studies of consumers’ online shopping behavior have been conducted in a diversity of national contexts. Much of this research has focused on describing the characteristics of online shoppers, comparing online shoppers with non-shoppers on demographic (e.g. Eastlick and Lotz, 1999; Vrechopoulos, Siomkos, and Doukidis, 2001; Dholakia and Uusitalo, 2002; Lee and Johnson, 2002) and/or psychographic variables (e.g. Sin and Tse, 2002), and identifying the factors that influence consumers’ decisions buy products online (e.g. George, 2002). The majority of studies, however, have focused on identifying the characteristics of online buyers and how they differ from non-buyers.
For example, Vrechopoulos, Siomkos, and Doukidis (2001) found that adopters of Internet shopping in Greece have generally been young, highly educated, high-income earning males who have previously used other “distance shopping” modes. Sin and Tse (2002) found that adopters in Hong Kong have similar demographic profiles, in addition to being more time-conscious, self-confident, and heavier users of the Internet and other in-home shopping alternatives. Goldsmith (2001) found Internet shoppers to be more innovative than their non-shopper counterparts. Thus, a general picture of the consumer who makes purchases over the Internet has emerged from this research as a young, educated, male, consumer, with higher-than-average income, and scoring high on a general innovativeness scale. In terms of motivations for buying online, researchers have identified shopping convenience, ease of price comparisons, and quicker delivery of products like music and computer software than are often available for immediate download as key drivers.
The purpose of the present study is to provide some insight into online purchase behaviour of consumers in Saudi Arabia. Specifically, the study examines the extent of online purchasing, the types of products purchased and the reasons for purchasing online by consumers in Saudi Arabia.
3. Empirical Study
The data used for this study were collected using a structured self-administered questionnaire distributed in the major cities of the Kingdom (Riyadh, Jeddah, and Dammam/Al-Khobar). In the questionnaire, respondents were asked to indicate whether or not they had ever bought any products online since December 1998 when consumers in Saudi Arabia started having full public access to the Internet. Those who reported having ever bought were then asked to indicate the types of products bought, reasons for buying online rather than through conventional channels, their experiences with selected online purchase problems, overall satisfaction with the online purchase experience, and their intention of buying online in the future. Those who had never bought were asked to indicate their reasons for not buying. All respondents then completed a set of attitudinal statements about online product purchase and provided demographic information.
A total of 1,637 completed questionnaires were collected. Of these, 436 respondents (26.6% of the sample) indicated that they had ever bought products online. The present study focuses on these respondents because the conceptual model and study hypotheses can only be tested on a sample that has actual experience with online purchase. Summary demographic characteristics of this sub-sample sample are: 75.1% Saudi (the remainder are expatriates); 88.2% male; 65.4% in the age group 18 – 30 years; 52.1% in the income bracket SR 0 – SR 5,000; and 79.5% with university degree or some university education.
4. Results and Discussion
4.1 Products Purchased Online
Table 2 shows the products purchased online by Saudi consumers. There appears to be four major tiers for the purchase frequency. Books areclearly the products most frequently purchased online (45% of the sample). They are followed by a second tier consisting of Videos and Music CDs (33.3% of the sample) and Hotel reservation (31.2% of the sample). Airline seat reservation, magazines, clothing, and hotel reservationsconstitute a third tier with around 21% of respondents reporting that they bought the products. Airline tickets, computer games, and stocks and bonds form the fourth tier while toys and art are the least frequently purchased (the fifth tier).
Table 2 Products Purchased Online
Products / %Books / 45.0
Videos and Music CDs / 33.3
Hotel Reservation / 31.2
Airline Seat Reservation / 22.8
Magazines / 21.8
Clothing / 19.8
Car Reservation / 17.9
Airline Tickets / 16.6
Computer Games / 15.4
Stocks and Bonds / 14.0
Toys / 7.3
Art/Antiques / 4.6
Other / 20.5
Note: These figures are percentage of the whole sample
4.2 Reasons for Purchasing Online
Respondents were provided with the factors listed in Table 3 and asked to indicate on a 5-point scale, how important each factor was in their decision to buy online (1=Not important; 5=Extremely important). Table 3showsmeans and standard deviations of the responses. The factors are arranged in descending order of importance. The results indicate that the most important factor affecting Saudi consumers’ decision to buy online is non-availability of the need product in the local market. Wider product variety on the internet is cited as the second most important factor, followed by lower prices, shopping convenience, and quick product delivery. The latter probably applies mainly to software and downloadable music CDs. Interestingly, lack of local shopping time, the availability of 24 hours shopping in the online situation, and shopping privacy are not important reasons for consumers’ decision to buy online.
Table 3 Importance of Online Purchase Decision Factors
Mean / Std. Deviation1. Product not available locally / 3.25 / 0.954
2. Wider product variety / 3.19 / 0.901
3. Lower product prices / 2.89 / 1.001
4. Need to shop in comfort of home / 2.85 / 1.063
5. Instant product delivery / 2.85 / 1.048
6. Easier to compare product prices / 2.81 / 1.001
7. Can shop 24 hours / 2.73 / 1.108
8. Need to shop in privacy / 2.53 / 1.116
9. Different shopping experience / 2.23 / 1.078
10. Don’t have time to shop in local shops / 2.07 / 1.005
5. Conclusions
This study examined the factors that serve as motivators to online purchase adoption by consumers in Saudi Arabia and the different types of products they purchase. Using a structured self-administered survey methodology, the study finds that close to 27% of consumers in Saudi Arabia have ever purchased products online. The most frequently purchases products are books, video and music CDs, and hotel reservations. Lack of local product availability, wider online product variety, and lower online product prices are cited as the key reasons for deciding to buy online. These results are consistent with previous studies of online purchasing in other national contexts.
6. References
Al-Watan Newspaper (2005). ريال حجم التجارة الإلكترونية في الخليجمليار33.5. Available for download at
Dholakia, Ruby Roy and Outi Uusitalo (2002), “Switching to Electronic Stores: Consumer Characteristics and the Perception of Shopping Benefits”, International Journal of Retail and Distribution Management, Vol. 30 (10); 459-469.
Eastlick, Mary Ann and Sherry Lotz (1999), “Profiling Potential Adopters and Non-Adopters of an Interactive Electronic Shopping Medium”, International Journal of Retail & Distribution Management, Vol. 27 (6); 209-223.
George, Joey (2002), “Influences on the Intent to Make Internet Purchases”, Internet Research: Electronic Networking Applications and Policy, Vol. 12 (2); 165-180.
Goldsmith, Ronald E. (2001), “Using the Domain-Specific Innovativeness Scale to Identify Internet Consumers”, Internet Research, Vol. 11 (2); 149-158.
Lee Mi Young and Kim K. P. Johnson (2002), “Exploring Differences Between Internet Apparel Purchasers, Browsers and Non-Purchasers”, Journal of Fashion Marketing and Management, Vol. 6 (2); 146-157.
Madar Research Group (2002). “Internet Coming of Age in Arab World with Advent of the Third Wave”, Madar Research Journal, 1(October), page 4.
Sin, Leo and Alan Tse (2002), “Profiling Internet Shoppers in Hong Kong: Demographic, Psychographic, Attitudinal, and Experiential Factors”, Journal of International Consumer Marketing, Vol. 15 (1); 7-29.
Vrechopoulos, Adam P., George J. Siomkos, and GeorgisI. Doukidis (2001), “Internet Shopping Adoption by Greek Consumers”, European Journal of Innovation Management, Vol. 4 (3); 142-152.
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