The E-commerce industry and consumer behavior of USA & Saudi Arabia

There are many cultural differences between the United States of America and Saudi Arabia. The differences are reflected in the business dynamics of both the nations. Despite the differences we see a lot of American investment in different sectors in Saudi Arabia. The businesses are doing good as they are localized to the Saudi Arabia’s markets. The marketing trends and consumer behavior differ in both the countries despite close business ties. I will be discussing the consumer behavior in the e-commerce industry of both the nations. The article will explain the cultural difference in the business context regarding e-commerce.

 The e-commerce industry has gained popularity over the years due to the growing influence of internet and access to greater markets. The e-commerce retail business is dominated by the USA and from the world’s overall sale 79 % come from the USA. Alone in 2011, $ 27 billion sales were done in the most popular category that is the clothing and accessories (Almousa & Brosdahl, 2014). A main reason for such a high number is the fact that the consumers have trust in the online businesses and e-commerce sites. 

On the comparative side Saudi Arabia only has a small fraction compared to the United States of America. Citizens of Saudi Arabia have been adopting the internet and become tech savvy but when it comes to shopping online they are not doing great. The total sales for Saudi Arabia e-commerce industry were approximately $ 520 million compared to the $ 27 billion in the clothing category for United States in the said year (Almousa & Brosdahl, 2014). The main reason is not that the consumers are not literate in use of technology but it is the concern of security and perceived risks when shopping online that hinders in the way of shopping online. The e-commerce sector in the Saudi Arabia has great potential to grow.

The secret of the online shopping is embedded in the consumer behavior of shopping and looking for products. In a survey it was revealed that 99.2 % respondents in the USA searched for the product online before proceeding to purchase whereas only 70 % Saudi respondents said they looked the product online. And the interesting fact is all the respondents of USA revealed they have done purchases from an e-commerce site whereas only 30 % from the 70 % of the respondents of Saudi Arabia said they have purchased from an e-commerce site (Almousa & Brosdahl, 2014).

It is believed that it is the notion of perceived risk that alters the purchase intention. Despite having great potential for growth the Saudi Arabian e-commerce sector is finding it hard to kick off. A main reason is consumer behavior do not fit the e-commerce scene. Whereas in the United states of America businesses are adopting a push strategy to generate sales online as not only it is cost effective but to the ease of consumers too. There are laws that protect the consumer online and there is less perceived risk in buying online for the people of United States of America.  The payment method mainly in the USA is through online means through various platforms but for Saudi Arabia the main payment method or the preferred method is Cash on Delivery (Almousa & Brosdahl, 2014). The COD is a tedious system and is not much cost effective, it is considered to yield low return on investment (ROI). Additionally the consumer behavior in USA is supported by the regulatory laws and better supply chain management whereas in the Saudi Arabia it needs great improvement. The e-commerce sector in both countries operates on different level but the industry is a great opportunity for both nations to develop and contribute to the economy.         

Reference of The E-commerce industry and consumer behavior of USA & Saudi Arabia

Almousa, M., & Brosdahl, D. (2014). Online apparel purchasing:a cultural comparison of Saudi Arabian and U.S. consumers . Journal of International Business and Cultural Studies , 1-15.