Business Setup

How to Launch Your Online Business in Saudi Arabia Market

How to Launch Your Online Business in Saudi Arabia Market

In the wake of the global upheavals caused by the COVID-19 pandemic, the paradigm of commerce has undergone a transformative shift, with a list of e commerce companies in Saudi Arabia emerging as a formidable force in the global market. This evolution has not only altered the dynamics of retail but has also revolutionized consumer behaviour, steering them towards the convenience and accessibility offered by online businesses.

This article serves as a comprehensive guide for aspiring entrepreneurs eager to embark on the journey of establishing their online business in the thriving market of Saudi Arabia. As the world witnessed the success stories of businesses flourishing from the confines of homes during lockdowns, it became evident that the digital realm is a fertile ground for entrepreneurial ventures.

Saudi Arabia, with its commitment to economic diversification, is strategically investing in the burgeoning field of e commerce company saudi arabia. The nation recognizes the transformative potential of online businesses and is poised to harness the opportunities presented by this dynamic sector. In this article, we delve into the intricacies and considerations that entrepreneurs must navigate when venturing into the realm of online business in Saudi Arabia, providing valuable insights and guidance for turning entrepreneurial dreams into successful realities.

Do I need a registered company to sell online?

Registration of the best online business in Saudi Arabia store in Saudi Arabia might be difficult due to rigorous company regulations. However, in 2019, the Saudi government issued an amended ecommerce Law that outlines all of the restrictions that e-commerce companies in Saudi Arabia must follow.

This law was enacted to encourage local and foreign e-commerce enterprises to invest in Saudi Arabia, which is consistent with the Saudi government’s efforts to embrace a new global business model. You can simply call the Ministry of Commerce in Saudi Arabia to register your firm, and they will walk you through the procedure.

When discussing small and medium-sized business initiatives, we must also consider Monsha’at, one of Saudi Arabia’s foundations of entrepreneurship. Monsha’at strives to develop, implement, and support programmes and projects that promote self-employment and the spirit of entrepreneurship, initiative, and creativity, diversify sources of financial support for businesses, and boost venture capital sector activities.

Registration with Monsha’at can also help your internet business grow significantly in its early stages and prepare you for all of the e-commerce companies in Saudi Arabia issues.

Benefits for E-Commerce Startups in Saudi Arabia

A recent study on media and Internet use in various Middle Eastern nations conducted by Northwestern University in Qatar found that, while e-commerce in Saudi Arabia was slow to grow, it showed significant promise for future market expansion. According to this report, around 8% of the Saudi population routinely purchases products online selling in KSA, 6% uses online banking services, and 7% makes trip arrangements via the Internet. While these appear to be low numbers, they show that Saudi Arabia easily beats other Middle Eastern countries when it comes to developing confidence in online markets. In fact, the Kingdom was designated the second largest market for E-commerce in the GCC in 2013, with $520 million in online sales.

The Saudi E-commerce market’s continued expansion and success in comparison to other Middle Eastern markets is partly due to increased trust in online payment systems. Saudis have little fear of using credit cards and have access to a wide range of payment channels (PayPal, CashU, etc.) to ensure their money’s security.

In their 2014 online business in KSA Behaviour Study, Mastercard discovered that nearly half of their survey respondents have used the Internet for shopping, with 80% being “highly satisfied” with the experience and quality of the market. They also discovered that, while approximately 45% of internet buying in Saudi Arabia takes place on foreign websites, Saudis are increasingly turning to local sources. All of these numbers show that Saudi Arabia has both the foundations for successful E-commerce and the potential for a thriving market.

Process Of Setting Up A LLC Company In Saudi Arabia

Before you begin learning about the corporate establishment procedure, you need first to understand the types of business forms that are permitted in Saudi Arabia. Typically, there are five sorts of company structures from which an investor can select the best one for their investment. These are the sorts of business formations available to an investor:

  • Joint Liability Companies
  • Limited Partnership Companies.
  • Joint ventures
  • Joint stock businesses and limited liability companies (LLCs)

Among the five categories of corporate formation, LLC, also known as Subsidiary Company in Saudi Arabia, is the most popular with international investors. Here, we will discuss the registration process and the cost of forming an LLC in Saudi Arabia.

Steps Of A Typical LLC Formation Process In KSA

Here are the following steps:

Step 1: Appeals for Investment Licence from Saudi Arabia General Investment Authority (SAGIA)

The first step in starting a business in Saudi Arabia is obtaining an investment licence from the Saudi General Investment Authority. Without this licence, a foreign investor cannot create a corporate enterprise in Saudi Arabia.

The entire process can be completed by submitting a prescribed application form to SAGIA. The entire paperwork transaction can be completed online or offline, whichever is more convenient for the entrepreneurs. Here you will acquire documents like as registration information and unique numbers, which will later be required to register and be certified by the Chamber of Commerce.

This certification is required throughout the company’s incorporation process. Overcoming this step will also allow you to create a bank account in Saudi Arabia, which is another important necessity for business setup.

Cost: for obtaining SAGIA license: 2000 SAR

You May Also Read: Top 10 Business Ideas in Saudi Arabia

Step 2: Notarize the firm paperwork.

In this step of the business incorporation process, all business documents must be properly notarized. Recently, the entire procedure has been completed primarily online, saving time and making it much more convenient for applicants. The notarization must be conducted as soon as the firm AoA is created and approved by the recommended authority. For notarization, the following papers must be available:

  • Original corporate AoA document and SAGIA licence copy.
  • Signed conscience of all shareholders and directors
  • Include corporate documentation (AoA, incorporation licence) for all shareholders, as well as copies of ID cards and passports for at least two company witnesses.
  • Coloured photocopy of the director(s) and partners.

Cost: No Charge

Step 3: Gazette publication of corporate information.

Another significant step in company registration in Saudi Arabia is the publication of the official gazette, which includes all relevant information such as the company name, AoA information, permission certificates, and so on. All of these paperwork are linked to company formation and numerous government approvals.

Cost: The cost ranges from 650 SAR to 5500 SAR.

Step 4: Open a bank account.

To complete the incorporation process in Saudi Arabia, a corporate bank account must be opened. This account will be used to submit government fees for various incorporation processes. Furthermore, this account will be used for numerous financial transactions relating to the new organisation.

Cost: At least 100,000 SAR must be the first deposit for the LLC setup.

Step 5: Set up an office premises

Setting up an office space is strongly encouraged. When following the requirements for creating a business in Saudi Arabia, it is required to set up a corporate address. This stage must be completed since once the Office allotment has been determined, you will be eligible to receive the municipal licence. In Saudi Arabia, obtaining a municipality licence is a required step in the process of incorporating a business.

Cost: Depends on the company’s requirements.   

Step 6: Get a commercial certificate.

The final stage of founding a business in Saudi Arabia is to obtain a commercial certificate. All legal company documentation and documents obtained thus far must be compiled for final submission to the Commercial Registry section of the Ministry of Commerce and Industry in the Unified Centre, Saudi Arabia.

The final verification, approval, and processing period is no longer than two working days. After the governmental process is completed, you will receive your commercial certificate. This will eventually make your organisation ready to operate in Saudi Arabia.

Cost: The cost of getting a business certificate ranges from 0 SAR to 8100 SAR, depending on the type of organisation.

Step 7: Join the Chamber of Commerce.

Membership in the Chamber of Commerce is a vital first step in establishing a business in Saudi Arabia. Once successfully registered, a membership certificate will be issued. This certificate is required for different aspects of company formation and business operations in Saudi Arabia.

A cost of 2000 SAR must be paid to obtain the membership certificate. The application and costs must be filed in the same building as the Unified Centre of Saudi Arabia.

Cost: The official fee for getting the Chamber of Commerce membership certificate is 2,000 SAR.

Cost Summery For LLC Formation For Foreign Investors In Saudi Arabia

The method outlined above has previously highlighted the costs associated with each stage of business incorporation. However, for a better understanding, here is a list of the average costs for setting up an LLC in this country.

There is no payment for reserving the company trade name.

SAGIA licence costs 2000 SAR.

Notarization of corporation papers is free of charge.

Company gazette publication: 650 SAR to 5500 SAR

There is no charge for starting a bank account (initial deposit of 100,000 SAR for LLC)

Office space: 4000 – 1500 SAR.

Commercial certificate: 0 SAR – 8100 SAR

Chamber of Commerce membership certificate: 2000 SAR.

FAQs:

Q1: Do I need to register a company to sell in Saudi online business?

A: While it’s not always mandatory, registering a company can offer legal protection and credibility, streamlining your online selling process.

Q2: What advantages do e-commerce startups have in Saudi Arabia?

A: E-commerce startups in Saudi Arabia benefit from a rapidly growing digital market, government support, and changing consumer behaviours favouring online shopping.

Q3: How can I choose the best shipping provider for my e-commerce business?

A: To find the right fit, consider factors like shipping rates, delivery times, coverage, and reliability. Compare options to ensure a smooth delivery experience for your customers.

Q4: What skills do I need to manage an online business, and when should I consider hiring an expert?

A: Essential skills include website management, digital marketing, customer service, and inventory management. Hiring experts can be beneficial when tasks require specialized knowledge or are time-consuming.

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