In a world rapidly moving towards digitalization, Kuwait stands out as one of the key players in e-commerce in the Gulf region. This industry has witnessed exceptional growth in recent years, driven by changes in consumer behavior, increasing reliance on technology, and the spread of smartphones and high-speed internet.
The remarkable jump from $600 million in 2018 to $1.5 billion in 2023 clearly reflects the extent of the transformation in the behavior of individuals and companies. This report presents the development of the e-commerce market in Kuwait, the key growth drivers, and the challenges it faces, while highlighting the comparative regional and Gulf context.
Development of the E-commerce Market in Kuwait
E-commerce in Kuwait has experienced qualitative leaps over recent years, becoming one of the fastest-growing markets in the Gulf region.
Rapid Revenue Growth
In 2018, e-commerce revenues in Kuwait reached $600 million. By 2023, revenues rose to $1.5 billion, reflecting a compound annual growth rate (CAGR) of 19.6%. It is expected that revenues will continue to grow, reaching $1.665 billion in 2024, with an anticipated compound annual growth rate of 4.5% until 2028, bringing the market to $1.986 billion.
Contribution of the Sector to the Kuwaiti Economy
The contribution of the e-commerce sector to the GDP was 0.9% in 2023, reflecting the increasing role e-commerce plays in stimulating the national economy. This industry has contributed to creating new job opportunities and enhancing economic growth by stimulating the logistics sector.
Growth Factors in E-commerce in Kuwait
E-commerce in Kuwait has been bolstered by numerous demographic, technological, and social factors, the most notable of which include:
- Digital Transformation and Technology Spread
- 99% of Kuwait's population has access to the internet, one of the highest percentages in the world.
- Kuwait is at the forefront of countries adopting 5G technology, which has helped accelerate digital adoption and increase e-commerce rates.
- Smartphones are widely accessible, enabling people to purchase easily through mobile applications.
- Demographics
- Those aged 20 to 39 make up about 45% of Kuwait's population, representing the most active segment in online shopping.
- This age group is characterized by high spending levels, making Kuwait a destination for global brands, both through traditional stores and digital platforms.
- COVID-19 Pandemic
- The pandemic accelerated the shift towards online shopping due to lockdowns and precautionary measures.
- Many traditional stores transformed into digital platforms to continue their operations, further enhancing the spread of e-commerce in the country.
- Quality of Digital Infrastructure
- Kuwait is one of the countries providing a strong digital infrastructure, including high-speed internet connectivity.
- Kuwait has been ranked as one of the leading countries in implementing 5G technology, reinforcing e-commerce, especially concerning consumer experience in fast browsing and online shopping.
Challenges Facing E-commerce in Kuwait
Despite rapid growth, there are still some challenges facing the e-commerce sector in Kuwait:
Legislation and Laws: The need for advanced legislation ensuring the protection of the rights of both consumers and merchants.
Logistics: Some areas still lack fast and efficient delivery services, which affects customer experience.
Cybersecurity: With the increase in electronic transactions, the importance of enhancing cybersecurity and protecting customer data is highlighted.
Consumer Behavior: Although a large segment of consumers prefers e-commerce, some still favor the traditional shopping experience in stores.
Fastest Growing Sectors in E-commerce in Kuwait
There are multiple sectors witnessing prosperity in e-commerce in Kuwait, significantly contributing to the revenue of the electronic market. Below is an overview of the main sectors driving this growth:
Hobbies and Entertainment Sector (24.1%)
The hobbies and entertainment sector ranks first among the sectors contributing to e-commerce in Kuwait, representing approximately 24.1% of total revenue.
This sector includes a variety of products such as toys, books, sports equipment, entertainment gear, and music.
This growth is attributed to the increased demand for recreational products, especially with the rise of digital platforms and the trend towards home activities during the pandemic.
Electronics Sector (22.8%)
The electronics sector comes in second, contributing 22.8% of e-commerce revenue in Kuwait.
This sector encompasses smartphones, computers, tablets, and smart devices.
It is one of the most sought-after sectors among the youth, as consumers prefer purchasing modern devices through online platforms, due to promotional offers and ease of online shopping.
Fashion Sector (18.0%)
The fashion sector is considered the third largest sector, accounting for 18.0% of e-commerce revenue.
This sector includes clothing, shoes, accessories, bags, and jewelry.
The increased reliance on e-commerce during the COVID-19 pandemic led to the growth of this sector, as many global and local fashion retailers shifted to online sales.
This sector enjoys significant interest from young age groups, especially women who find online fashion shopping more convenient and diverse.
Furniture and Home Tools Sector (12.1%)
‘The furniture and home tools sector’ represents about 12.1% of e-commerce revenue in Kuwait.
This sector includes home furniture, decorations, furnishings, and large household appliances.
With the spread of the "do it yourself" (DIY) culture, the demand for interior design tools has increased, and global platforms like "IKEA" and "Home Center" have contributed to boosting e-commerce in this sector.
Care Products Sector (9.0%)
The care products sector ranks fifth, representing 9.0% of e-commerce revenue.
This sector includes beauty products, skincare products, beauty tools, and perfumes.
Women and youth are the most interested demographics in this sector, with growing demand for personal care products, as online stores provide a convenient experience for comparing products and reading reviews before purchasing.
Household Tools Sector (8.3%)
The household tools sector constitutes 8.3% of total e-commerce revenue.
This sector includes electrical tools, small household appliances, and kitchen tools.
With the increasing reliance on smart devices in homes, the demand for kitchen tools and smart household appliances has become a core aspect of consumer trends, enhancing revenue in this sector.
Grocery Sector (5.7%)
The grocery sector is considered one of the fastest-growing sectors in e-commerce, accounting for 5.7% of revenue.
This sector includes food products, beverages, and grocery supplies.
During the COVID-19 pandemic, there was a surge in demand for online grocery orders, and local and international applications emerged offering delivery services to homes, making this sector one of the most important emerging sectors in e-commerce.
The Future of E-Commerce in Kuwait
Kuwait is heading towards a bright future in e-commerce, with reports predicting a continued growth rate of 12.57% CAGR (Compound Annual Growth Rate) until 2028. The share of online purchases is expected to increase to 8% by 2028, compared to 6.6% in 2023.
Future Trends:
- Increased use of artificial intelligence (AI) technologies to enhance customer experience.
- Diversification of payment methods, including payments through digital wallets and innovative financial technologies (FinTech).
- Adoption of omnichannel strategies, where companies integrate digital sales channels with physical stores.
Gulf and Regional Comparison in E-Commerce
Kuwait is part of the e-commerce ecosystem in the Gulf region, competing with other GCC countries in market size and growth rate. Although Kuwait ranks fourth in the Gulf after Saudi Arabia, the UAE, and Qatar, it is achieving steady and remarkable growth rates. In 2023, e-commerce revenues in Kuwait reached $1.5 billion, placing it behind Saudi Arabia ($8.7 billion) and the UAE ($7.5 billion), which together represent more than 76% of total e-commerce sales in the Gulf. Qatar recorded revenues of $2.8 billion, driven by rising local demand and increased reliance on online purchasing.
In terms of CAGR, Kuwait shows an annual growth rate of 19.6%, reflecting stable and upward performance, while Oman achieved the highest growth rate at 32.7%, reaching revenues of $0.7 billion. Despite the gap between Kuwait and larger countries like Saudi Arabia and the UAE, Kuwait is distinguished by stable growth rates and developing performance, especially with the trend towards improving digital infrastructure and supporting local e-commerce platforms.
These figures indicate that Saudi Arabia and the UAE dominate the largest share of the e-commerce market in the Gulf, supported by advanced infrastructure, diverse promotional offerings, and reliance on modern technology. However, Kuwait is steadily progressing towards expanding its e-commerce market, benefiting from a young demographic and rapid adoption of modern technologies, making it capable of competing effectively in the coming years.
Kuwait has managed to achieve qualitative leaps in the field of e-commerce, thanks to government support and a strong digital infrastructure. As this growth continues, the sector is expected to witness further prosperity, particularly with the introduction of more artificial intelligence technologies and digital transformation.
With the rise in online shopping rates, the challenge is not فقط about keeping up with technological developments, but also about providing an exceptional shopping experience for consumers. The time now is for innovation and development, as Kuwaiti companies will need to adopt more flexible business models that allow for a comfortable and secure shopping experience.
In the future, e-commerce in Kuwait will remain a fundamental pillar of the national economy, transforming into one of the key pillars of economic growth, reflecting the strength of the Kuwaiti market in keeping pace with global changes.
Moreover, Qusai Al-Shatti, an IT expert and former director-general of the Central Agency for Information Technology, stated in a special statement to Al-Anbaa newspaper that e-commerce in Kuwait is expected to reach $1.61 billion during the current year, equivalent to more than 500 million Kuwaiti Dinars, according to a report issued by the consulting and research center “TechNavio”.
Al-Shatti pointed out that the growth rate of e-commerce in Kuwait from 2018 to 2023 reached 11.33%, expecting that the compound annual growth rate (CAGR) will see a significant increase of 12.57% during the period from 2024 to 2028, which enhances Kuwait’s position as one of the fastest-growing markets in e-commerce.
He clarified that these figures are based on the trade volume in several key sectors, most notably fashion, clothing, electronics, beauty and personal care products, children's toys, food, and meals and beverages. He reported that the orders include those sent by various types of mail or direct delivery services, in addition to orders paid electronically or through the cash-on-delivery option.
The role of digital infrastructure in supporting e-commerce
Al-Shatti confirmed that the digital infrastructure in Kuwait is a fundamental factor and a key driver for e-commerce growth, as it allows 99% of the country's population to access the internet with broadband speeds in a secure and competitive pricing environment, thus enhancing the convenience and flexibility of online shopping. He noted that the widespread availability of smartphones among various demographic groups in the country, regardless of their income and living standards, has directly contributed to enhancing the use of e-commerce.
He added that Kuwait ranks first globally in the adoption of fifth-generation technology (5G), according to reports from the International Telecommunication Union, indicating that this achievement has been realized for the second consecutive year. He explained that this technology has provided immense technical capabilities that have helped facilitate and accelerate online shopping processes, which has strengthened Kuwait’s position in the regional e-commerce market.
The future of e-commerce in Kuwait
Al-Shatti expressed optimism regarding the continued growth of e-commerce in the medium term, indicating that this growth will not be limited to Kuwait alone, but will also encompass global markets. He added that e-commerce will continue to capture a larger portion of retail sales, which will lead to a decline in traditional shopping in physical stores.
He cited global cases such as the bankruptcy of some major brands, where Sears closed several of its stores in the United States, while Debenhams in the UK closed some of its branches due to the increasing trend toward online shopping. He explained that many retail companies have reduced the number of their branches as a result of consumers shifting to online shopping, noting that Kuwait will not be an exception to this global trend.
Al-Shatti referred to the IPSOS study center report, which showed that 53% of Kuwaiti consumers made online purchases, while 60% of participants mentioned that the experience of shopping in physical stores cannot be fully compensated by online shopping. However, the surprise was that 39% of participants confirmed that most of their future shopping will be online, reflecting a gradual shift in consumer behavior patterns, not only in Kuwait but globally.
A look at global e-commerce
Al-Shatti explained that the global e-commerce market is witnessing massive growth, with expectations that the global trade volume in e-commerce will reach $6 trillion by the end of this year, according to a report by the eMarketer study center. He noted that China accounts for $3 trillion of the total global market, making it the most prominent player in this field, as it represents 47% of total online retail sales.
The report itself stated that the global retail market reached $29.7 trillion, with e-commerce representing about 19.5% of that. Al-Shatti pointed out that this percentage reflects a significant room for future growth, as traditional shopping remains the main sales channel. He confirmed that the global trend is moving towards increasing the share of e-commerce even more over the coming years.
Factors Influencing Consumer Behavior Towards Online Shopping
Regarding the reasons that have driven consumers in Kuwait to prefer online shopping, Al-Shatti pointed to several key factors, the most prominent of which are:
- Time and Effort Savings: Consumers can browse products and purchase them at any time and from anywhere.
-Convenience and Flexibility: Online shopping provides a comfortable experience, with multiple shipping and payment options.
- Product Variety: E-commerce stores offer a wider range of products compared to traditional stores.
- Promotional Offers and Discounts: Online shopping allows access to exclusive deals that are not available in physical stores.
- Competitive Prices: Lower prices are often offered on digital platforms compared to physical stores.
Al-Shatti added that the evolution of e-commerce platforms, particularly in ease of browsing and purchasing, has played a role in encouraging consumers to embrace this type of shopping. Additionally, the proliferation of online sales channels, known as the "omnichannel" concept, has contributed to providing customers with a seamless shopping experience, thus enhancing the trend towards online shopping.
Future Expectations for E-Commerce
Al-Shatti indicated that e-commerce will continue to capture larger shares of the retail market, which may lead to the closure of more physical stores worldwide. He confirmed that the prevailing trend in the future will favor e-commerce, with expectations that it will replace traditional shopping malls.
Al-Shatti anticipated that Kuwaiti consumers will experience a significant shift in shopping patterns, especially with the growing reliance on electronic payment methods. A "TechNavio" report indicated that a large portion of consumers prefer electronic payment over cash on delivery options.
He also noted that the concept of "omnichannel," which blends e-commerce with physical stores, will be the most significant trend in the coming years, as companies work to provide an integrated shopping experience that combines online shopping with in-store visits.
Al-Shatti's forecasts regarding the future of e-commerce in Kuwait affirm that it is steadily moving towards further growth and prosperity. As consumers continue to shift towards digital shopping, the Kuwaiti market is expected to witness radical changes in consumption patterns, boosting the demand for digital services and positioning Kuwait as one of the promising e-commerce markets in the region.
Thanks to the advanced digital infrastructure, the adoption of 5G technology, and the increasing level of trust in electronic payment methods, it can be said that e-commerce in Kuwait will continue its upward trajectory, becoming a fundamental pillar in the Kuwaiti digital economy.
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Source of statistics and figures: https://ecommercedb.com/markets/kw/al
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