Saudi Arabia’s eCommerce sector is set to benefit from major investments in new smart warehouses.
In the city of Jeddah, the Saudi Authority for Industrial Cities and Technology Zones (Modon) has signed a deal to build 14 new high-tech warehouses that will be operated based on a public-private sector partnership model.
As TradeArabia reported earlier this month, the new warehouses will be “fully digital and automated,” allowing businesses to access their storage units via a smartphone app.
Pioneered by global eCommerce giants like Amazon, modern smart warehouses are increasingly automated, and with advances in warehouse robotics, it is common for entire areas of these warehouses to be devoid of humans as warehouse operators pursue greater efficiency with increased automation.
But building smart warehouses in itself is a major undertaking, and companies like Amazon have had to invest huge sums of money in warehouse automation, including a significant push into the European robotics space.
Likewise, in Saudi Arabia, Modon’s latest project is part of a broader investment boost that will drive further automation in the retail sector.
For example, within days of Modon announcing its intentions to build 14 new smart warehouses in Jeddah, Starlinks, a Saudi logistics and supply chain solutions company, announced the opening of a new fulfillment center in a bid to advance eCommerce in the kingdom.
The new 400,000-square-foot facility with storage capacity for over 12 million units will deploy over 250 Geek+ robots, which will carry out picking and order sorting tasks, the company stated in a press release.
Considered one of the biggest logistics players in Saudi Arabia and the wider Middle East and North Africa (MENA) region, Starlinks provides warehouse fulfillment and logistics services to major eCommerce players including Amazon.
Commenting on the new facility, Salah Taha, director of operations at Starlinks, said in the release that the “new solution comprises a pallet storage and handling storage system, a manual pick tower as well as a robotics solution allowing us to cater to a wide range of customer requirements and operations complemented by microfulfillment centers distributed strategically across Saudi Arabia.”
He added that big data analytics enables the firm to better track and manage inventory, predict demand, and optimize routes for transportation, helping to increase efficiency, improve lead time, and reduce operating costs.
Investments in the country’s logistics infrastructure come at a time when eCommerce in the kingdom is booming. According to a report published by Checkout.com in October, 91% of Saudi consumers now shop online and 14% reported doing so at least once a day.
What’s more, in 2022 the country emerged as a favorite destination for venture capital investment.
Managing to buck the wider regional trend, Saudi Arabia experienced year-over-year growth in VC investment in every quarter last year and for the first time attracted more VC dollars than its Gulf Cooperation Council (GCC) neighbor, the United Arab Emirates, in the second quarter of 2022.
As MAGNiTT reported last month, total funding in the kingdom rose to $987 million in 2022, a 72% increase compared to the previous year. Behind FinTech and food and beverage funding, the most VC investment went to transport and logistics ($180 million) and eCommerce ($119 million).
Fueled by the country’s thriving eCommerce sector, recipients of VC checks last year included several startups that are catering to rising demand for last-mile delivery services.
Delivery firm Mkhdoom and Redbox, a parcel locker operator in the country, are examples of this, raising a $1.1 million seed round and a $5 million pre-Series A round last year, respectively.
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