Customs clearance is difficult.
Many areas in the Middle East have high trade barriers, such as high trade tariffs and strict product customs clearance. From January 1, 2018, Dubai and Saudi Arabia Customs will charge a consumption tax of 5% of the value of goods for import and export. Compared with other regions, Saudi Arabia’s customs clearance policy is more stringent and the time limit is slow.
The following is a brief description of the two customs clearance methods in Saudi Arabia.
(I) B2B customs clearance
When using B2B customs clearance, each order needs to provide SASO or SABER certification, and the customs clearance time limit is slow. Previously, B2B goods imported into Saudi Arabia had to pass SASO certification. After September 1, 2019, all imported goods will switch to SABER2 system certification.
There are three main steps in the product certification application of the SABER system:
1. Product product details page, apply for product registration.
2. Product Cerification, apply for product certificate,
3. Shipment Cerifcation, apply for batch cargo certificate.
And it is necessary to provide the basic information of the importer and product information.
This customs clearance method can be used for sellers who stock up in large quantities during the peak season, or for goods with high value, large volume and heavy weight such as household appliances.
(II) Express customs clearance
Saudi Arabia’s express customs clearance has undergone new changes, and the original monopoly of customs clearance licenses is gradually opening up. At present, Saudi Arabia’s customs clearance resources, B2C Customs clearance costs have gradually returned to normal levels. Express parcels entering Saudi Arabia no longer require SASO or SABER certification, and goods priced below 1,000 SAR are exempt from tariffs.
If e-commerce companies encounter tariff increases, changes in regulations and exchange rate fluctuations, cross-border transportation of goods may cause huge losses. After a seller in the Middle East places an order, it often takes up to several weeks to deliver. Such logistics timeliness greatly reduces the consumer shopping experience and increases the probability of returns.
Delivery is difficult.
Local delivery in many parts of the Middle East is still very backward, and there are two prominent difficulties.
One is that the address filled in by the consumer is unknown. The local house numbers and geological conditions in many parts of the Middle East are complex, and there is no specific postal code. Large-scale units will go to the post office to buy a mailbox number, but ordinary residents generally do not buy mailbox numbers, so when they write the address, it is difficult to describe the specific address clearly, resulting in a low delivery rate. This problem is most obvious in Saudi Arabia. In addition, the number of couriers who are familiar with the route is limited, resulting in the “last-kilometer” The delivery cost has been greatly increased.
Second, local delivery also has to bear the function of collecting payment. Compared with online payment, people in the Middle East prefer cash on delivery, but cash on delivery is a very inefficient payment method. For sellers, if cash on delivery is the main payment method, the return rate is often very high, and the returned goods need to be reorganized and stored. Sellers need to pay the collection fee, as well as bear the risk of goods being stolen and customers refusing to pay. The processing cost of each business will be as high as 10 to 20 US dollars, which has also largely led to the difficulty of logistics delivery in the Middle East.
Warehousing is difficult.
With more and more sellers stationed in local e-commerce platforms and self-built platforms in the Middle East in recent years, the volume of goods in the Middle East e-commerce market has risen rapidly in the short term. The current logistics channels may be unable to carry the surge in goods, so more and more e-commerce giants and large sellers have begun to focus on the construction of overseas warehouses.
Geographical location issues.
The logistics infrastructure of countries in the Middle East varies greatly. Developed places such as the United Arab Emirates, Qatar, and Kuwait are relatively small countries, and their logistics facilities are relatively advanced in the world. However, Saudi Arabia is a vast country. Except for a few core cities such as Riyadh and Dammam, where logistics are relatively developed, other places are very backward. Many remote areas are deserts, and infrastructure is difficult to build. Camels are even needed to deliver the “last mile”. In addition, the uneven distribution of populations in various countries and regions leads to sparse distribution of orders, resulting in low efficiency in transportation.