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BinDawood to invest $390m in delivery hubs

By Gavin Gibbon
Saudi grocery retailer BinDawood to invest $390m in delivery hubs BinDawood Holding
A BinDawood Holding group Danube express supermarket. The company plans to invest $390m in so-called dark stores serving online grocery orders
  • Plans for Saudi grocery retailer
  • Looking at city hubs
  • ‘Dark stores’ for online orders

Saudi grocery retailer BinDawood Holding has announced plans to invest SAR1.5 billion ($390 million) in robotics and delivery hubs.

CEO Ahmad BinDawood confirmed that the investment, with partners, would be made in the company’s automated “dark stores” and the infrastructure needed to run them.

The stores, typically hubs for online shopping orders, will range from 30,000 to 50,000 square metres, BinDawood said in an interview with Argaam. Smaller distribution centres, between 2,000 and 3,000 square metres, will also be launched in cities across the kingdom.

BinDawood saw its half yearly profits increase 15 percent year on year to SAR136 million. The company’s shares were trading down 0.02 percent at SAR6.95 at 12.30pm on Monday.

Person, Electronics, Mobile Phone

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The retail group operates 87 stores across Saudi Arabia and Bahrain, according to its 2023 annual report. It also has two online grocery platforms – Danube Online and the BinDawood app.

A previous company statement said that following the acquisition in 2022 of the platforms’ developer International Applications Company Ltd, it would strategically expand its network of dark stores across the kingdom dedicated to online orders.

In addition, a “fully automated business-to-business ‘mega dark store'” set to open this year was planned in Jeddah.

Ecommerce in the kingdom’s retail sector is likely to double between 2020 and 2025, with annual compound growth of 15 percent a year, according to a report by Saudi Arabia’s Small and Medium Enterprises Authority.

The Saudi central bank said in April that the share of electronic payments in the retail sector rose to 70 percent in 2023. That was up from 62 percent the year before, as the government tries to boost online banking and the fintech sector. 

With encouragement from the Saudi E-Commerce Council, the sector is expected to exceed $13.2 billion by 2025.

That has prompted increased international attention from companies looking to capitalise on the ecommerce opportunities. Amazon doubled its storage capacity in 2023 with the launch of a 2.7 million cubic foot fulfilment centre in Riyadh that can house more than 9 million products.

In February, logistics and supply chain company Starlinks opened a 400,000 sq ft hybrid facility at Agility Logistics Parks in the city of Dammam.

The centre is equipped with 254 autonomous robots for picking and sorting, providing storage capacity for over 12 million units. 

The growth in ecommerce is aligned with government efforts to attract venture capital and promote small businesses. These are within the broader strategy of expanding the non-oil economy in the kingdom, which the government says reached 50 percent of GDP for the first time in 2023.

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