The Shutdown of Shgardi App: An Economic Analysis of Competition in SaudiArabia’s Delivery Market
Introduction
The on-demand delivery sector has been one of the fastest-growing markets in Saudi Arabia, driven by the expansion of e-commerce and the rise of digital platforms.
However, alongside this growth came a price war, shrinking profit margins, and increasing operational costs — all of which have challenged the sustainability of smaller service providers.
Amid this landscape, Shgardi, once viewed as a promising national competitor, officially ceased operations in October 2025, signaling deeper structural shifts in the industry.
Operational Performance Before Shutdown
Before its closure, Shgardi achieved significant operational milestones:
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Over 7 million completed orders
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More than 3 million customers served
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Active presence in 35 cities and provinces across Saudi Arabia
Despite these numbers, maintaining profitability proved difficult. High delivery costs, driver incentives, and regulatory compliance burdens increased financial strain. Furthermore, competitors with stronger capital bases engaged in aggressive discounting, reducing prices below sustainable levels.
Economic Causes of the Shutdown
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Price Competition and Margin Erosion:
The delivery sector has seen persistent “price dumping,” where large players lower prices to gain market share, making it nearly impossible for smaller firms to sustain profitability. -
High Operational and Logistical Costs:
Rising fuel prices, driver commissions, and technology maintenance significantly increased operating expenses. -
Regulatory and Compliance Pressures:
New government requirements for licensing, insurance, and driver verification added further complexity and cost. -
Limited Access to Expansion Capital:
Compared to global or regionally backed competitors, Shgardi’s capital reserves were limited, reducing its ability to absorb short-term losses for long-term gain.
Market Comparisons
| Company | Market Focus | Ownership/Scale | Strategy | Status |
|---|---|---|---|---|
| Shgardi | Multi-service local delivery | Local startup | Price competitiveness, local expansion | Ceased operations (2025) |
| Jahez | Food & multi-category | Saudi public company | Broad partnerships, tech integration | Active, expanding |
| HungerStation | Food delivery | Backed by Delivery Hero | Heavy promotions, wide coverage | Active, dominant |
| Mrsool | Person-to-person delivery | Saudi-based | Flexible pricing model | Active, stable growth |
The comparison highlights that scale and capital strength are now decisive factors for survival in the Saudi delivery market.
Economic and Strategic Implications
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The shutdown of Shgardi reflects the end of the experimental phase in the Saudi delivery market and the start of a maturity stage characterized by consolidation and financial discipline.
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It underscores a broader reality: rapid growth without sustainable margins leads to market exits, even for well-known players.
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In the short term, consumers may benefit from lower prices, but in the long term, reduced competition could lead to higher costs and less innovation.
Conclusion
Shgardi’s closure represents more than the fall of a single company—it illustrates a structural transformation in Saudi Arabia’s digital economy.
As the delivery industry matures, only firms with strong capital foundations, efficient operations, and technological innovation will survive.
For startups, Shgardi’s experience serves as both a cautionary tale and a case study on the importance of balancing growth with economic sustainability.