This paper presents the preliminary findings of a study researching the diffusion and the adoption of online retailing in Saudi Arabia. It reports new research that identifies and explores the key issues that positively and negatively influence retailers in Saudi Arabia regarding the adoption of electronic commerce. Retailers in Saudi Arabia have been reserved in their adoption of electronically delivered aspects of their business. Despite the fact that Saudi Arabia has the largest and fastest growth of ICT marketplaces in the Arab region, e-commerce activities are not progressing at the same speed. Only a tiny number of Saudi commercial organizations, mostly medium and large companies from the manufacturing sector, are involved in e-commerce implementation. Based on qualitative data, collected by conducting interviews with a sample population of retail sector decision makers in Saudi Arabia, both positive and negative issues influencing retailer adoption of electronic retailing systems in Saudi Arabia are identified. A number of impediments which include cultural, business and technical issues were reported. Facilitating factors include access to educational programs and awareness building of e-commerce, government support and assistance for e-commerce, trustworthy and secure online payment options, developing strong ICT infrastructure, and provision of sample e-commerce software to trial. While literature reveals that government promotion has had limited effects on the diffusion of e-commerce in most countries, this study significantly indicates government promotion and support as a key driver to online retailing in KSA.