Noon.com is to go online in January with a 50-percent investment from the kingdom's Public Investment Fund and the rest from around 60 investors led by Alabbar, who heads the emirate's real estate giant Emaar.
He told a press conference that distribution centres are being set up in the Saudi cities of Riyadh and Jeddah, along with a giant warehouse the size of 60 football stadiums in Dubai.
"We expect to become a world player but will concentrate firstly on Saudi Arabia and the United Arab Emirates," said the president of Emaar, the company which built the world's tallest building, the Burj Khalifa in Dubai.
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With an initial inventory of 20 million products, the online retailer aims to expand to Egypt, the Arab world's most populous state, at the end of next year or early in 2018.
Alabbar, quoted by Bloomberg, said Noon would be traded on stock markets after five to seven years.
Products will include fashion, books, home and garden, electronics, sports and outdoor, health and beauty, personal care, toys, children's and baby products.
With e-commerce growing fast in the Middle East, the region's Souq.com, founded in 2005 as an auction site before expanding into general retail, is often described as "the Amazon of the Middle East".
In February, Souq.com announced it had raised $273 million from international investors to finance expansion plans.