Kazakhstan - E-CommerceKazakhstan - eCommerce
Kazakhstan’s online shops first emerged in 2000 but even after fifteen years the industry is still underdeveloped. Based on recent reports, Internet use has grown quickly over the last year, from 70.5% use in 2014 to 77% of the population in 2017 (according to the International Telecommunication Union). This provides excellent opportunities for growth in e-commerce. Kazakhstan has steadily rising incomes, low population density and vast land mass making it an ideal candidate for a robust internet-generated, mail-order business sector. More than 600 Internet shops and Business-to-Business (B2B) trade marketplaces exist in Kazakhstan’s domain. Products sold online include prepaid phone and Internet cards, multi-media, books, computer hardware, computer peripherals and accessories, software, cosmetics, apparel, and more recently, consumer electronics and airline tickets. The most progressive types of e-commerce in Kazakhstan include online airline and railway tickets, and online payments for mobile services and public utilities.
B2B commerce is starting to grow, as many Kazakhstani companies begin to realize that having a web page is a must for good standing in the business community. Some firms now include product catalogs on their Internet pages. Most companies, however, are not ready to go beyond the web representative office to conducting on-line business. In 2004, Kazkommertsbank, the leading local bank in Kazakhstan, and Commerce One, with the support of IBM, activated the first Electronic Trade Ground (ETG) in Kazakhstan to conduct sales and tenders through the Internet. By June 2018, the ETG registered approximately 39,0000 members and more than 40,000 completed tenders. These numbers represent a considerable increase compared with 2005: 126 members and 140 tenders.
Specialists estimate that the sector is currently growing at 25% per year, a rate likely to continue for at least the next three years. Forecasts from the local experts indicate that e-commerce in Kazakhstan could be worth US$3.6 billion by the end of 2017. The leaders among foreign Internet shops in Kazakhstan are AliExpres, Amazon, and eBay. On-line shopping amounted to only approximately 10-12 % of all Internet services provided in Kazakhstan in 2017. Most international courier services have representation in Kazakhstan and use online sites to support delivery. In 2007, Air Astana, a leading international air carrier in Kazakhstan started to provide online services for its customers. The volume of Air Astana online services reached 10% of total ticket sales in 2013 and company plans to increase its electronic transactions to 30% in five years. In April 2015, PayPal announced the launch of its Merchant Services in Kazakhstan. Kazakh merchants will now be able to offer customers simpler, faster and more secure way of paying online. Kivanç Onan, Regional Director of PayPal Middle-East, North Africa & Turkey commented: “E-commerce is booming in Kazakhstan, with the country’s strong payment infrastructure prompting regional and cross-border trading.”
Imperfect and insecure systems of Internet payments and goods delivery, and a low level of consumer confidence in e-shopping are still the main obstacles for e-commerce development in Kazakhstan. Payments for orders over the Internet from Kazakhstan online shops are mostly done by cash-on-delivery or bank transfer and rarely by credit/debit cards. Most industry experts attribute the sector’s weak development to a lack of critical mass of internet users, as well as poor management of existing e-shops, most of which were opened in Kazakhstan by technical specialists with little or no experience in this specific business. At the same time, none of the large retail chains have yet attempted to open online stores.
Since 2013, the Association of Kazakhstani Internet business and mobile Commerce (AKIB) has provided independent evaluations of Kazakhstani Internet shops. A multifaceted system has been developed in order to survey all aspects of e-shops in Kazakhstan including level of access, feedback, ways of payment and delivery, technical support, etc. An association website rates the various Internet services and helps customers compare prices.
Kazakhstan eCommerce Industry Trade Development and Promotion eCommerce