Mongolia - eCommerceMongolia - eCommerce
Mongolia’s eco-system for eCommerce has remarkably improved over the last two years. Mongolia has a relatively good infrastructure for eCommerce centered in the capital city of Ulaanbaatar. Out of a population of three million, 2.6 million have Internet access, two million use smart phones, 1.3 million regularly use Facebook and Twitter (Communication Regulatory Commission). However, barriers to domestic eCommerce remain, including a lack of trust between buyer and seller, lack of logistics infrastructure to deliver products cost effectively, poor Mongolian-language search engines to locate products, and inconsistent and unclear government regulation affecting delivery, payment, and taxation of eCommerce transactions.
Current Market Trends
Established in 2016, the E-Business Development Center (EDC) registers e-businesses and e-deals, ranks e-businesses based on their security and capacity, provides business and legal advocacy, expands cooperation of e-businesses, and develops draft laws for e-commerce. EDC reports that an estimated two million Mongolians regularly shop online accessing both domestic-based shopping platforms (of which there are currently ten) and foreign e-commerce outlets such as Amazon or Alibaba. Facebook has become one of the most popular local platforms for e-commerce, with over 50,000 transactions daily. The 18-35 year-old demographic comprises 70 percent of active Mongolian Facebook users (Communication Regulatory Commission).
Domestic eCommerce (B2C)
EDC estimates that 25 percent of all Mongolian consumers shop online. Although EDC cannot yet calculate the total revenue from these sales, it reports that 70 percent of these consumers use online banking applications, with the remainder using debit or credit cards.
Online trade between businesses and consumers (B2C), business to business (B2B) or between two private persons (C2C), via such marketplace platforms as Amazon, eBay, Alibaba, and other platforms, is increasing but figures are not avaliable to determine the extent.
EDC reports that more and more Mongolian companies realize the benefit of launching online shopping platforms to access customers 24/7. IT start-up companies offer digital commerce platform software, some imported and some domestic. While local companies express interest in using B2B and B2C services, they require a great deal of education to understand the value of the service and how to properly use the platforms.
Relatively small and new, Mongolian eCommerce businesses have shied away from expensive customized eCommerce approaches, opting for “out of the box” solutions using existing platforms (Facebook dominates) and cloud-hosted software and data services.
eCommerce Intellectual Property Rights
The General Authority for Intellectual Property and State Registation (GAIPSR) is aware that eCommerce platforms, especially those based in China, sell pirated goods that violate intellectual property (IP) rights laws and international agreements. However, GAIPSR has not yet examined the extent of eCommerce-related piracy in Mongolia and has not developed a policy to deal with the problem. At this point, GAIPSR has not decided if it needs to amend existing statutes to deal with eCommerce intellectual property rights violations.
Popular eCommerce Sites
Sales Force LLC: Developed in 2012 to assist mega-mining project Oyu Tolgoi with processing procurement inquiries
APM LLC: Facilitates B2C connections between 50 shops selling 25,000 products to 110,000 registered customers.
MEC Partners LLC: Allows Mongolian customers to shop online from Mongolian and foreign suppliers of apparel, fast-moving consumer goods, and food items
Slide Ltd: Operates UBShop.mn selling new and used apparel, food items, electronics, auto parts, new and used cars, and real estate
Monos Group: Operates site selling pharmaceuticals, supplements, vitamins, healthy food, cosmetics, medical devices, maternal and infant items, and books
Happy Home: Allows owners of commercial and residential properties to reach potential buyers
Mongolian commercial banks offer a wide range of online payment options: internet banking, mobile payment, and smart phone banking systems such as Candy, GG, Most Money, Amar, Moby Express, and ZPay.
Four banks in Mongolia have introduced online payment systems: Golomt; Khan Bank; Trade and Development Bank; and XacBank. Mongolia has yet to develop and implement a merchant-based payment system.
EDC notes that while most customers shop from PCs, use of smartphones and other mobile devices for purchases is increasing.
Digital marketing is in its infancy in Mongolia, and there are no dedicated Mongolian digital marketers, although advertisers do avail themselves of this medium. Marketers routinely use cellular service SMS platforms to advertise goods and services, and post ads on Mongolian and foreign language websites. Twitter and Facebook are popular venues for marketing.
Major Buying Holidays
Usually occurring in January or February, Mongolia’s Lunar New Year, Tsagaan Sar, is the largest shopping holiday for Mongolians. Mongolia’s National Statistics Office estimates 2016 holiday consumption at $553 per household for food, drink, and gifts. About 80 percent of these gifts are imported.
Social media use has exploded in Mongolia, no doubt fueld by its overwhelmingly young population and open internet policy. In 2016, 77 percent of Mongolians (2.3 million) used social media — primarily Facebook, Twitter, or both — compared to 41 percent in 2014. While the government uses filters to block sexually explicit materials,it does not use filters to ban social media users actively exercising rights to access information and of free speech. Mongolians also use social media platforms to shop, with an estimated 65 percent of Mongolian Facebook users linked to at least one Facebook shopping page.
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