Assessment of Current Buyer Behavior in Market
Electronic commerce is slowly increasing in Azerbaijan from a low base. Domestic electronic payment systems such as GoldenPay and online authentication systems such as the “Asan Imza” electronic signature system have encouraged online sales. Despite the availability of electronic payment and authentication systems, most Azerbaijanis prefer to make payments in cash. E-commerce is otherwise only used for purchases made abroad. For sales overseas, the AzExport.az online sales portal provides a database of goods produced in Azerbaijan available for buyers anywhere in the world to purchase online. It offers secure payment options using major credit cards and global and local transport and logistics companies. The site has also partnered with other large international sales portals to direct potential buyers to its database of products.
Local eCommerce Sales Rules & Regulations
Electronic commerce is regulated by the Republic of Azerbaijan’s Law on Electronic Commerce, issued in 2005. The first electronic payment system was created in 2008. No specific license is needed for businesses to engage in electronic commerce; however, they must be registered with the State Tax Service and possess a TIN (Tax Identification Number). The Ministry of Economy oversees and regulates the electronic commerce in Azerbaijan.
Typical issues businesses might face include the lack of reliable security mechanisms on local online platforms, intellectual property-related issues, personal data protection issues, and the small number of electronic commerce platforms. Many shippers are reluctant to send goods without pre-payment as e-commerce is limited by a lack of clear and effective legislation. To address some of these challenges, the government passed legislation in April 2017 to promote the use of non-cash transactions in an attempt to improve tax collection and promote transparent transactions. These efforts are ongoing.
E-commerce is subject to relatively weak intellectual property rights enforcement, as with every sector in Azerbaijan. Several multinational IT companies report widespread unlicensed software use in homes, offices, and government workspaces. Some multinational IT companies have made progress engaging directly with government officials to highlight the security risks of unlicensed software. The American Chamber of Commerce in Azerbaijan, which represents many of the largest local companies, took a pledge in May 2019 to respect and protect IPR rights and advocate for improved enforcement in Azerbaijan.