Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Online shops first emerged in Kazakhstan in the year 2000, but even after twenty years the industry is still underdeveloped. Based on recent reports, Internet use has grown quickly over recent years, from 70.5% in 2014 to 86% of the population in 2020 (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 2,000 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 web pages and social media accounts are a must for developing a strong brand reputation. Some firms now include product catalogs on their websites. Most companies, however, use their websites simply to represent products and services offered, and cannot provide functions of online payment and shipping. In 2004, Kazkommertsbank, the leading local bank in Kazakhstan (which merged with Halyk Bank in 2017), 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 July 2020, the ETG had registered approximately 68,000 members and logged more than 100,000 completed tenders.
Experts estimate the sector is currently growing at 25% per year, a rate likely to continue for at least the next three years. At the same time, according to the Ministry of National Economy, in 2020 the e-commerce market in Kazakhstan increased by 1.8 times year over year and is valued at USD 1.4 billion. Forecasts from local experts indicate that e-commerce in Kazakhstan was(?) worth USD 1.5 billion by the end of 2021.
The leaders among the e-commerce companies in Kazakhstan in 2020 were AliExpress, Mechta.kz, Kaspi.kz, Wildberries and Ozon. In 2021, the growth rate of online shopping is expected to be lower than in 2020, since some consumers will prefer to shop in traditional stores that have reopened. Amazon and eBay are gaining popularity with franchises like Globbing and other delivery businesses that allow customers in Kazakhstan place orders to their U.S. warehouses.
On-line shopping amounted to only 15-17 % of all Internet services provided in Kazakhstan in 2020. Most international courier services have representation in Kazakhstan and use online sites to support delivery. From January 1, 2019, a limit of Euro 500 and 31 kg was set for goods bought at foreign internet shops and since January 1, 2020, the limit has dropped to 200 Euros, with weight not exceeding 31 kg.
Imperfect and insecure systems of Internet payments and goods delivery combined with weak consumer confidence in e-shopping remain the main obstacles for e-commerce development in Kazakhstan. The payments for orders over the Internet from Kazakhstan online retailers was mostly done by cash-on-delivery or bank transfer and rarely by credit/debit cards across the country. This trend began to change in the recent years, especially, with the emergence of Kaspi.kz, a local financial technology breakthrough with contactless payment solution. Most industry experts attributed the sector’s weak development to a lack of critical mass of internet users, as well as poor management of existing e-commerce shops, most of which were opened in Kazakhstan by technical specialists with little or no experience in this specific business. However, the pandemic changed both the e-commerce landscape. Continuing on from its hugely successful launch last year, Kaspi Pay continues to scale at an incredible rate and has firmly established itself as the digital payments platform of choice for merchants of all sizes, across all segments of Kazakhstan’s retail market