Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
Electronic commerce is still developing in the Kyrgyz Republic. Internet access outside of major cities is unreliable but improving quickly. ATM/debit cards are extremely common in Bishkek and ATMs are a common sight in most medium-sized villages. Electronic payment of salaries is becoming more common, and some local banks have developed applications for mobile phones. Nevertheless, the Kyrgyz Republic is primarily a cash economy.
The COVID-19 pandemic has greatly driven the development of e-commerce. Closure of borders and lockdown made companies look at the local and international e-commerce platforms.
According to the State Committee of Communication, at the end of 2020 the number of internet users in The Kyrgyz Republic reached 5.8 million people (88% of the total population). According to the Communications Committee, the importance of digital technologies has increased since the onset of the COVID-19 pandemic, which has also contributed to the development of Internet services, distance learning, online commerce, online conferences, Internet television and the like. Mobile broadband continues to rapidly expand, but only 40% of the population uses fixed broadband, according to the survey. Mobile internet prices in the Kyrgyz Republic are among the lowest in the world (0.15 USD for 1 GB).
Current Market Trends
Recently, eCommerce has experienced rapid growth in the Kyrgyz Republic. In recent years, significant advances have occurred locally in mobile payment systems and app-based commercial platforms. There are more online shops now than several years ago, and the variety of commercial services available via the internet has expanded significantly.
Despite recent technological developments, however, the majority of Kyrgyzstanis continue to prefer traditional forms of purchasing goods and ordering services. A key challenge to development of robust eCommerce in the Kyrgyz Republic is the perception that goods purchased online may be of lesser quality, and that services can be better negotiated in person. Consumers may also be concerned about poor customer service and no clear recourse in the event of a negative eCommerce experience. According to the State committee of informational technologies and communication only 5% of population are involved in e-commerce. Fifteen percent of the population has internet banking and 40% of population has a bank account.
The Kyrgyz Republic ranks 97th out of 152 countries in UNCTAD’s B2C E-Commerce Index. The index assesses the willingness of countries to develop e-commerce based on four indicators: Internet penetration, the presence of bank accounts among the population, the share of secure servers per 1 million of the population, and the level of development of postal services according to the rating of the Universal Postal Union. In this rating, the country lags behind almost all CIS countries - Belarus (37th place), Russia (42nd place), Kazakhstan (52nd place), Armenia (66th place), Azerbaijan (68th place).
According to the Association of Electronic Commerce of the Kyrgyz Republic, 72 percent of online stores are virtual showcases of offline stores, and they do not fully exploit digital commerce possibilities. It is necessary to implement a set of measures to stimulate the transition of entrepreneurs to e-commerce, starting with an understandable and accessible algorithm for starting a business in this area, simplified taxation, modern and convenient electronic payment systems, and a developed system of goods logistics, especially in cross-border trade. Amazon and Wildberries, the largest Russian e-commerce platform, started to allow Kyrgyz entrepreneurs to sell their products on their platforms in 2021.
The country is developing a strategy for e-commerce development for 2021-2025 and Ministry of Economy and Finance is discussing the legal framework and tax regulation necessary for it on different platforms. E-commerce development is heavily supported by different international organizations. An e-commerce law is being drafted but has not yet passed.
There is ample opportunity for improvement and development of eCommerce in the Kyrgyz Republic. High speed, affordable internet access and usage –- particularly in mobile broadband — are expanding throughout the Kyrgyz Republic, albeit primarily in urban areas. Rural areas, where 60% of the total populace reside, have limited internet access and low levels of internet use. The Kyrgyz Republic does have a steadily developing IT sector, and the undeveloped eCommerce sector may present investment opportunities for tech entrepreneurs.
Popular eCommerce Sites
Local internet retailers are rapidly increasing in the Kyrgyz Republic, though overall penetration remains low. Popular domestic eCommerce sites include Svetofor.info and Lalafo.kg. Svetofor identifies itself as the most popular online commercial market in the Kyrgyz Republic and offers a wide variety of retail goods. Lalafo is akin to an online trading site such as eBay or Craigslist. Additionally, websites that provide services are increasing in both number and use; websites such as Tez.kg or Namba.kg offer consumers a mobile and web-based interface to order taxis and food delivery services in Bishkek. Several online platforms offer taxi services like Uber, including Namba Taxi and Yandex Taxi. Chinese eCommerce websites such as taobao.com and alibaba.com are more popular than other international eCommerce platforms; many Kyrgyz companies retain Chinese-speaking staff to help locals make purchases through Chinese eCommerce websites. Russian marketplace Wildberries.ru is a popular international platform, which since May 2021 has allowed Kyrgyz entrepreneurs to sell their products on its website. Amazon has launched in Bishkek, although some products are not shipped to the Kyrgyz Republic. In May 2021, Amazon announced that Kyrgyz companies may officially register on the website and sell their products.
The social media market in the Kyrgyz Republic is rapidly growing, with an estimated 80% of internet users actively engaged on social media platforms. The total number of social media users reached 2.5 million people in 2020, approximately 40% of the population.  In 2021 the total number of Facebook users reached 760 thousand and Instagram users amounted for 2.5 million.