Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
ECommerce is developing rapidly in the Kyrgyz Republic and is expected to reach $185 million by 2023. It is overwhelmingly Business-to-Consumer (B2C); there is no major digital platform for Business-to-Business (B2B) transactions. 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 eCommerce. Closure of borders and lockdown made companies look at the local and international eCommerce platforms.
ECommerce penetration in the Kyrgyz Republic is 8 percent while internet penetration in the country overall is 90 percent.
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 the 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 percent of the population is involved in eCommerce. Fifteen percent of the population has internet banking and 40 percent has a bank account.
In 2020 the Kyrgyz Republic ranked 97th out of 152 countries in UNCTAD’s B2C ECommerce Index. The index assesses the willingness of countries to develop eCommerce 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 ECommerce Association 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 eCommerce, 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 eCommerce platform, started to allow Kyrgyz entrepreneurs to sell their products on their platforms in 2021.
The country is developing a strategy for eCommerce development and the Ministry of Economy is discussing the legal framework and tax regulation necessary for it on different platforms. eCommerce development is heavily supported by different international organizations. A national eCommerce law was passed in 2021 and came into effect June 2022.
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. 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, Lalafo.kg, Kivano, Shoppix.kg, Max.kg, Azor, and Wildberries. 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 percent 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 percent of the population.  In 2021 the total number of Facebook users reached 760 thousand and Instagram users amounted for 2.5 million.