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Fast delivery, hundreds of new jobs — Saken Sarsenov about potential of e-commerce development

Thursday, 13 June 2019, 20:28:36

Since the beginning of the implementation of the Digital Kazakhstan State Program, there has been a positive trend in the development of e-commerce in the country. Chair of the Board of Kazpost JSC Saken Sarsenov told about the current state and prospects for the development of e-commerce as the main engine for the growth of postal administrations around the world and in Kazakhstan in an exclusive interview with PrimeMinister.kz.

— Saken Seitzhapparovich, Kazpost in our country was named the operator of electronic commerce. What are you doing to develop it further in our country?

— The e-commerce market is spreading very rapidly throughout the world. Kazakhstan is now at the very beginning of e-commerce development. If in the world the average growth of the e-commerce market is 15-20%, and at the beginning it was 30-40%, now in Kazakhstan there is a boom in the development of e-commerce. It grows by nearly 35-40% in a year. These are very good indicators for the market as a whole and for the transition from offline to online. Speaking in numbers, now the e-commerce market in Kazakhstan is about 300 billion tenge. According to our forecasts, in the next 5 years it will grow to 2 trillion tenge. That is, if now the share of retail is somewhere around 2.9%, then after 5 years it should be 24%.

What is the government doing now? It pays great attention to the development of e-commerce, including Kazpost is creating postal infrastructure. The e-commerce market is entrepreneurs who sell goods online. It is also online payments, that is, the ability to pay either online or the so-called cash on delivery, when you bring the goods and you pay for it to the postman or courier, and the delivery. Now the market requires very fast and cheap delivery. This is what we are doing. As for the Government, it has already passed the necessary legislation. For example, last year, tax preferences were adopted that allow entrepreneurs to engage in online commerce. A lot of tax breaks have been introduced. This year, a number of amendments to the legislation have been adopted: export procedures have been simplified. Previously, as it was: if you were selling online, it was necessary to fill out a bunch of documents, customs declarations. Now this process is simplified, everything can be done through postal documents. Entrepreneurs do not have to do anything. Now, for the development of transits, a bill has been passed that allows, through Khorgos, very large flows of e-commerce goods, so-called parcels, to be sent from China to Europe and to the countries of the near abroad. I hope that those guys who want to engage in online sales and those who are engaged in the near future will have the opportunity to earn very good money, their business will grow very quickly.

— Share your plans for the near future.

— If we talk about Kazpost, our business is divided into two types. This is a financial and postal business. As for the financial business, we will translate everything into digital format, that is, we will go online. Regarding physical sales channels, when you come to the department, stand in a queue and receive our services, they cost us a lot. Therefore, we have to make this all online.

As for the postal business, here we need to reduce the delivery time. Due to digitalization, optimization of our routes, we recently managed to do a lot. Since 2017, we have reduced the delivery time of our parcels from 16 days to 6 days. Now we are doing a lot of work. Somewhere from mid-summer, the delivery time for packages in Kazakhstan will be reduced to 3 days. Any parcel must reach three days. There is also an express mail when you deliver the parcel in the morning, and in the evening it is in another city. We are doing a lot of work in this direction. We are opening digital offices where a person can come and receive services without the participation of our employee. In addition, we have a new service — a universal agent. We put such equipment in rural areas, which allows our clients to remotely receive different types of services — public service centers, medical organizations, educational institutions and many others.

— What is the growth dynamics of the e-commerce market in Kazakhstan compared to last year? How many online stores are there in Kazakhstan? How many Kazakhstanis buy goods in foreign online stores, what attracts them to online shopping?

— In Kazakhstan, the number of those who buy goods online once a month has reached 2.3 million people. According to our forecasts, by the end of the year this number should increase to 3.2 million. There is an increase in the number of online shoppers. According to our estimates, somewhere in 2025 there should be more than 12 million such people. Now this is not only the purchase of some things. Our daily life includes buying tickets for concerts, airplanes, trains, buying food. Regarding the dynamics of growth, I assume that in the near future, e-commerce will grow to 40%, because the market is now saturated and so many people are engaged in online business.

If we talk about the domestic market and purchases from abroad, then there is a parity of 50 to 50. Our residents buy both inside the market and from abroad. They buy mainly on such well-known sites like Alibaba, AliExpress, Amazon, Ebay. We have about 1,700 entrepreneurs who are engaged in online business and about 20 large internet sites where 80% of our population buy goods.

— Tell us about the tracking system of delivery of parcels to the destination? How can customers track this?

— The main requirement of our business is that the client clearly understands where his product is located. This is a guarantee of the safety of the goods and their on-time delivery. We provide tracking service. In January 2019, a new postal accounting system was introduced, where we allow our client to track the entire route of his package. This is a very convenient system. It is available on our website and mobile app. It is regulated by push-notifications, sms-messages.

— How does the service responsible for the delivery and safety of parcels work? Where can customers turn to questions regarding the delivery of packages?

— There are different channels of communication with us. First, contact centers. We have 99 contact centers. The second direction is our all contacts on our website, Facebook. We are interactive in principle. In the near future, we plan to launch a chat bot. This is a service in which the intelligent system generates responses from our systems and responds to our customers. Most of our requests we want to translate into the so-called format of communication with the machine. We are planning to launch this work in the near future.

— How is mobile banking developing, how many people use this type of service?

— In the world market, everything is moving towards non-cash payments. We also have strong services. Kazpost is also working in this direction. We have a mobile application, mobile banking service. There are about 650 thousand active users in our system. In the daily format, 100 thousand users use mobile banking. If in 2017 transactions through this application were only 1 billion tenge, then in 2019 we expect 15 billion tenge turnover through our mobile applications. Of course, these are not so high figures, but over the past 2 years these numbers have increased by 15 times. I think that the trend will continue in the near future. Soon we will see hundreds of billions of tenge that will turn around through our mobile platform.

— How many franchise offices work in the country today? What services do Kazakhstanis mainly receive through franchising?

— Franchising is our main driver. Because we have almost 4 thousand offices in Kazakhstan. Of these, 70% are in rural areas. Unfortunately, many of them are unprofitable. There is a requirement of the Government that Kazpost must be located in a rural settlement. There are 800 villages where there are no akimats and other local executive bodies, but only Kazpost. Relatively speaking, Kazpost is the only representative of the government, the only connection with the outside world. We understand that. Throughout the world, postal organizations are developing in the direction of franchising. This is when there is a shop in the same village. We offer the store owner to place his post office, and he will provide all our services on our behalf. In principle, the legislation allows and we apply this model. Now in Kazakhstan we have opened 224 offices on the franchise model and in the near future we plan to increase their number. In 2017, there were 3,500 branches. Until the end of 2019, there will be 4,000 Kazpost branches. And some of them are franchises. In the next 5 years, we plan to increase the number of our branches to 5 thousand. Most of our branches are planned to be replaced by our franchise partners. This will allow us to reduce our costs and losses, and entrepreneurs to develop new areas of business and to add to the existing business part of the business, which will bring good income and an additional stream of customers. This is a very good synergy between a state-owned company and a small and medium business.

— Saken Seitzhapparovich, what are the results of Paypost internet acquiring technology’s work?

— This is one of the components of mobile banking and Internet banking. We launched this service just recently. We offer this service to all entrepreneurs who are engaged in online business at very affordable prices. It is very important for us that there are more packages. Now, about 67 entrepreneurs already have the Internet acquiring system, relatively speaking, transactions are growing very quickly from month to month. I think in the near future until the end of the year these transactions will reach billions of tenge.

— By 2025, it is planned to create about 280 thousand new jobs in e-commerce. What specialties will be in demand and how will the training be conducted?

— Many say that digitalization leads to job cuts. We here show the opposite effect, that on the contrary there is a separate type of activity where new jobs can be created. We see a trend that at the expense of the e-commerce market in Kazakhstan many jobs will be created. For example, about 44 thousand new jobs were created in 2018. There is a task to create more than 200 thousand jobs in the next five years. They are couriers, drivers, contact center employees, programmers, marketing managers, etc. Their number will increase further. Because we consume these services and these goods. Naturally, someone should provide these services. Each product generates a new workplace.

— Does Kazpost plan to introduce new services in 2019?

— In general, Kazpost recently introduced a lot of new services for the development of e-commerce, non-cash payments in Kazakhstan. Now we have the task of stabilizing all this infrastructure so that it works without failures. Now all our IT systems are working. Our task is to allow more people use these services and projects. We place great emphasis on the promotion of these services. Across the country, we are opening e-commerce centers, export schools, which teach people how to conduct business online, how to buy, what to buy. We teach our business to sell their goods for export. Our economy now consumes, that is, imports goods from abroad. But we have a lot of products that we can sell. For example, China, on Amazon. The Chinese market is very interested in organic products. But if they are brought in by ordinary channels, there are a lot of obstacles: certification, etc. As a result, our business is not able to move into the Chinese market. But the online channels, when a citizen of the People's Republic of China orders a product through the site, and we can the parcel, and certification issues immediately disappear. This is a big niche, a great opportunity for our entrepreneurs to promote domestically produced goods in foreign Internet markets. Every day in the world, 270 million people buy online. The market volume is very large. If in the world now the volume of the e-commerce market is $1.8 trillion, then in 5 years it is assumed that this market will already weigh $2.8 trillion. Those who now start to engage in this business, including the promotion of our domestic products, will work very well.

— What opportunities open up before Kazpost, taking into account the implementation of the transit and logistics potential of Kazakhstan?

— April 2, 2019, the Head of State signed the Law “On Amendments and Additions to Certain Legislative Acts on the Development of the Business Environment and Regulation of Trading Activities.” The law allows the Khorgos International Center of Boundary Cooperation to turn cargo into mail. This is a unique project — the ideology of bonded warehouses. Now between China and Europe, goods worth $76 billion are sold annually. This is a huge flow. From China to Europe, the shortest path lies through Kazakhstan. Now Chinese businessmen have the following requirements: we must deliver very quickly and for very little money. The territory of Kazakhstan just allows you to fulfill these requirements. If in the middle of June all the bylaws are signed and this standard starts to work, we will be able to transport these goods through our territory. And this in the coming years will provide an opportunity for additional economic growth of $1 trillion a year. This is a very big challenge for our logistics companies, for people who are engaged in transit, including for Kazpost. If we do this project, I think a lot of large Chinese and European online stores will come to Khorgos with investments. This is our task and this is a very big challenge. I hope that we will succeed.

— At what stage of development is the launch of fulfillment centers in the regions up to 2025?

— Fulfillment Center is focused on the development of domestic e-commerce, the export potential of our online players. In 2018 in Kazakhstan, we opened three fulfillment centers: in Nur-Sultan, Almaty and Aktobe. Next year we have plans to open four more. In general, we plan to build 19 centers in Kazakhstan over the next five years. What does it give? The internet entrepreneur eliminates the need to look for warehouses, recruit people who will issue, pack orders. This all is done by our fulfillment center. We take goods from an entrepreneur, store them, then, when an order comes to the online store of this entrepreneur, information comes into our system, we take this product, pack it and deliver it to our client through our channels. That is, the entrepreneur's head does not hurt what to do with the infrastructure and so on. That is, Kazpost offers all types of services: storage, delivery, packaging of goods, receiving payments. The entrepreneur can only actively work with the site and promote their products. This is a very good business for both Kazpost and entrepreneurs who are engaged in online business.

— Saken Seitzhapparovich, thanks for the interview!

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