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E-commerce market amounted to 435 billion tenge in first half of 2020

Tuesday, 28 July 2020, 10:20:20

At the government session chaired by Prime Minister Askar Mamin, Minister of Trade and Integration Bakhyt Sultanov reported on the development of electronic commerce in Kazakhstan.

Sultanov noted that many people today understand the benefits and convenience of online shopping and are getting used to them. It is obvious that this trend will continue in the future.

“Consumers are now focusing more on product quality. According to international reports, 40% of surveyed consumers choose a product based on brand reliability. Most e-commerce companies note that the main factors of customer retention are the relevance of data on the availability of goods, fast processing and delivery of goods to the customer. Among other global trends, it is important to note the strengthening of international cooperation between countries for the development of cross-border online trade and logistics,” the minister informed.

The COVID-19 pandemic has led to significant growth in online commerce and increased sales through B2C channels. The rise in online retail activity occurs during outbreaks of disease and quarantine. The increase in sales through B2C channels is especially noticeable in the online sale of medicines, household items and food.

More than 2 thousand online stores operate in Kazakhstan. However, only 601 online stores were registered to receive tax benefits in the form of exemption from income tax.

According to Kazpost JSC, the volume of the e-commerce market in the first half of 2020 amounted to 435 billion tenge. This represents 9.4% of the total retail trade. By the end of this year, 900 billion tenge is expected. By 2022, this figure will reach 1.9 trillion tenge, accounting for about 13% of the total retail trade. The goal previously set was to bring the share of e-commerce in total retail to 10% by 2025. However, the ministry has begun revising the target for the share of e-commerce to 15% by 2025, which will be reflected in the State Trade Development Program 2021-2025.

During the quarantine, there was an increase in online trading and payment transactions. According to the National Bank, as of May 1, 2020, the volume of non-cash transactions in the country increased by more than 2.5 times and amounted to approximately 7.5 trillion tenge.

Sultanov also said that despite the growth in the share of e-commerce, there are still barriers to further full-fledged transition to online. Such as the high share of the shadow economy, high commissions for interbank payments, acquiring, unavailability of small medium-sized enterprises and late delivery of goods.

To fully increase the existing growth rate of e-commerce, further improvement of regulatory and technical support is required.

First. Direct support for promotion on Internet platforms for novice and experienced entrepreneurs is provided. Today, country partnerships are being worked out to bring Kazakhstani companies to international online trading platforms such as Alibaba, Amazon, Yandex, Ozon, Shopify. For example, 50 companies were selected to provide access to the Alibaba platform as a Gold Supplier. This premium status provides access to a global audience, the possibility of comprehensive promotion within the marketplace.

Second. Measures are being taken to support Kazakhstani digital trading platforms, which are developing at a rapid pace, especially in a pandemic.

There are 13 platforms on the market today. Marketplaces such as kaspi, chocofamily, technodom, mechta and others have about 20 categories of goods and services.

So, for example, the amount of orders of the national leader kaspi store for the first half of 2020 increased almost 2 times compared to the same period last year.

“In order to further develop e-commerce, we ask you to support the amendment to the norm in the tax code, exemption from CIT and IIT for individual entrepreneurs if income from e-commerce is at least 40% of the total annual income. To stimulate the use of non-cash payments, it is necessary to work together with the National Bank on the issues of reducing the commission for interbank transfers, acquiring, as well as to develop new non-bank payment systems,” the minister said.

Third. As part of the new norms of the Law on Consumer Protection, the ministry provides for the launch of a Unified Platform for Receiving Complaints from Consumers on the principle of “one window”. It will enable the consumer to restore their rights, as well as expand their knowledge and improve the business culture online. Today the topic of consumer protection marketplaces is trending on the agenda of the WTO, EAEU and OECD.

Fourth. Together with the International Trade Center, a large-scale 4-year project “Ready4Trade Central Asia” is being implemented. Its goal is to support the development of intraregional and international trade in the five Central Asian countries.

Fifth. The draft State Trade Development Program for 2021-2025 provides for a number of measures. These are: the creation of a unified information and analytical system for monitoring and analyzing the development of trade, improving statistical accounting, analytical and marketing research of the e-commerce market, developing and expanding electronic platforms, expanding the network of fulfillment centers, opening e-commerce centers for training entrepreneurs.

In conclusion, Bakhyt Sultanov noted that the main trends in the field of e-commerce are an increase in demand for the use of digital cryptocurrencies, the development of omnichannel tools, delivery and logistics using robotization with the principle of "day-to-day delivery", the use of big data for accurate forecasting, deep analytics, providing personalized services to the client, transition to cross-border payment systems on blockchain technologies to minimize transaction fees.

“Taking into account these trends, we will create a full-fledged architecture to support all e-commerce players and allow increasing volumes in the B2B and B2C segments in Kazakhstan,” the minister summed up.


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