E-commerce market will exceed 3 trillion tenge by 2024 | FinReview
22 July 2021

E-commerce market will exceed 3 trillion tenge by 2024

E-commerce in Kazakhstan is developing rapidly, sales in the sector are growing at double-digit rates. At the same time, all market participants remain the winners. For example, thanks to the development of non-cash payment technologies, commercial enterprises, service providers and consumers will be able to receive up to 7 billion US dollars in benefits per year.

The growth trend of the global e-commerce market has increased many times as a result of the well-known events of the past year, which led to economic and social upheavals. The previously observed trend of business transition towards the development of its brand on the Internet has become even more noticeable. And this is quite logical, because, firstly, the restrictions that have arisen aimed at suspending the spread of COVID-19 have forced many companies to switch to online trading in order to preserve their business. And, secondly, consumers themselves began to visit offline trading platforms less and switched to online stores.

Against this background, economists predict a significant growth of the global e-commerce market in the near future. According to some estimates, it is expected that by 2023 the volume of sales on the Internet will approach the mark of 6.6 trillion US dollars, while in 2020 this figure was 4.3 trillion US dollars.

Whether the uptrend will continue and how the e-commerce market is developing in Kazakhstan, the analysts understood FinReview.info.

In Kazakhstan, the growth dynamics of the e-commerce market corresponds to the global

E-commerce in Kazakhstan has also grown significantly. According to official statistics, the market volume for 2020 exceeded 1.2 trillion tenge, an increase of almost 2 times compared to 2019.

The upward trend will continue in the next five years — everyone agrees on this conclusion. According to the Ministry of Trade and Integration, the volume of the e-commerce market will reach 1.9 trillion tenge by 2022. And the Center for the Development of Trade Policy Qaz Trade estimates the growth of the market to 3.5 trillion tenge by 2025.

Non-cash payments can bring up to 7 billion US dollars in net benefits to Kazakhstan

E-commerce contributes not only to the development and increase in the volume of domestic and foreign trade, but also to the growth of non-cash payments, reducing business costs and minimizing shadow turnover. In 2020, the volume of non-cash payments increased 2.5 times to 35.3 trillion tenge. The growth trend is also observed this year — for the five months of 2021, the volume of non-cash payments amounted to 23.6 trillion tenge, an increase of 2.4 times compared to the same period last year. At the same time, the share of online payments made via the Internet and mobile phone amounted to 82.5% of the total volume.

The spread of non-cash payment technologies in the country has an economic effect for all its participants. The estimated benefit of commercial enterprises, service providers and consumers due to this form of payment will be about 7 billion US dollars per year. This indicator is calculated not when residents completely refuse cash payments, but on the condition that all residents of the country begin to use non-cash payments as actively as 10% of the most active users use non-cash funds.

In particular, enterprises can receive over 4.6 billion US dollars in net benefits, including sales growth due to the expansion of the online customer base. Consumers of services can save about 420 million US dollars through banking, retail and transit operations. And government agencies can increase the direct benefit to 1.9 billion US dollars, including increasing the volume of tax revenues, accelerating economic growth and reducing the number of crimes related to cash.

What ensures the growth of the domestic e-commerce market?

Among the factors provoked by the pandemic and influenced the development of e-commerce, it should be noted:

The influx of new customers. During the period of self-isolation, the number of active buyers on the Internet increased by 600 thousand from 3.2 million to 3.8 million users. Obviously, some of them started shopping online, because they lost the usual opportunity to visit offline sites. Some of these users will refuse to purchase goods and services online as soon as the previous scenario becomes available again, but most users will continue shopping online, having appreciated the convenience and advantages of such a service.

Remote employment. In 2020, about 70% of employees switched to remote work. In the first half of 2021, about 20% of employees continued to work remotely. At the same time, this indicator will be increased in the near future due to a new Indian strain of coronavirus, the so-called delta variant of SARS-CoV-2, which is twice as intense in incidence as COVID-19. This factor will further stimulate the development of e-commerce, since due to the limited functioning of offline platforms, people will look for the usual variety of goods in online stores.

Forced isolation. A part of the population will continue to order goods online with delivery even after the restrictions are lifted, as the safest way of consumption.

What will happen to e-commerce in the near future?

The state relies on the development of the e-commerce market, defining it as one of the drivers of the economy. After accelerated growth in 2020, further development of the market became impossible without improving government regulation measures and improving the e-commerce infrastructure for both domestic sales and exports. The Ministry of Trade and Integration identifies three key tools for the development of e-commerce. The first is the promotion of e-commerce and training of small and medium-sized businesses. The second is the development of the delivery service and logistics services. The third is the development of online cross-border trade.

Work in these areas is carried out jointly with the FinTech Hub of the AIFC, the Damu Entrepreneurship Development Fund and international organizations such as Mastercard, VISA, USAID. The first results of such cooperation have already been achieved. For example, since May 2021, Kazakh businessmen have been granted access to trade on the Internet platforms Amazon, Ozon and eBay. The geography of these sites covers more than 190 countries of the world, that is, now entrepreneurs will be able to trade abroad. Also, the export of goods through the Alibaba platform is available for domestic manufacturers from 2020. About 100 companies have already signed export contracts worth 45 million US dollars.

Forecast: by 2024, the volume of the e-commerce market will exceed 3 trillion tenge

The lockdown of 2020 led to the rapid development of the already steadily growing e-commerce market, which may soon outpace the offline sales figures.

Nevertheless, the growth rate is expected to decrease in 2021, as some consumers will resume shopping in traditional stores. However, the dynamics indicators will remain quite significant and it is obvious to expect a threefold increase in the next three years. That is, by 2024, the market volume may exceed 3 trillion tenge.