An insight into e-commerce in the world: part four. Central Asia and Caucasus

June 29, 2016 Blog
This article continues a series of surveys on current state of online retail markets worldwide as seen by independent industry reviewers. Previously we’ve looked into peculiarities of the Western European markets. According to the results of a recent market research from analytical portal, the region of Central Asia and Caucasus holds quite a significant potential for businessmen and affiliates wishing to capitalize on the e-commerce segment growth.

Current state of the market

As for now, the opportunities that online retail sector in the region offers mostly remain undiscovered. This market segment here is currently staying at an early stage of development but, curiously enough, online shopping traffic predominantly comes from abroad, meaning that there is enough demand for making purchases through Internet from foreign marketplaces. As the gathered data shows, the most popular foreign retail websites for Central Asia and Caucasus are:
These online trading platforms outperform local players of e-commerce market quite easily, which is mostly due to a wide range of goods that is being offered on these platforms, along with a moderate price for the vast majority of items.

What is happening in different countries across the region?

The regional leader in terms of e-commerce development is Kazakhstan – it’s one of the two countries on this territory where Internet penetration exceeds 50%. Still, online trade segment has a massive potential of future growth here – according to data of 2015, online retail accounted for less than 2% of the total volume of retail sales. This segment, though, is expected to show double-digit growth in a quite short period of time. It needs to be noted that Internet users in Kazakhstan are showing a growing interest towards making purchases online as they find appealing the following factors:
  • Convenience of online shopping;
  • A wide product selection offered by online retailers;
  • Comparatively low prices.
Quite interestingly, foreign online retailers are the sellers that are in the highest demand among Kazakhstan Internet users. It can be seen from the fact that three of the five top-selling retailers in Kazakhstan are located abroad. The second country in Central Asia and Caucasus where Internet penetration is above 50% is Azerbaijan. Almost a half of all the Internet users in the country are young people under 25 years old who are considered to be the major driving force behind e-commerce sector growth. A significant growth of interest towards online shopping can be seen among the country’s Internet users – the volume of online sales made during the first 7 months of 2015 exceeded the total number of sales made through the whole 2014. Nevertheless, the volume of B2C e-commerce deals amounted for less than 1% of all the retail sales in 2015. Quite typically, the majority of online retail platforms used was of a foreign origin which makes the analysts speak of a considerable room for growth in this segment in the foreseeable future. Countries like Georgia and Armenia also see improved Internet penetration levels which are now close to 50% in these countries. Along with Uzbekistan, the most densely populated country within the region where mobile technology is widely used for making purchases online, these territories open up some appealing opportunities for those willing to enter the growing market.

What do experts think of the region potential?

Analysts say that a significant growth of this market segment is expected to take place in the foreseeable future. They attribute this anticipated growth to the fact that online shopping infrastructure here is visibly improving – for example, delivery processes are being revised, and new ways of making payments are being introduced.