Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.

Kazakhstan’s online shops first emerged in 2000 but even after nineteen years the industry is still underdeveloped.  Based on recent reports, Internet use has grown quickly over the last year, from 70.5% use in 2014 to  76.4 % of the population in  2018 (according to the International Telecommunication Union).  This provides excellent opportunities for growth in e-commerce.

Kazakhstan has steadily rising incomes, low population density and vast land mass making it an ideal candidate for a robust internet-generated, mail-order business sector.  More than 1700 Internet shops and Business-to-Business (B2B) trade marketplaces exist in Kazakhstan’s domain.  Products sold online include prepaid phone and Internet cards, multi-media, books, computer hardware, computer peripherals and accessories, software, cosmetics, apparel, and more recently, consumer electronics and airline tickets.  The most progressive types of e-commerce in Kazakhstan include online airline and railway tickets, and online payments for mobile services and public utilities.

B2B commerce is starting to grow, as many Kazakhstani companies begin to realize that having a web page is a must for good standing in the business community.  Some firms now include product catalogs on their Internet pages.  Most companies, however, use their websites simply to represent products and services offered and cannot provide functions of online payment and shipping.  In 2004, Kazkommertsbank, the leading local bank in Kazakhstan (merged into Halyk Bank in 2017), and Commerce One, with the support of IBM, activated the first Electronic Trade Ground (ETG) in Kazakhstan to conduct sales and tenders through the Internet.  By June 2018, the ETG registered approximately 48,000 members and more than 80,000 completed tenders. 

Specialists estimate the sector is currently growing at 25% per year, a rate likely to continue for at least the next three years. At the same time according to the Ministry of National Economy, in 2018 the e-commerce market in Kazakhstan increased by 1.5 times compared to 2017 and reached approximately USD700 million and forecasts from the local experts indicate that e-commerce in Kazakhstan could be worth USD1.0 billion by the end of 2019.

The leaders among foreign e-commerce companies in Kazakhstan are AliExpres, Amazon, and eBay.  On-line shopping amounted to only 10-12 % of all Internet services provided in Kazakhstan in 2019.   Most international courier services have representation in Kazakhstan and use online sites to support delivery.  From January 1, 2018, a limit of Euro1,000.00 and 31 kilograms was set for goods bought at foreign internet shops and since January 1, 2019, the limit has dropped to 500 euros and weighs no more than 31 kg.  In 2020 the limit is planned to be reduced to 200 euros and weighing no more than 31 kg, that, according the local experts, may affect the market.  

Imperfect and insecure systems of Internet payments and goods delivery, and a low level of consumer confidence in e-shopping are still the main obstacles for e-commerce development in Kazakhstan.  Payments for orders over the Internet from Kazakhstan online retailers are mostly done by cash-on-delivery or bank transfer and rarely by credit/debit cards.  Most industry experts attribute the sector’s weak development to a lack of critical mass of internet users, as well as poor management of existing e-shops, most of which were opened in Kazakhstan by technical specialists with little or no experience in this specific business.  At the same time, none of the large retail chains have yet attempted to open online stores.

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