We’ve come a long way from taking long voyages to bring exotic items and produce from another part of the globe. Now, especially in the West, we can have anything, anywhere, at any time. These days, you need not even carry a physical credit card to make payments in stores. Digital commerce is present all over the world. In some areas, where it’s in the developing stages, now is a great time to invest.
Central Asia seems to be one of these areas. Africa and Latin America are also candidates. Yet, they have many more downsides including low security and high corruption. Not exactly a dream for investing. Much of Central Asia has seen significant reforms and improvement in these areas. With the relative stability in the region many are more willing to buy online. The region appears to be on the precipice of tremendous growth.
The region shows great potential despite almost half of the population lacking internet access. High-speed internet connectivity for a higher percentage of the population is the first step. Adding 50% more potential shoppers will be sure to increase expectations.
Online Commerce is and will be the Norm
Buying things online turns out to be one of the most popular hobbies of the current generation. People spend their money, and they like to do it from the comfort of their own homes. Anyone can shop with a phone, tablet, or computer. It’s not about books and gifts anymore. One can order almost anything on the web. Groceries are the latest big boom. The global pandemic has helped but the trend existed before as well. We are all getting groceries to our house without moving much else than a finger. You can get anything you want delivered to your doorstep.
For the customers it seems like a miracle, but it’s also a revolution for the sellers. Brick and mortar stores still exist but those operations will be more and more limited in the future. Digital commerce is the norm now, and it will only continue its growth . There are hundreds of stores to choose from online. Large international firms like Amazon, Walmart, Costco, and BestBuy are all big players. Despite that, the vastness of the internet means almost any small store can open a website and sell worldwide.
Boutique retailers are also part of this equation. Looking for a rare and exotic tea from a small village on the border between Germany and France? The internet will allow you to find and buy it with little difficulty. In Central Asia, the picture will soon be the same. Let’s zoom in, and see how eCommerce is doing there.
Central Asia and The Caucasus
Most of the states of this region are former Soviet satellites. This means that most of them have similar economic conditions. Despite being over thirty years removed from the Soviet dissolution, the legacy remains. Still, each country is unique and has its own challenges.
Three countries deserve the most attention: Kazakhstan, Azerbaijan and Georgia. The largest market in the region is certainly Kazakhstan. The most active online shopping markets are also here. On the other side of the coin, Azerbaijan has the highest Internet usage penetration. Despite many users, eCommerce is only in its infancy in Azerbaijan. Georgia can boast the highest potential for growth among its neighbors. Approximately one third of Georgians use the internet to buy goods. That number is still far-far away from the higher double digits but shows potential.
To understand the locality, local opinions are crucial. David Kezerashvili, former Minister of Defense of Georgia, certainly has that local knowledge. Now an entrepreneur and investor, David knows a lot about his homeland’s market. He also has a unique perspective on the potential of the region.
The Numbers
Tajikistan, Kyrgyz Republic, and Turkmenistan haven’t even begun exploring their eCommerce capabilities. As of 2020, less than 50% of the population was connected to the internet.
Georgia has oriented itself towards Europe and the US politically. Unsurprisingly, the country’s ecommerce is dominated by western giants such as Amazon. The high-economic development, relative to the region, makes foreign investment attractive. This obviously, causes a dearth of local start-ups in the market. David is predicting a second surge of popularity for Georgia. He believes that greater understanding of the potential by foreign firms will lead to huge investment.
David looks to Kazakhstan as an example. Kazakhstan eCommerce dominance splits. Local firm Wildberries holds much of the market but AliExpress is also quite popular. China’s proximity means AliExpress is often very competitive with the local supplier. This duality has created great competition and benefit for the consumer.
Kezerashvili believes that the industry and region are poised for huge growth. His final thoughts are immensely positive and optimistic. He is quite clear that growth is knocking at the door. Investors should make a decision soon because this opportunity won’t last forever. Online shopping is still an innovation in these countries, but soon it will be simply an everyday occurance.
