Kazakh retailers see positive dynamics in online shopping, plan to strengthen customer service

ASTANA – The government anticipates e-commerce will account for 2-3 percent of the retail market by 2021. The figure is currently approximately 1.9 percent of the total trade market, according to the Kazakhstan Internet Business and Mobile Commerce Association. 

The Ministry of National Economy reported the 101-billion tenge (US$270 million) e-commerce market represented 2.9 percent of the total retail turnover for the first half of 2018, a two-fold increase compared to 2017.

Last year, 250 new e-commerce entities were registered and approximately 1,700 online stores operate. The number of customers increased to 1.5 million.

The tax code provides tax benefits for entrepreneurs who began operating through an online store or online platform in 2018. Legal entities are exempt from paying corporate income tax and individual entrepreneurs from individual income tax until 2023. The entrepreneur must conclude the contract with the buyer online, use cashless payment and have his or her own delivery service or an agreement with a company engaged in transportation, shipment and delivery of goods.

Major online retailers, while cognizant of the challenges facing their growth, see positive dynamics and promising future of online commerce.

Launched in 2007, Flip.kz, one such retailer, offers more than 400,000 items from 200 suppliers, including books, toys, cosmetics, household appliances and electronics. The company, which opened its first brick and mortar store in Almaty in 2016, now has its own logistics system and courier service operating in 16 cities.

“Positive dynamics are observed entirely in the industry. People now use online shopping more often. Last year, the figures increased by more than 50 percent compared with 2017. This is a positive trend, but we know that it is possible to grow at even faster rates,” Flip.kz Director Alexander Sokolov said in an interview for this story.

The company is distinguished by excellent and fast service, according to social media reviews. As a result, improving service is always a priority.

“At the moment, we are doing everything to make it easy for our customers to make purchases. It is the most important task of our team. When the customer faces some problems, it becomes a challenge for the whole team. We solve this issue starting from the contact centre and other departments. I personally read comments on products and responses to publications on social media, so I control most of the situations that arise,” he noted.

The company employs more than 300 people, with the staff growing in proportion to the number of customers and orders.

“There’s still low confidence in online commerce in our country. This is one of the main challenges. We are glad that this indicator decreases with time. We work to increase the range of items and improve the quality of customer service,” he added.

Lamoda.kz, one of the largest online stores, launched Lamoda Market for independent clothing manufacturers and designers in 2016. The store promotes local brands and welcomes new partners.

“We are delighted to see a positive growth trend every year. According to the analytical department of Lamoda.kz, the number of orders increased by an average of 10 percent. By the number of orders, November leads both in 2017 and 2018. This is undoubtedly due to the most anticipated sale of the year, Black Friday,” said Lamoda Kazakhstan General Manager Molder Ryssaliyeva.

Lamoda Kazakhstan General Manager Molder Ryssaliyeva

The company has 282 employees including office staff, sales representatives and employees at points across Kazakhstan.

“We are constantly working to improve our service. We pay special attention to the new alternative methods of delivery,” she noted.

The company conducts trainings with call centre employees and sales representatives. Logistics, however, remains the main challenge for any Kazakh online company.

“Our company was founded seven years ago. Since that time, we significantly changed the service and market conditions. On-time order delivery is important for the customer, but logistics is still expensive for a company in Kazakhstan. The remoteness of cities is one of the main disadvantages for e-commerce. The percentage of people who shop online is still high. All the Internet platforms are interested in increasing the number of online consumers,” said Ryssaliyeva.

Most customers prefer paying in cash when receiving orders, a tendency observed in online clothing shops. Many want to try clothes on before purchasing them.

“We intend to increase the network of points for issuing orders. We will plan to develop the marketplace model – when third-party sellers can use the website as a platform for selling their goods. Now, we are attracting new partners and we are planning to attract large brands to the Lamoda.kz website by the end of 2019,” she added.