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Mussin: During pandemic, Internet and electronic government services became the first necessity

28.07.2020 5185
At the government session chaired by Prime Minister Askar Mamin, First Vice Minister of Digital Development, Innovation and Aerospace Industry Bagdat Mussin reported on the development of e-commerce in Kazakhstan.

According to Mussin, during the pandemic, the Internet and electronic government have become essential services.

The development of e-commerce is a pressing issue in these challenging times. This year has seen its high growth rates. So, for 6 months of this year, the number of purchases in online stores reached 19.5 million goods. The number of purchases in Kazakhstani online stores has doubled — from 7 million to 14 million.

There are 4 main areas in e-commerce: electronics, food and products, clothing, pharmaceuticals. All work on domestic platforms.

According to Mussin, market analysis shows that during the pandemic, the structure of online consumption of citizens has changed. People have changed their priorities. There is a decrease in purchases of clothing and cosmetics. But at the same time, the population began to buy more food, medicine and baby products online.

The production of many commodity items that are relevant during a pandemic are available in Kazakhstan. Accordingly, it is proposed to actively work on bringing Kazakhstani manufacturers online.

During the pandemic, FoodTech and PharmTech became actively developing markets.

“For example, purchases of food products at the Kazakhstani supermarket Arbuz.kz increased up to 7 times during April-June compared to 2019. For the further emergence of online food services in the regions, we with Arbuz.kz, Chocofood and other market players will train local entrepreneurs in online sales,” Mussin said.

In the pharmaceutical segment today, there are problems with selling antibiotics online, as this requires an online formulation.

“To this end, we, together with the Ministry of Healthcare, will link online stores with telemedicine and the provision of online prescriptions,” said Mussin.

It should be noted that all Kazakhstani players have to compete with international start-ups, which are provided with long-term venture financing from abroad. For this, it is important to develop the domestic venture capital market, which will increase the competitiveness of Kazakhstani companies and bring them to international markets. In this direction, a draft law regulating venture capital is being worked out. There is also an agreement with Baiterek NMH JSC on attracting funds from QazTech Ventures to Kazakhstani startups.

The main tool for e-commerce is the development of logistics infrastructure. Kazpost JSC is working and opening three fulfillment centers for business.

Due to market needs, it is planned to open 20 fulfillment centers in the country by 2025. At the same time, the market begins to independently develop its own infrastructure. They need warehouse construction and last mile solutions.

Also in e-commerce, one of the key elements is the development of the last mile. Customers want to receive their goods in a fast and convenient way. The infrastructure of Kazpost allows solving this issue with the help of parcel terminals and parcel supermarkets.

Today, about 4 thousand front offices provide services. Market players are working to reduce delivery times. Today it is 1 to 3 days.

It should be noted that the market is open to everyone. More than 570 companies operate in the courier services market.

Kazakhstan is actively working to develop its transit potential. In this direction, Kazpost is implementing a Bond warehouse project on the territory of the Khorgos ICBC. Provides transit of goods both to Russia and to European countries.

Kazpost provides transit of goods from Germany and Great Britain to Russia and Central Asian countries.

The development of the penetration of e-commerce will be the transition of offline business to online.

“Our goal is to help offline entrepreneurs start selling online. To do this, we must teach seemingly simple and primitive things how to properly show our content to a client online — photographing a product, packaging a brand, and so on, which is very important in e-commerce,” said Mussin.

The importance of the availability of digital services, which will solve the headache of entrepreneurs, was also noted.

“We will collect them in Astana Hub. We are ready, together with the Ministry of Labor and NCE Atameken, to create a special program to train entrepreneurs in online sales throughout Kazakhstan. It is necessary to involve successful Kazakhstani Internet entrepreneurs in this work,” said the first vice minister.

An important step is to bring agricultural producers online. It is proposed to create a digital platform for agricultural products, which will directly link large retailers and agricultural producers. This will allow agricultural producers to open direct access to sales. They will also be able to get convenient banking and logistics services, organize the process of storing goods in the USC. This will exclude all intermediaries, and accordingly the price for the end consumer is reduced. The digital platform will also enable agricultural producers to enter international markets.

In conclusion, Mussin spoke about the trends that are taking place in the world.

“During the pandemic, the e-commerce market has become a turnover driver. For example, Amazon has created over 100 thousand new jobs. The turnover of Russian sellers on Aliexpress Russia has tripled. Kazakhstan online store Flip.kz during the pandemic increased the number of jobs by 20%, due to the growth of e-commerce. This suggests that online trade can not only save jobs, but also provide an opportunity to increase them,” said Mussin, noting that the ministry will continue to work on the transfer of industries to online, especially regions, together with other ministries. This will ensure the turnover of goods in the country's economy, make purchases and receive all services without leaving home and maintaining social distance among the population.

First Deputy Prime Minister Alikhan Smailov noted that e-commerce is one of the priority areas of the economy of Kazakhstan, which contributes to the transition to non-cash payments, a decrease in the volume of shadow trade and the general growth of entrepreneurship.

For the first half of 2020, the total volume of the e-commerce market reached 435 billion tenge, which is 2.2 times more compared to the same period in 2019," said Smailov.

To stimulate the development of the e-commerce market, it is necessary to actively work.

First, it is important to ensure access to affordable long-term finance.

Second, with the involvement of Kazpost and courier companies, it is necessary to build a supply chain from large warehouses to a retail recipient.

Third, Ministry of Trade and Integration, Ministry of Labor and Social Protection of the Population, Ministry of Digital Development, Innovation and Aerospace Industry, together with NCE Atameken, should provide training courses for a wide range of entrepreneurs to trade online.

A roadmap for the development of e-commerce in the Republic of Kazakhstan until 2025 has been developed. Taking into account today's discussions, it is necessary to carry out appropriate work.

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