Traditional markets and shops in Kazakhstan are struggling: Is it feasible for all sellers to transition to online retail?
Online Shopping on the Rise in Kazakhstan: Is the Traditional Marketplace Facing Extinction?
Kazakhstan is witnessing a shift towards online shopping, with e-commerce seeing a surge in volume, according to national statistics. Last year, the e-commerce market reached 2.4 trillion tenge from 1.6 trillion tenge the year before. The trend is reflected in the growing preference for purchasing phones, gadgets, appliances, clothes, shoes, sports goods, computers, laptops, and software online.
However, not all marketplace vendors are reaping the benefits of this migration. Approximately 84% of registered entrepreneurs remain inactive sellers. Experts attribute this to inadequate working capital and unfavorable terms offered by banks. Almas Kasymzhanov, a seasoned e-commerce expert, posits that sellers lack profitability and other essential factors that attract banks. He also highlights the absence of a transparent scoring system for evaluating borrowers.
On the flip side, the appeal of online marketplaces is drawing in consumers, while traditional markets face a diminishing presence. Trading spaces are shrinking, as people opt for the convenience and cost-effectiveness of online shopping.
In large cities like Almaty, the increased workload and lack of time are major factors driving the shift towards online shopping. According to economist Arman Baiganov, this trend is set to continue as people seek time-saving solutions for their buying needs. However, economists foresee some vendors from traditional markets struggling to maintain their businesses.
Almaty, known for having the most trading spots, leads the number of markets in Kazakhstan. Despite a slight increase in the total area of markets in all regions, the number and trading spots continue to decline. For instance, the central market in Kostanay has reduced its area significantly in the past year, making way for pedestrian and traffic areas. Construction of a new school is slated to begin on the site of another Narimanov market this summer.
Relevant Enrichment Data:- The growth of active sellers in Kazakhstan's online marketplace is influenced by regulatory complexities, logistical challenges, economic conditions, and marketing constraints. To boost growth, solutions include better analytics and AI tools, improved logistics solutions, infrastructure investments, and development of local expertise. Financial assistance can further support online sellers.
- Regulatory challenges and costs, market and cultural nuances, marketing restrictions, and logistics and delivery issues are some of the factors contributing to the slow expansion of active sellers.
- Progress towards enhancing e-commerce growth can be achieved through enhanced analytics and AI tools, improved delivery options, expansion of logistics infrastructure, building local expertise, digital marketing innovation, and supportive financial frameworks.
- As online shopping continues to grow in Kazakhstan, with an increasing preference for purchasing home-and-garden appliances, technology gadgets, clothing, and lifestyle products online, some traditional marketplace vendors are struggling to maintain their businesses due to inadequate working capital and unfavorable terms offered by banks.
- Meanwhile, the lifestyle sector, including home-and-garden, technology, and shopping, is experiencing a surge in online sales, while traditional markets face a diminishing presence, as people prefer the convenience and cost-effectiveness of online shopping, particularly in large cities like Almaty.
