TASHKENT, Uzbekistan, Aug. 28, 2023 /PRNewswire/ -- The global professional services firm KPMG estimates that the e-commerce market in Uzbekistan has expanded more than fivefold during the past five years, solidifying its position as the fastest-growing e-commerce market in Central Asia. Such a strong growth is attributable to a combination of favourable factors, e.g. consistent government support and a steady increase in the number of internet users. These trends facilitate the emergence of local players, incl. the major national player, Uzum Market - the only marketplace in the country boasting its own fintech solutions and logistics infrastructure.
In 2022, the e-commerce market in Uzbekistan is estimated at $311 million. However, by the end of 2027, the market size is set to reach $2.2 billion, indicating an e-commerce penetration target of 9-11% vs. current 2.2% level. The KPMG analysts expect a strong growth of the number of e-commerce buyers driven by (i) growing internet penetration (from 77% in 2022 to 87% in 2023) and (ii) favourable demographics (high share of young population). In addition, strong macro fundamentals and growing share of urban population are expected to change existing consumer habits resulting in higher order frequency.
Government support has been paramount to supporting proliferation of the e-commerce industry in the country. As noted in the KPMG report, key milestones in the industry's development include the adoption of the "Electronic Commerce Law," the "Digital Uzbekistan 2030" strategy, the "E-commerce Development Strategy," and the establishment of an IT park, providing IT companies with more opportunities and growth potential.
"As highlighted by KPMG analysts, integration of convenient fintech services with marketplaces is one of the growth levers that are currently available in Uzbekistan," says Nikolay Seleznev, Director for Strategy and M&A at the Uzum group. "This is part of a global trend, which our experience also confirms. Today, one in three orders placed with Uzum Market is paid in installments via Uzum Nasiya. Further integration with Uzum Bank and Click would allow us to provide our customers with even more convenient payment options, which, along with the development of logistics infrastructure across the country, will allow Uzum Market to maintain its growth momentum and strengthen its #1 position in the market."
The lack of logistical and IT infrastructure, as well as convenient and reliable digital financial services, along with established user patterns, are considered by KPMG analysts to be the primary barriers to the development of the e-commerce market in Uzbekistan. The emergence of major national players, such as Uzum Market, who are developing logistics and financial infrastructure, will have a strong impact on market development and help overcome existing limitations. Investors recognize the enormous potential of this sector and are eager to leverage the opportunities, as evidenced by the entry of foreign companies like ZoodMall into the market.
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