Only a couple of years ago, internet usage in a number of former Soviet countries was way below the world average. However, by 2022, a few have surpassed several Western countries. For instance, with over 86% of the population being online, Georgia stands higher than Italy, Ireland, or Australia.
It’s a similar case with other ex-Soviet states, including Kazakhstan and Azerbaijan. Even though high-speed connectivity is still an issue, users from Central Asia and the Caucasus have been using the internet on a regular basis. Among the things they’ve been using the internet for is online shopping, which has put them on the radar of venture capital firms seeing the potential of investing in Digital Commerce in this region.
Next Step for eCommerce in Former Soviet Countries
Those former Soviet states that are geographically located in Europe have been keeping up with the rest of the continent in terms of technology. Evidence of this is that the Baltic states – Lithuania, Estonia, and Latvia – rank near the top when the average internet speed is concerned.
Lithuania, for instance, has an average download speed of 80.28 Mbps according to Ookla. In comparison, Turkmenistan, a country in the central Asian portion of the former Soviet Union has an average speed of 2.05 Mbps. Improving the infrastructure is likely to benefit the eCommerce industry as well as others.
It’s estimated that even a slight increase in the internet speed could result in as much as a 50% boost to the number of eCommerce users in the region. Doubling the number of online shoppers would do great for both the local economy and Western venture capital firms.
Kazakhstan, Azerbaijan, and Georgia Leading the Way
There are a couple of countries that seem to be on the right track. Kazakhstan, Azerbaijan, and Georgia stand out in 2022 where eCommerce is concerned. Although it wouldn’t be correct to say that the online shopping industry in those countries is blooming, it looks like the industry has great potential to do so in the near future.
Kazakhstan stands out from the crowd for several reasons. Although its internet infrastructure isn’t great, it’s also not too bad. Nearly 14 million Kazakhs have access to the internet with an average download speed of ~33Mbps.
Kazakhstan is the largest market in the region, which is why it’s no surprise that it has the largest number of active online shoppers. It’s followed by Azerbaijan, a country with the highest Internet usage penetration in the Central Asian-Caucasus region.
Still, the country with the highest potential for growth is Azerbaijan’s neighbor, Georgia. In 2022, about one-third of all Georgians are using the internet for shopping, which is an impressive statistic. However, that number could go skyrocket in the future.
One of the key reasons is Georgia’s orientation towards Europe politically. European Union membership is one of the country’s top priorities. With the onset of the war inUkraine, the EU has sped up its integration process. The result of which is that Georgia and Moldova have received a questionnaire for the application for the membership.
Another important factor in Georgia’s eCommerce is the country’s high economic development. Although Georgian isn’t an economic powerhouse compared to Western Europe and North America, relative to the region, the country is doing well financially.
Furthermore, Georgians already have experience with eCommerce, with Amazon dominating the market. This fact on its own makes Georgia a fertile ground for more foreign investments – Georgia has already proved itself as an eCommerce-friendly country.
Online Shopping to Become the Norm
Online shopping has been around since the early days of the internet. However, in the past, eCommerce was reserved mostly for non-essential shopping. However, everything changed with the COVID-19 pandemic, when online grocery shopping became a big deal. Being able to buy food online and get it delivered to your doorstep meant that people were able to stay indoors during the global pandemic.
The pandemic has subsided since, but the popularity of digital commerce keeps increasing. In 2022, eCommerce will be the norm. One of the reasons behind the continuous rise of eCommerce is the fact that in addition to major companies like Amazon and Walmart, local businesses have also embraced it. Right now, the companies that do not sell their products online are in the minority.
At least that’s the case in the West. However, countries in Central Asia and the Caucasus still have some catching up to do. The good news is that it probably isn’t going to take too long for them to get their eCommerce industry to the US/European levels. This goes especially if Western companies continue their expansion to this part of the planet.