Issue 2, 2018. April-May

   

GEORGIAN GOVERNMENT EYES E-MARKET, PROPOSES DOMESTIC 'AMAZON'

The Georgian Economy Ministry has floated the idea of building an Amazon-type service based on the Georgian Post. Georgian companies are becoming increasingly active in e-commerce, but worry a government-supported player could disrupt the field.

Nino Bakradze

The Georgian Post is planning to launch a new e-commerce platform in May, according to Economy Minister Dimitri Kumsishvili.

Few details are available about the new platform, but it underscores the government's priority to develop Georgia's e-market and bolster Georgian online sales domestically and abroad.

There are more than 300 sites in Georgia offering everything from equipment to cosmetics, from food to movie tickets, for purchase online.

The field has been growing steadily, according to local businesses involved in e-commerce. Some online companies worry, however, that a large, government-supported player like Georgian Post could make it more difficult for small businesses to survive.

A Growing Market

E-commerce platform Mymarket.ge, established by the company 'My.ge' in 2008, started selling consumer goods online two years ago.

The company's marketing manager, Madona Kachkachishvili, told Investor.ge that Georgia Post's entry into the e-commerce field could hurt competition.

'Our competitor will be a much larger system ... Presumably, many small players will be completely excluded from the market or will be forced to join this platform and pay the cost of the service, and that will be an additional expense for them,' she noted

Nona Baindurashvili, Georgian Post's marketing manager, said the e-commerce site is still under development, so it is difficult to predict how it could affect the local market.

She noted, however, that placing items for sale on the site will be free and product delivery will be less expensive.

'The e-commerce site will promote the development and expansion of Georgian production, significantly increase productive, fast and proper development of e-commerce in the country, and it will also positively influence Georgian regions to develop in a technological direction,' Baindurashvili told Investor.ge.

The company Soplidan.ge, which provides products from rural farms to city residents, believes the Georgian Post initiative might help them export their products and, if it looks promising, they might cooperate with the government platform.

The website Gamoiwere.ge was launched in January 2017, and today, more than 800 businesses use it as a platform to sell a wide variety of products. Any company or new business can register on the site, open its own virtual shop and manage it.

Lasha Grdzelidze, the site's founder, notes that new competition in the market is good if it is healthy. 'It would be better if the government did not initiate the creation of a new platform and, on the contrary, would [instead] help existing private companies to develop in this field,' he said.

For example, he noted that even though they have more than 800 businesses selling their wares, they cannot sell goods overseas due to prohibitive shipping costs.

'If a foreigner buys something from our website, it is very expensive for us to deliver the product.

Georgian Post charges a high price to ship goods on abroad, and there are no other options in the market,' Grdzelidze told Investor.ge.

Better Protection

The Economy Ministry is also looking at ways to improve how e-commerce is regulated by Georgian law.

With the assistance of USAID's 'Governance for growth (G4G)' project, the ministry is working with a European expert to draft a law on 'electronic commerce.' The aim of the draft law is to bring regulations up to European standards as much as possible and to protect the right of parties involved in electronic trade.

Mymarket.ge's Kachkachishvili welcomes better regulations, noting that if the market is better regulated, it will become more developed and more Georgians will use it.

Plus, she noted that if Georgian sites meet EU standards, it might be easier for them to expand their services to include European businesses, goods and clients.

The director of Soplidan.ge, Natia Ninikelashvili, agrees that better laws could help promote online trade and, if regulations match EU standards, people's faith in Georgian sites will increase.

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