Regional e-Commerce Development in a Multi-channel Retail

Environment

Umit A. Tasbulatoa

and Elmira E. Baimukhanbetova

Al-Farabi Kazakh National University, Almaty, Kazakhstan

Keywords: Online Banking, Retail, Fulfillment, Digitalization, e-Commerce.

Abstract: E-commerce is an important area of trade development because in many countries it generates revenues,

promotes service development, small and medium-sized businesses, and increases employment. Multi-

channel retailing encompasses e-commerce as one area of trade in goods and services to meet customer needs.

Each country has its own history of trade development, which has evolved over many centuries and even

millennia. In this regard, Kazakhstan has its advantages, since the caravan routes of the "Great Silk Road"

passed through its territory and this was reflected in the economic development of the region. The purpose of

this study was to identify the prospects of multi-channel retailing, its importance and role in the economy of

Kazakhstan and the global community. The purpose determines the relevance of the research topic, which is

currently unquestionable. The idea of the scientific article is to present the possibilities of multichannel

retailing for the development of economies of countries and regions, including small and medium-sized

businesses.

1 INTRODUCTION

The relevance of the research topic lies in the features

of multi-channel retail development in the regions of

Kazakhstan, particularly in Almaty, which is the

largest city in the country, as well as the center of

education, culture, business and other aspects of

modern society.

Modern retail has more expanded opportunities

due to informatization and digitalization, as well as a

well-developed transportation and logistics system.

The retail business is developing in the direction of

online commerce, online retail, fulfillment, as well as

last-mile express delivery and other sales methods, as

the experience of recent years has shown, especially

during the lockdown period.

In 2020, the volume of the e-retail commerce

market increased by 82% compared to 2019 and grew

from 327 billion tenge to 596 billion tenge. The

number of online transactions for the year increased

by 20%, while the average check on such purchases

increased by 52% (Vidyanova, 2021).

The purpose of the study is to identify the

prospects for the development of multi-channel

https://orcid.org/0000-0002-0044-2517

https://orcid.org/0000-0002-2306-7107

retailing, its importance and role in the economy of

Kazakhstan and the world community.

The hypothesis of the study is the assumption that

multi-channel retailing can contribute to the

development of national and regional economies,

including small and medium-sized businesses.

2 RESEARCH METHODS

The methodology is based on the theoretical and

practical consideration of the subject and object of

research, which in this paper are research and

methodological provisions and methodical tools of

multi-channel retailing (Mikhaylyuk, 2019).

The main task in using research methods was to

ensure the achievement of the goal set in this article,

which is related to the topic of the study, as multi-

channel retailing in theory has not been studied

enough (Mikhaylyuk, 2019).

In connection with the requirements of research

methodology system and factor analysis, synthesis,

logical clustering and assumptions were made, based

on which conclusions were made about the further

300

Tasbulatoa, U. and Baimukhanbetova, E.

Regional e-Commerce Development in a Multi-channel Retail Environment.

DOI: 10.5220/0010667600003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 300-305

ISBN: 978-989-758-597-5

development of e-commerce and multi-channel

retailing. This is due to the specifics of retail in the

current environment, especially in a pandemic, as

shown by the situation in 2020, which resulted from

the coronavirus.

In the course of the study, the analysis was based

on official materials, information from research and

educational and methodological literature, as well as

publications of international and Kazakh

organizations in the open press and on the Internet.

Statistical analysis and cause-and-effect studies

were conducted on data from government agencies,

and world economic relations were determined.

3 RESEARCH RESULTS

Multi-channel retailing is the use of multiple

fulfillment channels, including offline and online

through stores, mobile apps and other ways to

optimize the shopping experience in a consumer-

friendly way. Single-channel retailing, which existed

in the recent past in the retail industry, involved

selling only through retail outlets where customers

could purchase items from available stock. With the

advent of the Internet and mobile communication, the

possibilities of commerce have expanded, and

shoppers themselves determine the form of shopping

to be able to consume goods at a convenient time and

place (New Retail, 2021).

Figure 1. Multi-channel retailing pathways.

Compiled by the author according to the source (New Retail, 2021).

E-commerce is part of multichannel retailing and

includes financial transactions, product flows,

business processes and all types of electronic and

digital transactions.

The main areas of e-commerce are shown in

figure 2 (Gringard, 2016).

Figure 2. E-commerce pathways.

Note: compiled by the author according to the source (Gringard, 2016).

The retail transformation strategy is to rethink the business

model and move towards Retail 4.0, the foundation of

which is the use of combined technology, information,

analytics, media, mobile applications, cloud storage and

Multi-channel

retailing

E-commerce

Delivery service

Retail trade

Distribution

Fairs and Sales

Fulfillment

Internet trading

E-commerce

Electronic Funds

Transfer (EFT)

Electronic Data

Interchange

(EDI)

Electronic trade

(e-trade)

Electroni

c cash

(e-cash)

Electronic

marketing

(e-marketing)

Electronic

banking

(e-banking)

Electronic

insurance

services

(e-insurance)

Regional e-Commerce Development in a Multi-channel Retail Environment

301

artificial intelligence (AI). These factors combine

technology with operational and organizational capabilities

to summarize purchasing priorities and can be grouped as

follows (MyRetailStrategy, 2018):

 Customer experience;

 Rethinking and creating a business model;

 Processes and supply chain integration;

 Managing multi-channel categories.

The components of these factors are generally presented in

Figure 3, but this list can be expanded and detailed as

necessary, depending on the specifics of the retail business.

Figure 3. Main directions of e-commerce.

Note: compiled by the author according to the source (MyRetailStrategy, 2018).

In addition to multi-channel retailing, Omni-

channel retailing, which is characterized by consumer

integration of a product or service using all available

channels, is developing rapidly (Okorokov, 2016).

Figure 4. Retail transformation in single-channel, multi-channel and Omni-channel systems.

Note: compiled by the author according to the source (Okorokov, 2016).

Figure 4 illustrates the difference between single-

channel, multi-channel and Omni-channel retailing,

which demonstrate the transformation of the

interaction between seller and customer and further

extend the «customer is always right» principle. All

means are used to identify the real needs of

customers, from surveys and questionnaires, to

studying their preferences on search engines.

In Kazakhstan, since 2017, work has started on the

implementation of the government strategy «Digital

Rethinking and

creating a business

model

Review the retail

business model and

identify opportunities

and challenges

Identification of

"white spots" and

reinforcing key

success factors

Develop an innovation

roadmap to identify

transformation

requirements and build

the next generation

retail business model

Implementation of

data-driven decision-

making, building a

data-driven corporate

culture

Managing multi-

channel categories

Evaluation of

product categories

through different

channels

Introduction of a new

multi-channel

approach and

strategies in category

management

Development of

new category

management tactics

across all channels

Customer

experience

Identifying buyer

insights and needs

at critical

touchpoints of the

customer

experience

Improving the

customer service

strategy based on

improving the

Customer Journey

(CJM)

Developing and

implementing an

improved customer

experience

Processes and supply

chain integration

Creating a strategic

business process

map and a new

retail business

model

Identify and address

gaps in integration

and flexibility in

existing business

processes

Building an

organisational social

network to boost

innovation

WFSDS 2021 - INTERNATIONAL SCIENTIFIC FORUM ON SUSTAINABLE DEVELOPMENT OF SOCIO-ECONOMIC SYSTEMS

302

Kazakhstan», or the third modernization, the basis of

which is digitalization (Postanovleniye Pravitel'stva

Respubliki Kazakhstan № 827, 2017). Earlier, the

Law of the Republic of Kazakhstan No. 418-V of 24

November 2015 «About informatization» was

approved, which at the legislative level enshrined the

government's strategy (Zakon Respubliki Kazakhstan

№ 418-V, 2015).

The main purpose of informatization and

digitalization is to ensure that the country's economy,

science and technology develop at an accelerated

pace, and to improve the quality and ease of life of

people with digital technology (Tsifrovaya povestka

Respubliki Kazakhstan, 2018).

The «Digital Kazakhstan» strategy is planned to

be implemented in the short, medium and long term,

during which the digital infrastructure and economy

will be progressively developed.

The implementation of the "Digital Kazakhstan"

strategy is monitored by the state at the level of

relevant ministries and statistical authorities (Table

1).

Table 1: Results of the governmental strategy «Digital Kazakhstan» for 2018 – 2019.

Indicators Unit of measure 2018 2019 2020

Share of e-commerce in total retail trade % 1,4 1,8 1,9

Share of Internet users % 81,3 84,2 88,2

Level of digital literacy of the population % 79,6 82,1 84,1

Growth of online retail orders (by 2016) % 56,8 68,4 71,5

Home broadband Internet penetration rate % 83,9 86,8 90,6

Note: compiled by the author according to the source

The level of digital literacy in Kazakhstan is more

than 82.1%, more than 83.7% of public services are

provided online and about 7,000 IT companies are

registered.

Kazakhstan is one of the world leaders in Internet

accessibility and this data shows the country's

readiness to develop e-commerce in various Internet-

based options (Table 2).

Table 2: Main indicators of internet accessibility on

25.06.2020

Country Internet cost per 1 GB Internet

access

Kazakhstan $0,49 84,2%

Ukraine $0,51 62,5%

China $9,89 61,2%

The USA $12,37 87,3%

Note: com

iled b

the author accordin

to the source

In 2017, online commerce accounted for about 1-

1.5% of total retail sales in Kazakhstan, but the e-

commerce market is growing by 30% annually.

According to Satu.kz, Kazakhstan's leading online

retailer, Kazakhstanis bought 20.144 billion tenge

worth of goods on the marketplace in 2017, and the

average bill per online purchase was 3,4742 tenge.

Health and beauty products, household and

garden products, medical products, household

appliances and electronics and children's appliances

are the most commonly bought goods online in

Kazakhstan, which make up the TOP 5 most popular

categories of goods by number of orders.

In the context of pandemic and quarantine, online

purchasing of food, beverages, sanitary and health

products has increased. A promising trend is the

online purchase of test and measurement equipment

and tools.

To investigate multi-channel retailing

opportunities, online shoppers are analyzed by

region, gender and age, by gadget used, and by day of

the week and season.

The analysis shows that 54% of Kazakhstan

consumers are women, which is 8% more than men

(46%), mostly using smartphones (67%) and

desktops (30%); the age of the most active buyers is

25-34 years. By region, residents of Almaty (44%)

and Astana (21%) are the most active in online

retailing, while in the remaining regions, Internet

shoppers account for no more than 3-4%.

Kazakhstan people shop most often on weekdays

(Monday to Thursday), with the most orders on

Monday (17%) and the least on Saturday (10%). On

Friday and weekends, activity drops, due to trips to

the countryside, weekend getaways and offline

shopping.

In turn, E-commerce is undergoing a

transformation, evolving into m-commerce and ar-

commerce, which is expanding the possibilities for

multi-channel retailing. M-commerce is mobile-

enabled, allowing consumers to make online

purchases anywhere, anytime. Ar-commerce offers

Regional e-Commerce Development in a Multi-channel Retail Environment

303

augmented reality services that help consumers select

products by size, color and various parameters using

visualization.

4 RESULTS DISCUSSION

E-commerce offers a host of benefits when shopping

online, as consumers can satisfy their desires and

retailers can realise their goods without maintaining

large storage facilities.

More and more people are using androids, tablets

and mobile apps in a comfortable environment with

easy navigation and visualization. Sales giants such

as IKEA, which offers the IKEA Place app, are using

virtual reality in sales, or AR-commerce. The IKEA

Place augmented reality app can be used to virtually

arrange furniture, create interior decorations or décor

in a flat. Amazon has created a Dash Button, which,

when clicked, can be used to place an order for a

specific item with home delivery in one click.

In any industry where digital technology is used,

knowledge of information and communications

technology is essential, and therefore appropriate

outreach is needed not only to staff but also to

customers.

The digital economy requires educating the public

about gadgets, mobile applications, Internet banking

and the various available payment and purchasing

methods. However, the current level of computer

(digital) literacy is 76.2% and needs to increase in the

coming years.

Digitalization is taking place not only in

individual countries, but also in unions of states, as

exemplified by the EU, which has adopted the EU

Digital Single Market (DSM) Strategy, defining the

European Commission's economic policy priorities in

the following areas (Georgios Alaveras, 2015):

1. Expanding access to electronic goods and

services in Europe;

2. Establishing uniform rules for digital

networks and start-ups;

3. Developing the growth potential of the

digital economy.

The EAEU is also developing the digital

economy, which is planning a three-stage

digitalization (Andreyev and Andreyeva, 2018):

1. From 2017 to 2019, it was planned to

model the digital transformation processes, work

through the first initiatives and launch the priority

projects, which are almost complete.

2. From 2019 to 2022. The formation of

digital economy institutions and digital assets as well

as the development of digital ecosystems are

envisaged.

3. From 2022 to 2025. Digital ecosystems

and cooperation projects will be implemented at

global, regional, national and sectoral levels.

Regionally, the most interesting experience is that

of China, which is part of many alliances and has

adopted the practices of all major economies in e-

commerce development, outstripping many countries

in this respect (Kovalev, 2020).

Thus, digitalization in Kazakhstan is taking place

in almost all areas of activity, including ensuring the

comfort and safety of people and retailers.

5 CONCLUSIONS

The study presented the prospects for multi-channel

retailing, its opportunities, importance and role for the

global and Kazakhstan's economy.

E-commerce in the context of multi-channel

retailing is not only developing, but also expanding,

as new services, applications, technical and

technological innovations appear.

Multi-channel retailing makes it possible to track

the flow of goods and monetary transactions, which

increases tax revenues for the budget, promotes

individual entrepreneurship and provides

employment for the population.

Kazakhstan is developing like any other country

in the CIS, with a certain base, the main advantage of

which is the educated population. The knowledge

gained throughout the country's development history

has made possible the achievements that set

Kazakhstan apart in the Central Asian region.

However, not resting on its laurels, the country trains

future cadres, who are educated in the world's leading

universities through government programs and

grants. This is due to the global trend of knowledge

accumulation, not just goods and products, which

have become a trend of the digital economy and

information society.

Thus, the topic of the study requires further

investigation based on global and, already existing,

Kazakhstan experience, in the following areas:

 The transformation of the supply chain in

Kazakhstan’s e-commerce market.

 Innovative digitalization and informatisation

opportunities, including automation and

robotisation in multi-channel retailing.

 The evolution of the transition from single-

channel to multi-channel retailing.

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 Improving the logistics supply chain in the

regional e-commerce market in the multi-

channel retail environment.

 Increasing the digital literacy of the population

and the accumulation of knowledge.

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