Georgia’s retail scene has changed dramatically in recent years with the Arrival of large, international brands. Slowly, however, the market is moving off the streets and onto online sales platforms – many geared towards local producers.
Change on Tbilisi’s shopping streets is highly visible – from Freedom Square’s multi-story Galleria Mall to Vake’s edgy fashion district.
Less visible, but no less radical, is the change in Georgia’s commercial scene that in 2019 is developing rapidly online.
This time the main drivers are the two major banks, TBC Bank and Bank of Georgia.
They are moving into marketplaces, buying and building new retail platforms (the internet’s version of marketplaces), to help a whole host of Georgian businesses, even small ones, sell online.
Behind their moves is the latest buzz word in international banking – “ecosystems”, which come with their own online platforms. With competition rising, regulations tightening and profit margins under pressure, banks want to keep as close to their customers as possible and find additional ways to offer them deliverable services.
As explained by multinational professional services group Accenture, “banks can set up and run ecosystems with third parties (banks or other businesses) to cross-sell financial services and generate new revenue streams. Or they can also become partners in third-party ecosystems, extending their presence into the non-banking aspects of customers’ lives.”
Banks’ new e-commerce platforms or ecosystems are not all to do with finance. Real estate (popular with the banks as they can be linked to a whole range of financial services), consumer and household goods, electronics, cars and car parts, tickets and textiles can all be purchased from Georgian providers via these new apps.
Until very recently, most Georgian companies sold via international platforms, such as amazon.com or ebay.com or the Chinese site AliExpress.
But Cushman & Wakefield’s latest Retail and Leisure Report points out: “The number of [Georgian] online stores now exceeds 50 … with established Georgian brands such as Roniko, Voulez-Vouz and the ICR brands (European brands of shoes, clothes and accessories).”
The banks are approaching these new platforms with plenty of online experience.
For several years now, Georgian banks have been developing digital banking systems, moving to the cloud and away from the old brick-and-mortar networks, and doing more and more business online and via smartphones.
TBC Group started off in summer last year with the purchase of Swoop, a Georgian online discount and sales group. From this base it began to develop an e-commerce marketplace by building digital trading platform Vendoo, and in February this year it announced its launch as an on-line marketplace for small and medium-sized companies selling electronics and personal care products. The range of goods is expanding. Vendoo’s aim is to “provide a platform to small and medium entrepreneurs as they will be able to distribute their products to Georgian customers online.”
At the end of last year TBC partnered with real estate platform, allproperty.ge to offer Livo – a platform which offers 3D tours of properties. Allproperty.ge also offers a property assessment service which, within hours, can give a certified assessment and price.
Following that, TBC built up a 55 per cent stake in ticketing website TKT.GE. Then in early September it bought a 65 per cent stake in the my.ge group; a market leader in the automotive and spare parts industry and top player in real estate. My.ge has extended to include in its product ranges a wide range of household and electrical goods and also carries job ads.
“The acquisition of my.ge provides a strong acceleration in our ecosystems strategy. It will dramatically
increase our digital presence in the Georgian market and provide access to a large number of new customers,” comments Vakhtang Butskhrikidze, CEO of TBC.
Bank of Georgia launched a real estate digital platform, Area.ge, back in February.
The company says the platform “offers a single place for convenient exchange of information among all parties involved in buying, selling, renting and developing real estate in Georgia”.
In June Bank of Georgia added extra.ge, a consumer-to-consumer (C2C) as well as business-to-consumer (B2C) site with around 80,000 registered buyers and sellers and which offers 100,000 products and services through its website and social media.
“This integrates with Bank of Georgia’s current flexible single sign-on and payment system and will offer the Bank’s pre-approved instant instalment loans to enable its customers to purchase selected products”, extra.ge’s website reads.
An attraction of these ecosystems is that they can be accessed internationally.
For banks operating in a country with a declining population, that is an advantage – to keep in contact with customers abroad and find new ones. TBC is gaining experience in international trading with its cloud-based neobank Space, which is structured as an autonomous business, existing only as a mobile app. Work is underway to expand it into Azerbaijan and Uzbekistan. For Georgian companies, they can help build export business.
Referring to these moves, Vakhtang Butskhrikidze said at a recent TKT.GE press conference: “We have launched the presentation of a number of important applications over the past few months. This is one of the strategic directions for the TBC Group, which is focusing on the simplification of life for clientele, making it easier to do business for entrepreneurs. We aim to test the given application in Georgia first and then move it beyond the borders of the country.”
TBC’s goals include expanding in Azerbaijan and Uzbekistan, increasing its customer numbers to 10 million by 2022. It announced a partnership with Azerbaijani bank Nikoil in July last year, and entered into an agreement to buy a 51 per cent stake in Uzbek payment platform Payme in April this year. It has a strategy of developing “a next generation banking ecosystem for retail and MSME customers” in Uzbekistan, focused on digital channels.
The scope for increasing online business in Georgia, and venturing into the wider region, looks good. A report on Exporting to Georgia, published in August by the US Department of Commerce (USDC), put the number of households with broadband connections at 74 per cent, of which 55 per cent were mobile internet users.
“Electronic transactions over the last four years have increased significantly”, it comments. There is a major government drive to put more onto the net. The World Bank Group, with the support of the EU under the EU4Digital Program, has been preparing recommendations for the Georgian government on a national broadband development strategy. The aim is “the roll out of more, faster and affordable internet services across Georgia”.
Those other essentials for internet business, debit and credit cards, are being used increasingly, with the Georgian numbers now at 6.7 million and 0.7 million holders respectively, according to USDC, and in March alone a total of 24 million transactions (of all types) were made.
According to cloudscene.com Georgia has over 45 internet users per 100 of its population, though others put the usage at over 60 percent.
Scope for growth regionally seems considerable. “B2C E-commerce is still in its early stages,” states a regional report from ResearchAndMarkets.
“Among more developed markets in the region, access to financial services reaches only over half of the populations of Georgia and Kazakhstan. As internet penetration increases and infrastructure improves in the region, the growth prospects for B2C E-Commerce increase as well.”
Azerbaijan, where nearly 75 percent of the population are internet users, looks particularly promising, but there is also “large potential” in Georgia, where “Nearly a third of internet users used the internet to browse for information on services and goods and a lower share bought goods and services online in 2018”.