Low Digital Integration Hinders E-commerce Development in Georgia

Only 9% of Small and Medium-Sized Enterprises Have Websites with Sophisticated Functionality.

The e-commerce reform in Georgia aims to enhance the country's e-commerce ecosystem and bolster its export potential. It seeks to introduce stringent user rights standards in e-commerce, foster trust in electronic transactions, and overcome the challenges hindering the development of digital commerce. Giorgi Papava, the leading economist at the ISET Research Institute and Project "Reformer" manager, shed light on the obstacles impeding e-commerce progress in the country.

One significant barrier, as Papava emphasized, is the limited access to financial resources for Georgian enterprises striving to integrate digital technologies and engage in e-commerce. The challenges also encompass low reliability, particularly concerning risks associated with personal data protection and the absence of secure payment methods and local financial service providers.

Papava highlighted the significant disparity between Georgia and the European Union (EU) in terms of digital integration. For instance, a mere 4% of Georgian SMEs use two or more social media platforms, while the corresponding figure for EU SMEs is 28%. Additionally, only 2% of Georgian small and medium-sized enterprises sell their products or services online, compared to 19% of EU enterprises.

According to a review conducted by the ISET Research Institute, only 9% of small and medium-sized enterprises in Georgia possess websites with sophisticated functionality, whereas the EU boasts a significantly higher figure of 63%.

To address the challenges in the e-commerce market, the country is actively implementing an e-commerce reform program with the support of the USAID economic management program. The reform encompasses various crucial aspects, including the adoption of a new legal framework for e-commerce. The Georgian Parliament has already passed the draft Law of Georgia "On Electronic Commerce," which defines the rights and responsibilities of intermediate service recipients, rules for electronic contract signing, and principles for providers and recipients of information society services, among other key provisions.

The ongoing e-commerce reform, now in its active phase, holds promise for overcoming the barriers impeding digital commerce in Georgia. By promoting digital integration, enhancing reliability, and creating a conducive environment for e-commerce, the country aims to unlock its full potential in the digital marketplace.