Iran E-Commerce Market Worth Over $18 Billion

EghtesadOnline: E-commerce accounts for 10.4% of Iran’s GDP with the market’s nominal value standing at 2.08 quadrillion rials ($18.4 billion), E-Commerce Development Center of Iran reports.

News ID: ۷۴۸۴۴۵

16 September 2019

The center has released its annual report for the fiscal year that ended March 2019, which indicates that the nominal value of Iran’s e-commerce market has grown 30.5% to reach 2.08 quadrillion rials ($18.4 billion) from 1.59 quadrillion rials ($14.08 billion) in the fiscal 2017-18.

The report further states that the market’s real value stood at 6.1 quadrillion rials ($54 billion) for the fiscal 2018-19, down 13% compared with the same period of a year earlier.

Behnam Amiri, a deputy at the center, says the difference between the true and nominal value of the market is due to the sharp surge in prices and raging inflation over the past fiscal, Financial Tribune reported.

“The gap indicates that people’s purchasing power has been slashed, which took a toll on the e-commerce market,” he said.

According to the report, during the fiscal 2018-19, the e-commerce sector’s share in Iran’s gross domestic product observed a 5.28% year-on-year decline.

The report put Iran’s GDP (excluding revenues from oil industries) at 20.014 quadrillion rials ($176.8 billion) for the fiscal 2018-19 and 14.5 quadrillion rials ($128 billion) for the year before.

E-Commerce Firms

There are 270,000 Iranian e-commerce businesses with an operating website, of which 49,000 had received the “Trust Seal” issued by the center by March 2019.

Close to 64% of these businesses are classified as online stores, while 15% offer educational services and 10% are labeled as content producers.

From the 270,000 Internet-based businesses, 22,694—or 8.4%— are based in Tehran. The capital city is followed by Khorasan Razavi Province with 3,751 e-commerce firms and a 1.4% share of the sector.

Unlike most developed countries, most e-commerce firms are registered by natural persons in Iran, accounting for 76% of the businesses compared to 24% registered by legal persons.

Furthermore, 91% of the investments in e-commerce firms were made by natural persons during the fiscal 2018-19, 5% by startup accelerators, 2% by the government and 2% via crowdfunding.

Women Business Owners

The number of women business owners in the e-commerce sector observed a significant YOY jump during the period.

According to the report, women owned 13% of the businesses (35,100 firms) by March 2019 compared to 9% a year earlier.

The report further indicates that 67% of customers of e-commerce firms are men. This is in stark contrast with the public belief that Internet-based enterprises are more popular among Iranian women than men.

By March 2019, close to 95% of the e-commerce businesses had fewer than 50 employees and 58% of the firms were established more than a year ago.

The center puts the total number of e-commerce transactions carried out in Iran during the fiscal year at 1.11 billion.

The report further compares the number of online financial transactions during the fiscal 2018-19 with a year earlier, indicating a 77% hike. However, the amount of money transferred had only increased by 30%. This indicates that people’s declining purchasing power and the economic headwinds facing Iranians had slashed their online spending.

Each e-commerce transaction averaged 1.87 million rials ($16.5) during the fiscal 2018-19, which figure stood at 2 million rials ($17.6) a year earlier.

Many Iranian e-commerce firms are based in tech parks and innovation factories set up by government support or private investment.

Note: The USD exchange rate was 113,200 rials on Sunday (Sept. 15) when this report was prepared.