In co-founding Uzum, a new entrant to the fintech scene of Central Asia, Uzbek entrepreneur Djasur Djumaev has built not only an online marketplace that offers advanced fintech and banking assets services, but he also helped further develop an entire fintech ecosystem in Uzbekistan.
Since Uzum recently won the title of Digital Ecosystem of the Year at the Leaders in Fintech Awards 2023 staged by Entrepreneur Middle East, we talked with Djasur about his future plans for Uzum, especially in the MENA region, and the Uzbek tech scene.
In the Middle East, Uzbekistan is known as an important center of Islamic culture and an attractive travel destination, but we rarely hear about the Uzbek tech industry. Please tell us more about that.
Uzbekistan today is going through a pretty radical economic and social transformation. Relatively closed economy only a few years ago, Uzbekistan is opening up to the world, bringing in investments, businesses, and talent from all over the world. The sweeping government reforms unlocked entrepreneurial spirit of the country’s private sector and gave a boost to a continuous GDP and wage growth over the years. With its growing population of 36 million with a median age of 29 years, Uzbekistan is already the largest market in Central Asia and one of the most attractive developing markets among its peers.
Speaking of the tech sector in particular, the Uzbek president and the government consider a developed IT industry as the key factor in enabling economic growth and improving quality of life. Major initiatives, like national IT education programs, digitalization of government services, regulatory and financial support for IT companies, and the creation of Uzbekistan IT Park, are all examples of the country’s digital transformation in practice. And, by building the country’s first technology unicorn, we at Uzum aim to put Uzbekistan on the global tech map.
So, opening up the nation’s economy allowed the influx of tech businesses from abroad and gave a significant investment and expertise boost to the local companies. Coupled with the strong support from the government, this creates a dynamic and competitive environment across all segments.
However, tech startups in Uzbekistan, like in many other developing markets, have always had very limited access to venture capital and institutional investors. The nascent VC ecosystem in the country is represented by about a dozen firms that mostly focus on early-stage investments in promising digital platforms. And while this is certainly an improvement compared to the market situation only a few years ago, in terms of capital accessibility, tech companies in Uzbekistan do not receive much of a special treatment — especially at the stage when they need to scale.
That is why tech entrepreneurs like me are constantly seeking sources of capital, on the one hand, and building business resilience from the early stage, on the other.
What is Uzum?
Uzum is the largest e-commerce and fintech ecosystem in Uzbekistan aimed at enhancing day-to-day life with technology. In Uzbek, uzum means ’grape’ and the image of a bunch of berries growing from a single stem is very illustrative of our approach — we combine many services centered around daily needs of consumers and businesses.
We launched Uzum Market in October 2022, and within months, it has become the number 1 online marketplace in the country with six million app installs, over 500,000 unique goods from 4000 merchants available on the platform, and well over 800,000 orders delivered every month. In the meantime, we have added a user-friendly digital bank Uzum Bank, Shari’ah-compliant BNPL installment service Uzum Nasiya, and food-delivery service for restaurants and groceries Uzum Tezkor. Our recent deal is a merger with the nation’s largest payment system Click.
Today, we are the largest and the fastest growing e-commerce and fintech ecosystem serving 13 million people or over a third of the country’s population.
How did you come up with the vision of Uzum?
Like many things in business, the ideas come from personal experience. A few years ago, I came to Tashkent to spend the New Year holidays with my family. My mother wanted to give new mobile phones as gifts to her grandkids and we went to an online marketplace to order them. To my surprise, on a delivery date I got calls from three different couriers who were supposed to bring a single order. The first said that he was bringing one item in the order, the second one said he would bring another, and the third courier told me to change the order because one of the chosen models was not available.
It wasn’t difficult to realize that these online stores were missing the basic infrastructure, like storage facilities and order management processes, and were likely purchasing the goods from a limited stock elsewhere. More so, technologically all these websites and apps were merely a shopping window, and as a customer, I could not know whether the seller actually had goods on display or was just pretending to have them — up until the delivery date. While the potential customers were there, an infrastructure to serve their needs was not. It was a huge market opportunity that I just couldn’t let go. I already had enough experience in building tech businesses in developing markets and I redirected my knowledge and that of my team to build the first tech unicorn back home. We didn’t start from scratch — to move faster some of other projects were merged in the process of Uzum creation as an ecosystem.
What challenges have you faced?
I think the key one was to overcome the distrust of online services. Take e-commerce — people in Uzbekistan are generally used to outdoor markets, or bazaars. Bazaars are an important part of our traditional Uzbek culture, and to this day this is where a vast majority of retail sales in the country is conducted. However, for all their vibrance, bazaars simply cannot offer the variety of goods that an online marketplace provides. More so, buying something that is not available at a local bazaar takes many people, especially in remote areas, traveling to the neighboring towns. Of course, over the years people would gradually move from outdoor markets to retail chains to e-commerce, but I knew that digital technology had the potential to revolutionize the market by leapfrogging from bazaar cart carriers straight to a cart icon on screen.
To gain customers’ trust we built infrastructure allowing us to deliver orders within 24 hours across the entire country, including a fulfillment center in Tashkent and our own transportation fleet operating on a tight schedule.
We have also connected an unfamiliar world of online shopping to our customers’ neighborhoods by creating a growing network of order collection points. Moreover, these points serve as an offline super app, a comfortable entry point to the digital ecosystem, where along with picking up their orders customers can get banking cards, apply for installment service, and explore other services within the ecosystem. We already have 170+ points and their number will grow to 500 by the end of the year.
Another factor is that a significant part of the adult population of Uzbekistan is underbanked, and people are actively using mobile payment services instead of traditional banking. This is why, along with Uzum Market, we launched a fully digital Uzum Bank and a Shari’ah-compliant BNPL service Uzum Nasiya, so that customers would only need their smartphone to benefit from e-commerce and advanced financial services. In essence, to bring e-commerce to the Uzbek consumers we had to create an entire ecosystem from the very start.
Ecosystems take time to build — how have you managed to pull it together in less than a year?
I was lucky to find local entrepreneurs who shared the same vision. In fact, we started Uzum as a group of successful local businesses, built and managed by Uzbek entrepreneurs who pooled together their resources, technologies, and expertise. What we are looking for is a synergetic effect where every business vertical is enhanced by other verticals.
For instance, among the first partners was the leading BNPL service provider Paymart — now Uzum Nasiya — with their own technology stack and a large user base. It is a successful business made stronger through integration with the ecosystem. Today, almost a third of all purchases on Uzum Market is made with Shari’ah-compliant BNPL service Uzum Nasiya, so it’s a win-win. The same goes for our banking assets which are now the country’s largest private commercial bank and a digital bank with its popular app and #1 P2P transfers service — this created a backbone for our fintech offering.
With the recent merger with Click, Uzbekistan’s largest national payment system, we combine the two outstanding teams with unique operational know-how, top-notch customer experience, granular understanding of the market, and best-in-class talent. This is another step towards building the biggest super app in the market, and the first one made entirely in Uzbekistan.
What makes Uzum stand out from competitors?
In short — it’s the best-in-class talent and technology combined with extensive international experience and deep understanding of the country. I am proud to say that 80% of our employees come from Uzbekistan, but we also bring people with technical or management expertise from the best e-commerce, fintech, and banking businesses in the region and beyond.
Another factor is, of course, our ecosystem approach. We face intense competition across all our business verticals. As I have already mentioned, new local and foreign e-commerce players are actively entering the Uzbek market and dozens of digital banks and fintech platforms are offering apps and services. However, as a unified ecosystem of services made specifically for Uzbekistan, we are simply unmatched.
Finally, we are laser-focused on growth and speed because to be the first you must be the fastest. For instance, by the end of 2023, we will expand Uzum Market storage facilities almost five times, the number of order collection points will triple and the number of unique items on sale will almost double compared to our current figures.
How do you see the future development of Uzum?
We continue exploring new verticals and seeking further horizontal integration within the ecosystem. By merging with Click, the country’s most popular payment service, we are building the foundation for the first super app in Uzbekistan made entirely of local services and covering more than a third of the country’s population.
We will also need to raise additional capital to sustain our growth and expand our product portfolio. In particular, we are focusing on attracting investments from the global capital market and VC firms in Europe, Middle East and Asia Pacific.
The UAE as a hotbed of fintech innovation and a global investment hub is uniquely positioned to drive the development of e-commerce and fintech startups across the entire region and we already see the growing interest of capital and investment community in new frontiers.
I believe that investing in tech businesses in Uzbekistan, a country tied to the Middle East by historical and cultural ties but often overlooked by the investment community, offers enormous opportunities for growth. In this sense, working with Uzum means investing in the national technology champion and a unicorn-in-the-making.