In Pakistan, e-commerce entering a new era

Published: December 14, 2015
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Has already surpassed $100m milestone, stakeholders believe awareness key to growth. CREATIVE COMMONS

Has already surpassed $100m milestone, stakeholders believe awareness key to growth. CREATIVE COMMONS

KARACHI: Not long ago, e-commerce in Pakistan was primarily related to online sales of smartphones, laptops and fashion apparel and almost all online retail sales were generated from Karachi, Lahore and Islamabad – the largest urban centres constituting major markets for e-commerce even today.

Fast forward to 2015, Pakistan’s e-commerce sector held the country’s first ever ‘Black Friday’ in the last week of November. The industry noticed people buying washing machines and televisions online with orders coming from as far as Tando Allahyar. The rural town, as opposed to a daily average of one, placed 50 orders on Homeshopping.pk, a major player, which had 40,000 people on its website when the deal started at midnight (the night between Thursday and Friday).

Black Friday:“We made history” says Muneeb Maayr, CEO Daraz.pk

According to major market players, one-third of the total Black Friday transactions were online – a major shift in the consumer habit from cash-on-delivery (CoD), which still accounts for more than 95% of Pakistan’s e-commerce that has already surpassed the $100 million milestone. These Black Friday trends indicate e-commerce in Pakistan is certainly picking up.

According to industry experts, e-commerce follows a four-phase growth cycle from infancy to maturity in any new region. Some say China has entered the third phase while India is close to finishing the second.

However, when it comes to Pakistan, many say the country’s e-commerce is still in its infancy. But a successful Black Friday, which received an overwhelming response from consumers across Pakistan, certainly merits a question: is the country’s e-commerce entering level two?

“Absolutely, Pakistan’s ecommerce is entering the second phase,” says Saman Javed, Head of Communications and PR at Daraz, which started Black Friday sales and invested heavily in its marketing for consumer awareness.

“One-third of the payments were online, which indicates a shift in consumers’ attitude who now trust online payment system,” Javed said, adding the response was beyond the company’s expectations, which shows the demand people have here is almost similar to elsewhere in the world.

Though it didn’t disclose sales figures, Daraz said it offered Rs132 million in discounts during Black Friday sales when 1.5 million people visited its website.

Black Friday – biggest sales event of the year

Another factor indicating an overwhelming consumer response was the websites of Daraz.pk and Homeshopping.pk – which attracted almost all the traffic on November 27 – went down immediately after the sale began.

“We witnessed something we have never seen before,” Shayaan Tahir of Homeshopping said, adding there were 1,000 people on their page at a single point in time. “It will be even bigger next year.”

Homeshopping sold Rs5.6 million worth of iPhones at more than one phone per minute during the first hour of its ‘White Friday’ sale before running out of stock. The company sold 45 units iPhone 6 Plus and 25 units of iPhone 6. This is in addition to 100 units of smartwatch sold by the online retailer.

By contrast, iPhone deal on Daraz was sold out within minutes and many consumers complained over being left out. The traffic was insane and not everyone could get what they wanted, says Javed. It’s a global trend where people fight for the best deals that sell out in minutes, she added.

While smartphones remained the top-selling category on all major platforms, other sectors were also impressive. Daraz says it had record-breaking sales for fashion while home appliances brands, such as Kenwood and Dawlance were also amongst the top sellers. On the other hand, TVs were among top selling categories at Homeshopping.

Though still in the 10% range, the mobile broadband penetration is the real reason for the growth of e-commerce.

Online vendor introduces ‘White Friday’ because ‘Friday is never black’

“Third-generation (3G) mobile Internet technology is reaching remote areas and adding new Internet users thus boosting our traffic,” Tahir of Homeshopping said adding 50% of their traffic is now coming from mobile phone platform, up from 20% eight months ago.

Since the rollout of 3G, which started in mid-2014, Pakistan has been adding more than 1 million new users to its mobile Internet base every month. The number of broadband users in the country skyrocketed to 23 million at the end of October, 2015, up from less than 4.7 million a year ago. More than two-thirds of these users age between 18 and 34 years and are active participants of e-commerce.

The aforesaid e-commerce trends and telecom indicators certainly indicate the e-commerce is set to enter the second phase but there is still a long way to go before it becomes a major market.

“The country’s overall retail market is worth $40 billion but we are still 0.2% of that,” Tahir said adding awareness is the key to further growth.

The writer is a staff correspondent

 

Published in The Express Tribune, December 14th,  2015.

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Reader Comments (19)

  • Rocky
    Dec 14, 2015 - 10:44AM

    This is a positive trend and will reap good profits in the time to come!Recommend

  • Obama
    Dec 14, 2015 - 10:58AM

    Wont be successful unless the government monitors the the quality of the products shown on the online shopping portals. The pictures are deceiving (kaymu.pk,bartmall,darazpk and what not)Recommend

  • Max
    Dec 14, 2015 - 11:39AM

    What Pakistan now needs to solidify the e-commerce platform is a trust and stable online payment system. The lack of PayPal in Pakistan since that platform’s inception provided an opportunity to local entrepreneurs to come up with a well-known alternative by now, but unfortunately that is not the case. So we have to get PayPal to enter the Pakistan market to increase e-commerce transactions substantially. PayPal would also be instruments in allowing Pakistanis online entrepreneurs to sell their goods to a much bigger market abroad. Recommend

  • sabi
    Dec 14, 2015 - 2:17PM

    What do you say Mr Hasan Nisar,you had predicted bankruptcy of Pakistan economy in six month time to 18 months in 2013.You had also predicted mid term election and -you were so adamant.What do you feel now bad or ashamed? or none.Recommend

  • Babloo
    Dec 14, 2015 - 2:33PM

    In India e-commerce has already crossed one trillion dollar mark hahaha. Recommend

  • nadeem
    Dec 14, 2015 - 2:46PM

    What are the Pakistani e-commerce websites doing about data protection? What if we hear one day that they got hacked and now all of Pakistan is using my credit card for shopping. Recommend

  • Hero
    Dec 14, 2015 - 2:56PM

    Government has to provide and guarantee the security the online payment gateways and also must implement some good payment related and consumer related laws which are very poor in Pakistan. Recommend

  • ABC
    Dec 14, 2015 - 3:06PM

    @Babloo:

    Read the news clearly. Read again and again and again until you succeed to see its a news about Pakistan, nothing to do with India or comparison Recommend

  • Kuro
    Dec 14, 2015 - 3:32PM

    Enter paypal and it would be even more successful. Who agrees with me on this?Recommend

  • John M
    Dec 14, 2015 - 3:59PM

    @Babloo:
    You missed out some zeros there, the Indian market is one gazillion dollars now ;)Recommend

  • Wajahat
    Dec 14, 2015 - 4:31PM

    Ordered a Samsung Galaxy S6 Edge on Daraz and it got delivered to a wrong house who is not returning it to their rider. Now Daraz is waiting for them to return it since last 18 days and not answering me.

    This is the level of service and mismanagement. Never buying online again.Recommend

  • Shakil Ahmed Khan
    Dec 14, 2015 - 5:23PM

    @Max:
    Why wait for paypal? which is normally a person to person payment in auction type transaction.

    Pakistani banks should come up with online payment authorisation thats normally done with debit and credit cards. Online sale hardly use PayPal its not meant for retails sales.

    PayPal like payments system can be devised with help of local consortium of banks for auction or used market online sales or international payments. This is not required for website sales though!Recommend

  • adnans hair
    Dec 14, 2015 - 5:51PM

    @sabi:
    Well said. My nisar underestimated Ishaq’s Dar skill in begging IMF for further loans. Well done Mr. Dar!

    Meanwhile, our exports are falling, but as long as Mr.Dar keeps getting us loans we’ll be fine!Recommend

  • gp65
    Dec 14, 2015 - 9:20PM

    @Max: Unsure about how things are in Pakistan. In India, people are hesitant to pay ahead with payment solutions like paypal because they do not trust the seller. Hence over 70% of sales are CoD (Cash on delivery). I would be surprised if that is not the case in PAkistan. So really the path to growth is greater awareness and a broader range of products and services selling at competitive prices and finally a good customer experience for all first time buyers so that they make repeat onlinepurchases.Recommend

  • Netizen
    Dec 14, 2015 - 9:23PM

    Don’t rely on online shopping too much as products are different during delivery.Recommend

  • Max
    Dec 15, 2015 - 2:13AM

    @Shakil Ahmed Khan: I think you are limiting PayPal usage to Ebay only, whereas it has much wider appeal in the online marketplace, including retail sites such as Amazon. As for your proposed solution for Pakistani banks, that was my main assertion, that no viable solution has come up in the absence of PayPal for more than a decade. Hence PayPal is very much the need for online transactions in Pakistan, while having the additional benefit of facilitating the freelancers in Pakistan who work on foreign projects. ICYMI, the Govt of Pakistan has also recently invited PayPal to consider starting operations on Pakistan. Read below too…
    @gp65:
    PayPal offers a higher protection level to buyers, who stand a fair chance to get refund if they are not satisfied with their purchase. Know why the online market is so big in foreign markets? Its due to the buyers knowing their interests are protected. As you say COD is 70% in India, and it has the same or higher ratio in Pakistan too, but it’s not really convenient to have online retailers going around collecting physical payments. Surprised PayPal is not widely used instead.Recommend

  • mohsin
    Dec 15, 2015 - 9:23AM

    chinese e-commerce giant is now to enter in pak market with the name of cheezmall.comRecommend

  • Dec 15, 2015 - 7:19PM

    Without Paypal, There is no future of Ecommerce in Pakistan. Recommend

  • Jan 7, 2016 - 1:22AM

    Government should monitors the all activities of online shopping portals.Recommend

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