E-commerce: Online shopping making its way into rural areas

Published: August 17, 2014
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Catalyst: 327% is the growth witnessed in branchless banking transactions during 2011-13. $30m is estimated to be the value of the e-commerce market in Pakistan. PHOTO: STOCK IMAGE

Catalyst: 327% is the growth witnessed in branchless banking transactions during 2011-13. $30m is estimated to be the value of the e-commerce market in Pakistan. PHOTO: STOCK IMAGE

LAHORE: 

The trend of online shopping has witnessed rapid growth recently with several retail market portals springing up.

But, a recent increase in their penetration into far-flung areas has also boosted future prospects of the e-commerce market. What used to be limited to metropolitan cities has now spread to semi-urban and rural areas of the country. This is another potential market not only for shopping portals but also for fast moving consumer good (FMCG) companies, due to better availability of internet facilities throughout the country.

Online shopping portal, Daraz.pk, claims that online shopping websites have penetrated into the rural areas. In a recent survey, they revealed that around 48% of all orders placed in the first six months of 2014 were outside of Pakistan’s biggest cities – Karachi, Lahore and Islamabad.

“Half the world’s population will have internet access by 2017, showcasing the potential of e-commerce in the future,” said Daraz.pk co-founder Muneeb Idrees. “It is also expected that the number of mobile-connected devices will surpass the number of people. These statistics represent the expanding ecosphere of e-commerce.”

Established in August 2012, Daraz.pk is a project of Rocket Internet, the world’s largest incubator. The portal is currently offering over 400 brands in 200 cities across Pakistan. After the initial success, other venture capital firms took notice and starting initiating contact with local businessmen in the industry to fund entrepreneurs.

The website gets receives their highest number of orders (six per cent) from Ghotki, a semi-urban area in Sindh. The highest basket size across the country was from Lala Musa in Punjab, doubling the average order size of Lahore.

“In general, more than half our orders are from outside Karachi, Lahore and Islamabad,” said Idrees. “People in smaller towns have access to social media and television. They learn about new products, but don’t have malls in their cities to buy these products.”

The e-commerce market in Pakistan is estimated at around $25-30 million, in comparison to the total retail market of approximately $42 billion. Internet availability, along with introduction of branchless banking through cellular technology, has done wonders for the market.

According to estimates, branchless banking transactions have witnessed a growth of 327% during 2011-13. Daraz.pk is one of the few businesses utilising mobile commerce in Pakistan with great numbers. The management said that 20% of the transactions of the portal take place via mobile phones.

FMCG giant Unilever recently entered in an agreement with Daraz.pk to use its marketing reach all over Pakistan for its beauty and personal care products. The management thinks that this deal could be vital for the retail industry as previously no FMCG had seriously looked into the e-commerce sector.

Published in The Express Tribune, August 17th, 2014.

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Reader Comments (3)

  • Adam
    Aug 17, 2014 - 5:32PM

    This is how i read the situation. Its easier to fool people from far flung areas, than those in big cities because consumers in these areas are generally more aware, educated, quality conscious and have a variety of options to choose from.

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  • MK
    Aug 18, 2014 - 10:16AM

    Well thats a placed article if I have ever seen one!Recommend

  • Sohail
    Oct 3, 2014 - 2:21AM

    Have worked in the e-commerce industry and trust me, you’ll get one of your first orders from Rural Areas. Sometimes even places you have never heard of before. I agree with Adam to some extent and the real reason for this is non-availability of most products in these towns. It is not actually about fooling them, it is about selling them the things that are not available there. If you fool them once – they never order again – so fooling them is not true for all the people working in the sector.

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