E-Commerce: Making inroads before roads are built

Giants eyeing huge market segment in rural areas.

LAHORE:

The fact that most of Pakistan’s population is concentrated in rural areas makes that particular market segment crucial to the growth of e-commerce.

Major players state that they have witnessed high growth that is likely to continue — at least for now. But, like any industry, the room for growth would remain limited if e-commerce services remain restricted to urban centres. Its true potential lies in the rural areas where there is an absence of shopping malls.

And this is what some players are now focusing on.

An overwhelming response from semi-urban and rural areas is helping these portals to simultaneously shift their paradigm to such areas as part of their future growth strategy. Some leading portals are using all possible measures to address issues faced while delivering orders in rural areas.

“The positive response from second-tier and other rural areas forced us to streamline issues including logistics and mode of payment,” said Kaymu.pk’s Regional Managing Director Asia Ahmad Khan.

The main mode of payment in these areas remains cash on delivery, which is the model portals follow in urban centres as well. However, some of them are also engaging cellular mobile operators (CMO) to facilitate rural customers as they are better-versed with this kind of method. The International Monetary Fund’s survey already revealed Pakistanis’ financial access remains limited.

This level of engagement with CMOs not only facilitates customers in rural areas but also benefits the online portals in sorting out, to some extent, their cash flow problem. In addition, some groups like Rocket Internet are also in the process of introducing their own payment solutions to further facilitate masses.

But like any other model, this penetration depends on the company itself. The major beneficiaries continue to be shopping portals that provide a wide array of items, ranging from apparel to electronics.

Khan said that the penetration in rural areas is likely to be higher with increasing awareness.

It is tough to find a consolidated figure of how many online portals have penetrated into rural areas. However, Kaymu.pk says that 29% of their orders are placed by customers in rural areas including areas in Sindh, Punjab, Azad Kashmir. On the other hand, Daraz.pk says that around 48% of their orders are from second-tier cities or other rural areas in the country.

A potential market that is yet to make inroads is the food delivery market. Due to obvious reasons, they are yet to gain popularity.

Real estate portals have just recently entered this market segment and it would take a while for them to make their presence felt.

“It would be a few years before these second tier cities shifted from the conventional mode to the online mode,” said Zeeshan Ali Khan, co-founder and chief executive officer at zameen.com. “These markets are less educated and we have to educate them as we did in mega cities.”

Industry experts now believe that the booming period has started with rural Pakistan due to play a huge role.

Published in The Express Tribune, September 22^nd, 2014.

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