The internet has significantly changed the way the retail business is done in many parts of the globe; now it’s doing the same in economies like Pakistan. The trend of online shopping has caught up quite rapidly in Pakistan in the recent years.
The fact that the new online marketplace is expanding and consolidating itself is reflected in the growth of numerous C2C (consumer-to-consumer) and B2C (business-to-consumer) startups, focussing on online marketing and selling and offering a wide range of products - fashion-wear, footwear, casual clothing, jewellery, electronics, computers, handsets, books, gifts, toys, and what not - to be sold and bought online.
The major catalyst of this changing trend are mostly foreign investors, who see enormous potential for the online retail business to grow in a country with a large population of 180 million people and a burgeoning urban middle class and a massive youth bulge.
“The investments made by the global firms show their confidence in the future of e-commerce in this country,” argues Ahmed Jahangir, managing director of kaymu.pk, one of the fast growing online marketplaces in Pakistan, in an interview with Dawn.
Launched in January last year, kaymu.pk is one of the largest ventures of Rocket Internet, a German incubator operating in Pakistan, and Qatar Telecommunication, and is based on a marketplace model and acts as a platform where buyers and sellers can come together. Rocket has invested over two million euros in Kaymu.pk, which largely operates on a B2C model and is making its way into being C2C as well with an aim to cater to all who have a product to sell - be it large businesses, small stores or home-based sellers.
Ahmed himself is a strong believer in the huge potential for the relatively new, online marketplace in Pakistan. Else he would have been running his family’s textile export business. “At the moment, it may appear only a dream to many, but the online retail business is going to hold a substantial share of retail revenues in near future,” he says. “It is just the beginning.”
In its very short life of a half and a year kaymu.pk has come to be known as one of the best online platforms with 1,900 retailers, including 400 individuals, offering their products to the online shoppers. “The portal is maturing some 1,500-1,600 transactions daily with an average turnover ranging between Rs1 million and Rs1.5 million,” notes Ahmed.
There are several factors that have impacted growth of e-commerce industry in Pakistan; some listed by Ahmed include availability of fast-speed internet to a limited segment of population, power shortages, lack of public trust on portals conducting e-commerce and awareness about the online marketplace, payment solutions, and delivery logistics infrastructure. Since most people do not have access to credit or debit cards or do not want to use plastic money for shopping only owing to security concerns, majority of e-commerce companies like kaymu.pk have adopted the ‘cash on delivery’ model.
“Pakistan is a new place for e-commerce; we have to create a marketplace here. Once the use of plastic money grows, the ratio of online transactions will rise significantly,” Ahmed, who has launched kaymu in several other countries in South Asia, Central Asia, Africa and East Europe, contends. The increase in the use of smart phones and the launch of 3G and 4G mobile spectrums is also expected to give a big boost to online shopping.
Kaymu.pk itself has grown pretty big in one year from a company employing 10 people to the one with 80 young and dynamic business and marketing graduates and under-grads from reputed universities in Lahore. The number retailers has also trebled in one year.
“Online shopping in Pakistan is being driven primarily by young, urban and male population,” Ahmed notes. “Our 60 per cent retailers are from Karachi and we are generating half of our business from three cities - Karachi, Lahore and Islamabad. The remaining half comes from the rest of Pakistan, including Waziristan.”
He says increase in online shopping is beneficial to every one — retailers, producers and consumers. While it is convenient, cost and time effective for the buyers, it helps boost sales and margins of the retailers and producers and increases their access to a more diverse clientele without any additional investments in their businesses. “This is the kind of change we are trying to bring about,” says Ahmed, a Cambridge alumni.
Qamar Zaman, a retailer who sells casual clothing for young men and women under his own brand SQZ and set up a small outlet in DHA in Lahore, says his sales have grown rapidly ever since he has forged an alliance with kaymu.pk. “Today my online sales are almost 60pc of my total turnover, and no extra cost or investment is involved,” says Qamar.
There was also time a few months ago when Qamar even thought of winding up his outlet and take his entire business online to save his costs on keeping his presence on the ground. But he has ditched the idea since. “There are days when you get up to 150 online orders a day and there are days when you don’t get any at all. So I thought better of that idea.”
There are no authentic data but kaymu.pk is estimated to hold around 6pc share in the online retail market at present. Ahmed says: “We are planning to undertake a massive marketing initiative to increase our business and create more jobs in the near future. Pakistan is a very strong market; it is time we decided to grow our share in online retail. We are very excited about our future market expansion plans. We want to take this technology (e-commerce) mainstream.”
Published in Dawn, Economic & Business, July 21st, 2014