KARACHI: Estimates about the size of Pakistan’s e-commerce industry have been many and varied, and there seems to be no ballpark number. While recent figures put it around $100 million, it may be greater than that, stakeholders believe.
Part of the reason why some people underestimate the size could be their lack of understanding of the concept of e-commerce, believes Adam Dawood, the managing director of online marketplace Kaymu.pk.
He gives an example: “Buying airline tickets online is e-commerce, too. PIA alone should be generating annual revenue of $8 million given a conservative figure of 250 online reservations per day and Rs9,000 per ticket.”
He, however, concedes that a consensus on the industry’s size would not be easy to achieve. “Estimating revenue is also difficult because our sellers are selling on Facebook, too... Our biggest sellers I have talked to say they are getting around 40 to 50 orders a day. Forget Kaymu, Daraz, foodpanda; Facebook sales are probably going to be bigger. That’s e-commerce, isn’t it?” Mr Dawood, 29, said in an interview with Dawn.
Long-term prospects for the industry have also improved on the back of growing use of the internet, especially through smartphones and tablets. “After the launch of 3G and 4G spectrums last year, we have seen our mobile numbers go up incredibly. Over 60pc of our orders come from mobiles now, compared with 20pc in January and zero last year,” he said.
The number of cell phone users in the country has ballooned up from a mere 5 million in 2003-04 to around 130 million in September this year, according to the Pakistan Telecommunication Authority. The growth in the number of 3G and 4G users has been even faster — they surpassed 18 million in September compared to 13.5 million by the end of June.
This means more and more people would be clicking “Buy Now” on shopping websites as mobile internet penetration is only going to grow (12.5pc in July, 13.25pc in August and 15pc in September).
Kaymu is a venture of the Asia Pacific Internet Group (APACIG), which was established last year by German start-up incubator Rocket Internet and Rocket Internet and Qatar-based telecommunication provider Ooredoo.
A kind of e-shopping mall, it boasts around 15,000 sellers, 500,000 customers, and an average 3,000 orders per day. Its website, visited by more than nine million unique visitors since January this year, has more than 250,000 products up for sale at any time.
Unlike online shopping stores like Daraz or HomeShopping, Kaymu is an online marketplace where one can buy as well as sell products.
Though Mr Dawood wouldn’t reveal the average daily turnover of Kaymu, it should be at least $30,000 ($11 million a year) given the average size of an online sale at $10, compared with global figure of $100 and India’s $20.
The portal operates along the same lines as China’s market leader Alibaba and America’s eBay. It doesn’t sell anything itself and has zero inventory. The model helps its sellers promote and provide a lot of choice to consumers which otherwise “gets very hard to do in a pure inventory model”, said Mr Dawood.
Clothing, health and beauty, and jewellery watches are the three categories that attract most buyers. And the quantity sold is so high, it makes up for the revenue as well, he said.
Buyers are now coming from varied cities as the share of Karachi, Lahore, Islamabad and Rawalpindi (KLIR) dropped from around 60pc last year to 45pc now. “Overall orders have grown tremendously from KLIR, but the growth coming in from the next eight to 12 cities is much greater,” he added.
On payment options for buyer, he admitted that cash on delivery is expensive and “bad for both the merchant, and the logistics side”, but said it will not go away because customers feel safe with it. “Cash on delivery will not go away. Last I checked, in China there was 20pc CoD. Dubai, India, they are still like 40 to 60pc.”
Lack of debit and credit cards, fear of data theft and cumbersome banking procedures have also contributed to the problem. So while CoD is here to stay for now, the future of payments in Pakistan, he said, is not credit or debit cards but mobile wallet, a system that lets people transfer cash using their phones. He said the biggest challenge facing the Pakistan’s online shopping industry is winning over customers because most of them are buying for the first time.
Published in Dawn, November 26th, 2015