E-Commerce Starting to Take Off in Pakistan

[Riaz Haq]

Guest Post by Monis Rahman
Founder, Chairman and CEO of Rozee.pk

Pakistan is late to the party. E-commerce is booming throughout our immediate region. India's leading e-commerce website, Flipkart, recently raised a record $1 Billion in new investment, handling 5 Million shipments each month. The website sees so much potential in mobile shopping that it has a stated goal of becoming "the mobile e-commerce company of the future".

To our north, China's e-commerce leader, Alibaba, set a global record when it listed its shares on the New York Stock Exchange in September. Alibaba's Initial Public Offering raised a staggering $25 Billion, making its record-breaking IPO the biggest in the world. Today the Chinese e-commerce giant's market capitalization is over $250 Billion exceeding that of Wal-Mart, the world's largest old economy retailer. The market value of e-commerce companies in Pakistan's immediate vicinity including Turkey, the Middle East, India and China exceeds half of a trillion dollars.

But the party has indeed finally started in Pakistan as well. By 2017, the size of our e-commerce market is expected to reach over $600 Million from it's current size of $30 Million spent on online purchases annually. There are several factors driving this growth, which will dramatically change the way we buy things over the next several years.

Growth of Internet Penetration

Pakistan's Internet penetration rate historically exceeded that of India until 2009. In 2009, India launched 3G and its Internet penetration sky-rocketed. The same hockey stick growth took place in Sri Lanka's after its 3G launch in 2006. With Pakistan's long awaited entry into the 3G club a few months ago, there will be a similar burst of Internet accessibility which will further catapult online purchases.

Following the pattern of our neighbors, Pakistan's Internet enabled population will increase from 30 Million users today to 56 Million in 2019. Over the next five years, 28% of the country's citizens will have Internet access. This unprecedented reach will transform not just how consumers purchase goods, but will also significantly impact several other industries. My own online jobs classifieds site, ROZEE.PK, today processes 40,000 job applications a day and has helped over 1 Million people find jobs. Social media sites including Facebook and Twitter are transforming how we consume news and shape opinions.

Ubiquity of Access through Mobile

Along with the rise of Internet accessibility through 3G, Pakistan is simultaneously witnessing a surge in smartphone usage. There are an estimated 9 Million smartphone users in Pakistan, using handsets that are fully equipped with web browsers and online connectivity. Smartphones have become increasingly sophisticated, not only substituting many functions previously only capable through desktop and laptop computers, but also greatly increasing the ease of going online. Not only is the Internet becoming more accessible to consumers, consumers are also becoming more accessible to Internet merchants through the ubiquity of the smartphones in our pockets.

While the growth of smartphones in Pakistan is linked to the rise of Internet penetration, it is more so driven by the declining cost of increasingly sophisticated devices. Chinese companies which have traditionally manufactured devices for the world's leading mobile phone brands including Apple and Samsung, are now OEM'ing their own handsets for a fraction of the cost powered by Google's Android operating system. So significant is this trend that Samsung's third quarter profits fell by 50% as its mobile business continued to lose ground to low-cost Chinese smartphone makers.

The sub Rs. 5,000 price point of relatively powerful smartphones in Pakistan is enabling online accessibility to penetrate a lower untapped income strata of society. My cook now downloads recipes from the Internet on his smartphone.

India's Flipkart sees so much potential in mobile shopping that it has a stated goal of becoming "the mobile e-commerce company of the future".

Online Payment Initiatives Are Mushrooming

While over 95% of online purchases are fulfilled through Cash on Delivery (COD) in Pakistan, several promising initiatives are underway which will make it easier to pay directly online. Many banks and telcos alike have launched branchless banking and m-commerce initiatives ranging from MCB Banks's MCBLite, Telenor's Easy Paisa, Mobilink's Mobicash, Zong and Askari Bank's Timepay, UBL's Netbanking and others. The number of branchless banking agents which facilitate offline payments for online purchases tripled from 41,000 in 2012 to 125,000 in 2013, making it increasingly easier and more convenient to transfer money.

One of the most frequent complaints from Pakistan's online sellers of not being able to get merchant accounts that allow them to card payments online, has been abated. While Citibank Pakistan was once the only bank in the country to offer online merchant accounts, it was also notoriously difficult for businesses to get approved. When the bank wrapped up its consumer banking operations in 2012, it left its approximately paltry 14 approved merchants high and dry without an online card processing facility. However, UBL has since launched its Go Green Internet Merchant Account product for businesses which is far more reasonable in its on-boarding criteria. Online merchants can now potentially collect payments electronically from 12 Million debit cards in Pakistan.

Perhaps the most successful online payment solution currently available in the country is Inter Bank Fund Transfer (IBFT). A large volume of payments are made by consumers directly going to their bank's website to electronically transfer funds to online stores. Most banks are now offering their customers net banking IBFT payment facilities through their websites, bringing a majority of the country's banked population into the fold of electronic payments.

Maturing Logistics and Parcel Delivery Infrastructure

Currently 95% of online purchases are paid for through COD at the time the parcel is delivered to customer. TCS, BlueEX, Leopards and other couriers are providing COD delivery services across over 150 cities in the country. This becomes especially relevant when considering that approximately 35% of the the country's monthly 70,000 COD shipments are delivered to cities outside the three main urban centers of Karachi, Lahore and Islamabad. While urban shoppers are more online as a percentage of population, the value for rural shoppers is higher as many products are not available in their local markets. This implies a huge untapped segment of the population that will increasingly transition to online shopping.

Growing Trust in Online Storefronts

One of the main obstacles to the growth of e-commerce is the lack of consumer trust in purchasing from the "cloud". As a dotcom entrepreneur in Silicon Valley during the 1990's, I recall the prevailing conventional wisdom at the time: people would never give their credit card information on the Internet to buy items. Today, over 72% of Internet users in the US are digital shoppers. This contrasts sharply with less than 3% of Pakistani Internet users who have bought goods online. Although we have a long way to go, there is correspondingly huge upside potential as well.

After initial hesitation, an inflection point in consumer behavior was reached in the US during the late nineties with strong online storefront brands such as Amazon taking to mainstream media. The large amount of investment these sites were able to raise, coupled with highly professional teams, led to positive shopping experiences for the risk averse early adopters who ventured to buy online. We will see this same pattern in Pakistan.

For the first time in the country's history, we are seeing online brands deploying significant advertising budgets for mainstream media advertising. Deep pocketed general classifieds sites like OLX, funded by the South African mega media group Naspers, and Asani, a Schibsted funded company from Norway, have embarked in our online industry's first media war with ads competing for our eyeballs. Rocket Internet, which runs Daraz and Kaymu in Pakistan, recently completed an $8.2 Billion IPO in October of this year. Daraz and Kaymu are well funded and will be pouring capital into the Pakistani e-commerce market in a magnitude not seen here before. Several other Pakistani online players will be launching their TV ads in the coming months, giving new credibility to the online medium and e-commerce.

All of these developments will lead to a rapid increase in trust as first time online shoppers experience e-commerce and generate acceptance through word-of-mouth.

Pakistani E-Commerce Companies

Big foreign investors are a swooping in to become first movers in key verticals in the world's sixth most populous country with the goal of claiming online thrones. Visionary local players like Home shopping, Shophive and Symbios are organically emerging from our ecosystem and bootstrapping to success. This is a winner-takes-all market: the largest marketplaces grow the fastest making it unviable for new entrants as the industry heats up. And this industry has a voracious appetite for capital. The e-commerce party has started.

The Author is Chairman and CEO of Naseeb Networks and is one of Pakistan's most prolific Internet entrepreneurs. He runs leading online job classifieds sites ROZEE.PK in Pakistan and Mihnati.com in Saudi Arabia. 

This post reflects the author's assessment of the e-commerce scene he sees in Pakistan. The owner of this blog does not necessarily agree with the contents of this guest post. 

Here's a couple of video clip on e-commerce company leaders in Pakistan:

http://www.youtube.com/watch?v=ehNY5GuY8Vw

http://www.dailymotion.com/video/x1aoyc7_daraz-pk-co-founder-farees...

Daraz pk Co-Founder Farees Shah on eCommerce in... by f555680658

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[Riaz Haq]

Estimated to be worth about $25 million (Rs150 crore) in 2013, the Pakistani online retail industry bears little comparison to India's $2.3-billion (Rs13,700 crore) retail ecommerce sector. But the one aspect uniting them is the high percentage of cash-ondelivery transactions. In addition, rising mobile penetration — 131 million Pakistanis now use mobile phones in a nation of 181 million — is expected to boost digital commerce, same as in India.

"The challenges in all South Asian countries are structurally similar," said Ashish Kashyap, CEO of Ibibo India, which is evaluating opportunities, specifically for its online ticketing business redBus in the subcontinent. Currently parent company Naspers runs the online marketplace Olx in Pakistan.

In the years since Jangda first stoked the fire, nearly half a dozen online retail companies have sprung up in South Asia's second-largest country, where online retail is growing at 40% every year.

Electronics, fashion and apparel, children's products, healthcare as well as Internet services such as listings are the top products and services on offer.

For global investors this offers fertile ground to build businesses and reap the first-mover advantage. "It's cheaper to build a business in Pakistan currently than to acquire. Lack of big investors also means lack of competition," said Muneeb Maayr, who runs fashion portal Daraz.pk, which is backed by German incubator Rocket Internet that is also an investor in India's Jabong, an online retailer of fashion and accessories.

The advertising blitz on television by Indian portals such as Flipkart and Snapdeal has also done much to build consumer awareness about online shopping. "People are becoming aware that they can buy a product sitting at home," said Maayr, who is yet to spend on marketing for Daraz.

Next month, Maayr aims to begin retailing electronic products on his portal in a bid to compete directly with early entrants Symbios and HomeShopping, Pakistan's largest ecommerce firm with sales of about $6 million.

Shayaan Tahir, 28, who was forced to launch a startup after he couldn't find a job in a commercial carrier despite having a commercial pilot's licence, launched HomeShopping.Pk in 2008 with a seed capital of Rs 10,000.

"There are tonnes of opportunities for entrepreneurship. One just needs to be persistent here," said Tahir, who has employed about 60 people to manage the operations. The company aims to target $10 million in sales this year. Entrepreneurs said the biggest challenges for online retail are the lack of payment gateways and sufficient interest from investors.

http://articles.economictimes.indiatimes.com/2014-07-24/news/519822...

[Riaz Haq]

Unilever launches Pakistan’s first FMCG e-commerce solution with daraz.pkUnilever launches Pakistan’s first FMCG e-commerce solution with daraz.pk

Pond’s, Toni & Guy and Dove offering 66 products through the online portal http://www.daraz.pk/unilever

Unilever has partnered with daraz.pk to become the first organization in Pakistan’s FMCG sector to offer an online retail solution for customers. As part of this collaboration, consumers will be able to purchase a large variety of Unilever’s beauty and personal care products from the online portal.
The initiative is part of Unilever’s global e-commerce vision that focuses on increasing revenue share from e-commerce. Pakistan has been identified as a high potential market because of the high mobile penetration and increasing usage of internet across the country. The partnership with daraz.pk is the first of many more planned to go live within this year.
Amir Paracha, VP – Customer Development, Unilever Pakistan Limited, highlighted, “Despite being a developing country, we have found Pakistan to be highly adaptive to innovation. E-Commerce in Pakistan is forecasted to generate a turnover of PKR 4 billion over the next 5 years, with much of this growth being driven by beauty & personal care products. At Unilever, we believe in the potential of e-Commerce and are working to make it one of our core channels for customer outreach. The idea is simple; who wants to go through the hassle of shopping in supermarkets, wait for car park and long queues when your favorite Unilever items can be delivered to your doorstep.”

Daraz.pk is a project of Rocket Internet, the world’s largest internet incubator and was launched in Pakistan in 2012. It is an online shopping portal that currently offers a portfolio of over 400 brands and 15,000 products ranging from fashion apparel to beauty products, with over 1.2 million unique visitors each month. The online portal has now delivered to over 200 cities across Pakistan with half of its sales volume driven from cities outside KLI.

http://www.unilever.pk/media-centre/pressreleases/2014/Unilever-lau...

[Riaz Haq]

E-commerce laws in Pakistan:

As a result of the advanced vision of the Government of President Musharraf, the Electronic
Transactions Ordinance 2002 has come to fruition and is being promulgated. This is a fist step
and a solid foundation for providing Pakistan with a comprehensive Legal Infrastructure to
facilitate and provide legal sanctity and protection for Pakistani E-Commerce locally and
Globally.
There are various aspects relating to Commerce generally and providing legal cover only to
Transactions is akin to providing a Contract Act & Evidence Act. In order to facilitate Commerce,
however, other areas also need to be addressed; such as:
E-Banking/Finance
Intellectual Property
Anti-Trust/Competition
Consumer Protection
Conflict of Laws
TelecommunicationTechnology Law
Date Protection & Confidentiality
Cyber Security
Cyber Crimes/Terrorism
The Shariah Aspects
Thus, this Government as it were has put the first man in Orbit in a long Space Race. It I now
necessary to concentrate on the continued and efficient implementation of the ETO 2002 by
correct interpretation and application and also the promulgation of laws in the other areas
identified above.
It will be effort to first highlight the salient features and policy reasons for the particular
provisions of the ETO 2002 both in the domestic context as well as in comparative light of
International regimes. This will be followed by an identification of the areas of Pakistani ECommerce
Law that exist at present and an analysis of whether legislation in those areas is
desirable and if so briefly what form it might take.

http://workspace.unpan.org/sites/internet/Documents/UNPAN93511.pdf

[Riaz Haq]

E-commerce: Pakistan very much on investors’ map

Foreign investors, keen to expand in other countries, have seen South Asia as a lucrative market with its bulging population and growth in internet penetration. Rocket Internet is one of the foreign companies that have made their presence felt in Pakistan, taking on local competition with its aggressive expansion strategy. Backed by heavy investments, the German based e-commerce focused venture capital firm and startup incubator has captured a share in the country’s growing market.
The company has given stiff competition to leading portals in various spheres including pakwheels.com, zameen.com and homeshopping.pk with clones including carmudi, lamudi and daraz.pk clones. Since the start of their operation in 2012, they have doubled the number of their ventures, pouring in millions of euros.
During his visit to Karachi, Asia Internet Holding co-Chief Executive Officer (CEO) Koeen Thijssen said that Pakistan has the most number of ventures opposed to the rest of the Asian countries Rocket Internet has invested in. Asia Internet Holding, a joint venture between Rocket Internet and Qatar-based Ooredoo, builds and funds startups across Asia, particularly focusing on ecommerce and mobile services. The core focus is emerging economies in Asia, particularly Pakistan, Myanmar, Thailand, Malaysia, Singapore, Indonesia, Vietnam and the Philippines.
He said Rocket Internet will pump €180 million during the next three to four years as investment in Asia, declining to quote even a ballpark figure for Pakistan’s share.
“But a major chunk will be invested in Pakistan,” he said.
Recently, Daraz.pk – based on the amazon model – included the electronics category on its online shopping store. “The response has been very good with almost 100 iphones sold in a matter of seven days.
“The profit margins in electronics are very low. The local sellers did not have the platform, skills or the delivery network to sell in high volumes, so they go through us.”
The co-CEO said Pakistan is an interesting case because most of the local ventures are headed by Pakistani nationals, while in the rest of the Asian countries, expats tend to head the ventures. “It’s very unique for Pakistan. It seems that the country naturally has the entrepreneurial gene,” he said, appreciating the country’s workforce. “It’s difficult for expats to recognize local market mechanics.”
When asked about the company’s market strategy, he said, “It is simple; it aims at transparency by providing comparable prices on its websites. We are also using market place strategy for all our ventures,” Thijssen added.

http://tribune.com.pk/story/803154/e-commerce-pakistan-very-much-on...

[Riaz Haq]

The rise of Pakistan’s startup ecosystem: Shifting traditions and inward inspiration

Just two months ago, e-commerce company Markhor, which works with local artisans to produce high-quality men’s leather shoes, became Pakistan’s most successful Kickstarter campaign, raising seven times more than its intended goal, catching the attention of Seth Godin and GOOD Magazine.

There is no greater evidence of this positive change than in Pakistan’s burgeoning technology ecosystem. In a new report released by my company, Invest2Innovate – which was commissioned by the World Bank’s Consultative Group to Assist the Poor (CGAP) – we mapped the number of startup competitions, incubators, university programs, coworking spaces and forums, and analyzed the gaps and challenges entrepreneurs continue to face in the country.

Three years ago, the ecosystem was relatively nascent, with just a handful of organizations. Today, the space is unrecognizable and brimming with constant energy and activity.

A closer look at Pakistan’s tech scene

Plan9, the country’s largest technology incubator launched by the Punjab Information Technology Board, recently announced PlanX, its new startup acceleration program. The Lahore University of Management Sciences (LUMS), one of Pakistan’s top universities, recently graduated the first class of incubatees from its Foundation program.

The IT trade association, Pakistan Software Houses Association for IT & ITES will soon launch Nest i/o, a Karachi-based technology incubator seeded by Google, Samsung and the US Department of State. Coworking spaces like Basecamp in Peshawar, DotZero and HQ in Karachi and TechHub in Lahore are sprouting all over the country – providing space to fledgling and growing companies.

Hackathons and Startup Weekends are producing startups like Savaree (a ride-sharing application similar to Lyft) and Groopic (a photo editing application), and online publications like TechJuice and PakWired also provide constant coverage of rising companies, events and other startup-related news.

While this phenomenon is not unique to Pakistan – we are watching startup communities sprout and thrive all over the world – there are several factors that make us hopeful about the growing ecosystem.

First, Pakistani entrepreneurs have largely led the growth of Pakistan’s ecosystem. In his book, Startup Communities, author and cofounder of TechStars Brad Feld noted that leaders of a growing startup community must be entrepreneurs who have a long-term commitment to growing the ecosystem and “must be inclusive of anyone who wants to engage with the community.”
----------

For example, DotZero, one of Pakistan’s first major coworking spaces, was cofounded by four successful technology entrepreneurs based in Karachi. The Karachi Institute of Technology & Entrepreneurship (KITE), established in by a Pakistani entrepreneur, is providing an alternative and innovative learning environment to students wishing to enter the technology sphere.

Second, though security issues, corruption, and political instability have increased the perceived risk for foreign investors, it has also in turn caused Pakistanis to look inward, build indigenous networks, and replicate models that have worked in other countries for the local market.

As a result, we’ve seen an ecosystem that is being built by Pakistanis for Pakistan. Moreover, given that 2/3 of Pakistan’s 180 million people are under 30 years old, we have a young population who are hungry and determined to change the environment around them. Young Pakistanis are launching local chapters of global brands like TEDx, Startup Weekend and Startup Grind, further fostering idea generation and the dialogue around innovation.

http://thenextweb.com/entrepreneur/2014/12/20/rise-pakistans-startu...

[Riaz Haq]

Thanks to competitive packages and affordable rates, the 3G users are predicted to touch 10 million mark within next few months, ensuring swift mobile broadband internet services to subscribers.
Since launch of 3G around seven months ago by mobil phone operators, such services are receiving a healthy response as around more than five million subscribers have so far adopted them. 
As per publicly available stats, there were 3.7m broadband users in Pakistan till May-2014 for all technologies combined. According to operators including Mobilink, Telenor, Zong and Ufone they have already crossed 1.5 million 3G users mark.
Sources confirmed that Telenor is standing around or over 1.7 million 3G users while Ufone, Mobilink and Zong must have added more 3G subscriptions since their respective announcements for crossing 1 million 3G users two months back.
Zong, the only operator which acquired 4G license during an auction in April this year, has also launched its 4G services from seven cities of the country. A telecom expert said Pakistan had only 3.35m broadband subscriptions before auction of 3G and 4G licenses, while if one looks at 3G uptake during first seven months month of service then there are more than five million 3G users, which is around 3.5 % of 139 million total mobile phone users in this short span of time.

The expert said historically, if one looks at track record, then Pakistanis are usually very hungry for new technologies and their adoption rate is decidedly high for new tech or for anything that’s better than what they were using earlier. This has happened before (during 2G era), and from its looks one can be certain that total subscription count for 3G users can cross 20 million in first 30 months.
The subscribers have appreciated the packages and reduced rates for 3G users but said quality of services also needs to be considered.

http://nation.com.pk/business/23-Dec-2014/competitive-3g-packages-t...

[Riaz Haq]

Warid Telecom has officially announced launch of its 4G LTE (Long Term Evolution) services in Pakistan. The service will be initially available in six cities including Islamabad, Rawalpindi, Karachi, Lahore, Gujranwala and Faisalabad from Friday (today).

The company will offer a free LTE trial to its customers for seven days following the commercial launch and charge Rs5 per MB for data transactions afterwards.

The commercial launch of Warid’s LTE services came following a month of unlimited 4G LTE trials to its postpaid customers in the abovementioned six cities.

Company’s customers have been notified regarding the conclusion of unlimited trials and tariffs for data transaction through SMS, emails as well as automated calls.

“Over the years, Warid Telecom has developed a reputation for breaking new ground in Pakistan’s mobile landscape. We have always remained at the forefront of innovation: our decision to transform directly from 2G to LTE technology is a reflection of this spirit of innovation,” Chief Executive Officer (CEO) Warid Telecom, Mr. Muneer Farooqui, said while speaking on the launch.

Ericsson, a leading hardware provider for telecommunication services, is Warid Telecom’s partner for rollout of LTE network in Pakistan.

Farooqui said Warid has earmarked US 500 million dollars for the development of infrastructure to roll out 4G LTE in the country in next five years.

“Moving forward to 2015 and beyond, we will continue to invest in premium technologies and network infrastructure to ensure service excellence to our patrons who have always held us close to their hearts,” he said.

Warid was the only mobile company which had not participated in government’s 34/4G auction, held in April, and has directly switched from 2G services to 4G-LTE technology with its available spectrum that it had purchased in 2004.

Zong, the only company to have bagged the license of 4G spectrum in the auction, had launched its 4G LTE services in seven major cities in September.

- See more at: http://www.pakistantribune.com.pk/28870/warid-telecom-launches-4g-l...

[Riaz Haq]

From Saudi Gazette:

OVER five IT, Telecom and Technology firms from Pakistan, who participated in the TECH Seminar organized by Pakistan Embassy’s Commercial Section in Riyadh recently, have reached agreements with several Saudi companies to cooperate in related fields in the Kingdom.

Global Control, MAS Holdings, Communication Concepts and Corporate Solutions are negotiating details of their engagements with Pakistan’s 360 Technologies, 360 Logics, Kualitatem, and 313 Evolution.

Hani Almuhammad, CEO of Global Control (a Saudi-owned company) called the seminar a superb event which had many “very good presentations” and said he was impressed with what Pakistani companies were offering as value-added services. Global Control has reached an agreement with Kualitatem and Corporate Solutions.

“I look forward to attending more such events under TECH Pakistan program,” added Dr. Abdulaziz Al-Majed, CEO of MAS Holdings whose IT subsidiary MAS-MBTS (a Saudi-owned company) also sponsored the event.

More than 100 professionals attended the technology seminar and listened to what the companies were offering in terms of knowledge-base and technology transfer.

Dr. Majed, a Saudi professional, said he was happy to connect with several participating Pakistani IT firms and looked forward to doing business with them in the Kingdom. His company is in talks with 313 Evolution Co.

Pakistan Ambassador Manzoor ul Haq said, he hoped the seminar will act as a stepping stone to arrange more fairs and seminars in the technology sector. “Definitely it will provide an opportunity to entrepreneurs from Pakistan and Saudi Arabia to explore business opportunities as well. There is great scope for collaboration in various areas pertaining to services like IT, Telecom, Engineering and Health between Saudi Arabia and Pakistan,” the ambassador added.

“The Technology Seminar has succeeded in generating serious business interests and technology transfer opportunities as it managed to showcase products and services the Pakistani-owned companies were offering for a higher value-added price structure in IT/Telecom, e-governance and construction,” said Waseem Bajwa, the commercial consul at the embassy who initiated the seminar titled TECH Pakistan.

“T stands for Technology, E for education and engineering, C for communication and construction, and H for Health and Human Resources, while Pakistan meant services Pakistan has to offer in Saudi Arabia for these sectors,” Bajwa explained when asked what TECH Pakistan stood for.

Irshad Salim, whose New Jersey-based firm Irshad Salim Associates collaborated with Riyadh-based Corporate Solutions to assist the embassy initiative, said, “The technology seminar has generated meaningful and actionable business-to-business (B2B) engagements between the participants on the very first day, and we are happy to have played a small role in it.”

The CEO of Corporate Solutions Zeeshan Shahzad said, “As a member of the local IT/Telecom and GIS/Mapping industry, we have identified key areas of business interests with several Pakistan companies desiring to do business with us.”

The organizers said they now plan similar events on construction and education also.

http://www.saudigazette.com.sa/index.cfm?method=home.regcon&con...

[Riaz Haq]

Pakistan is the sixth largest country worldwide and has one of the highest (B2C) growth rates among the economies in South Asia. Though Internet penetration of just above 10% lags behind many of its neighbors, mobile Internet and especially 3G/4G connections are spreading fast. E-Commerce is at the early stages of development in Pakistan, and connectivity share there falls significantly behind other countries of its income group in Asia-Pacific. However, as the number of Internet users grows, with young consumers accounting for over 60% of web connected individuals, they are beginning to grasp the benefits of online shopping.

Surveys have shown that Internet users in Pakistan shop online because it gives them more variety in products and saves time. The majority of online shoppers make their purchases on local sites, while close to a third buy from both local and international sites. Despite global E-Commerce merchants Amazon and eBay not offering direct delivery to Pakistan, these websites are among the most popular in the country as consumers turn to third-party operators to organize import of their orders from these merchants. China-based Alibaba, on the contrary, takes direct advantage of the growing market in Pakistan offering swift and often free delivery to this country from its websites Alibaba.com and Aliexpress.com. Prominent local E-Commerce players include online retailers and marketplace operators such as HSN (Homeshopping.pk), Symbios.pk, Daraz.pk, Shophive.com and Kaymu.pk.

One of the biggest challenges that these merchants have to work with in Pakistan is the underdeveloped online payment infrastructure. Cash remains the most used and the most offered payment method in both online and offline retail, as card penetration is low and electronic payment processing has sparse local offering. Moreover, online retailers have to win over the trust of consumers, as a third of them did not shop online because they found information about products displayed to be insufficient. With these obstacles overcome, Pakistan could become one of the future hotspots of emerging B2C E-Commerce.

http://www.businesswire.com/news/home/20150203005544/en/Research-Ma...

[Riaz Haq]

Why #technology entrepreneurs are setting up shop in #Karachi #Pakistan #SiliconValley 

http://to.pbs.org/1EtWSwR via @NewsHour


The country (Pakistan) is also home to one of the world’s largest populations of young people.

Special correspondent Fred de Sam Lazaro met with some innovators in the capital, Karachi, who are hoping that generation will fuel Pakistan’s rise to becoming a high-tech powerhouse.

The story is part of our Agents for Change series.

FRED DE SAM LAZARO: It’s one of Asia’s fastest growing tech start-up companies. This team of Web site developers is on a project for Coca-Cola.

UMAIR AZIZ, Tech Entrepreneur: So, this is going to go up in 27, 28 different markets.

FRED DE SAM LAZARO: Umair Aziz, the founder, can name-drop other blue-chip American clients.

UMAIR AZIZ: Sears. We have worked with Amazon in the past. We have worked with Microsoft. We worked with Intel.

FRED DE SAM LAZARO: One secret to his success — actually, it’s pretty much a secret, period — is where this company, called Creative Chaos, is located, Karachi, the teeming and indeed chaotic commercial capital of Pakistan, a country beset by terrorist violence and political instability, a city that ranks as one of the world’s most violent.

UMAIR AZIZ: We don’t want to be out of the race by advertising that we’re based in Pakistan. There’s a very negative stigma associated with the country.

FRED DE SAM LAZARO: So, prospective customers see nothing on Creative Chaos’ Web site about its location. Technically, it’s headquartered in San Francisco. They soon learn that almost all workers are in Pakistan. Once hired, Aziz says, his company has never been removed from a job.

UMAIR AZIZ: People in the U.S. really don’t know that there’s a world outside of Talibans, and there’s a world outside of, you know, everything that they hear on CNN and BBC all the time.

FRED DE SAM LAZARO: It’s in that world that Aziz carved out a profitable niche. Back in 2000, he was fresh out of college in Ohio and working for a Boston tech firm when he decided to return to his native Karachi.

UMAIR AZIZ: I knew there were hundreds and thousands of people like me who could join, you know, my organization. It was a risk, but I was betting on the talent. I was betting on people just like me.

FRED DE SAM LAZARO: His is one of a handful of thriving Pakistani start-ups, designing Web sites, databases and applications for global clients. The tech sector is seeing a healthy 35 percent annual growth and Aziz expects his firm to grow fivefold by 2020.

In raw numbers, though, that talent pool could be a lot larger, says Jehan Ara, herself a tech entrepreneur.

JEHAN ARA, President, The Nest: The country is about 200 million people, and 70 percent of them below the age of 30. So it’s a very young population. So, the potential is amazing. How to channel that potential is something that we are all sort of thinking about.

FRED DE SAM LAZARO: Ara is leading an effort to scout that talent, trying to create what the technology business calls an ecosystem to foster creativity and new business.

This is The Nest. It’s one of a handful of so-called incubators that have been built in Pakistan. Here, 13 teams of techies chosen from more than a hundred applicants are working on what a panel of judges decided were promising business ideas.

JEHAN ARA: We are looking for young people who’ve developed a minimum viable product themselves while at home or at university and we know that they are committed to doing this. And then, once they get here, then we can help them further.

FRED DE SAM LAZARO: For Pakistan, this is a rare work environment, and not just because it’s offered for free to these would-be tech titans. They have reliable power, broadband and hardware many could not afford on their own, plus a connection to global resources from donors to the facility, including Google and Samsung