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:

https://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]

#Pakistan #Post introduces ‘same-day #delivery’ service for 25 cities. Pakistan Post is going towards #ecommerce, rebranding, mobile money orders and enhanced #logistics facilities through its network of 13,000 post offices across the country. #package http://www.samaa.tv/news/2018/11/pakistan-post-introduces-same-day-...

In an attempt to revamp the Pakistan Post, the government has launched ‘same-day delivery’ service for 25 cities.

Pakistan Post is going towards e-commerce, rebranding, mobile money orders and enhanced logistics facilities through its network of 13,000 post offices across the country, Minister of State for Postal Services Murad Saeed said Tuesday.

According to Radio Pakistan, Murad Saeed said that the Pakistan post has a market of around Rs80 billion.

This will help the department not only overcome its current losses, but also make it an earning institution, the minister said.

Earlier, Saeed launched the Electronic Money Order service for the quick transfer of up to Rs50,000.

Initially, the Electronic Money Order service is being started at 93 General Post Offices across Pakistan and it will be extended to other post offices later on.

[Riaz Haq]

#India’s #ecommerce crackdown upends big foreign players.
#Amazon, #Flipkart have till end of Jan to comply with new restrictions, that sharply restrict the use of their hefty balance sheets to boost sales on their websites. #FDI https://www.ft.com/content/6dd8188a-14c2-11e9-a581-4ff78404524e via @financialtimes

Saifuddin Bhanpurawala is one of dozens of shopkeepers on a dusty Mumbai back street that bustles with customers buying everything from tobacco to perfume. But Mr Bhanpurawala’s mobile phone shop is going through hard times, selling as few as two handsets in a bad week. He says the reason is obvious: the huge discounts available online at Amazon and Walmart-owned Flipkart, the two biggest players in India’s fast-growing ecommerce sector. “If we sell something at Rs5,000 [$70], they might sell it at Rs2,500 — we don’t understand how it’s possible,” said Mr Bhanpurawala, 28. He argued that the Indian government’s tolerance of such practices has demonstrated its lack of concern for small businesses: “The rich are getting richer and the poor are getting poorer.” With a general election just four months away, prime minister Narendra Modi is moving to address such complaints. Amazon and Flipkart have been given until the end of this month to comply with new restrictions, announced in late December, that sharply restrict the use of their hefty balance sheets to boost sales on their virtual marketplaces.  But while the move is intended to strengthen the government’s credentials among India’s millions of small retailers, it has sparked alarm for two of the country’s biggest outside investors. Walmart’s $16bn buyout of Flipkart last year was the biggest foreign direct investment in Indian history, while Amazon has committed $5bn in capital to its Indian operation. “A sudden change in rules is not helpful,” said Mukesh Aghi, president of the US-India Strategic Partnership Forum, which works to build economic ties between the countries. “It sends a message to groups that the environment is not transparent.” ‘Behave like a marketplace’ When India opened its economy to foreign capital in the 1990s, it was careful to maintain protection for small retailers. Foreign investment was allowed in single-brand but not multi-brand retail — allowing clothing labels, for example, to open stores but keeping out the foreign supermarket chains that were feared by many shopkeepers. As ecommerce took off, New Delhi updated these rules for the internet age. Foreign-backed companies would be allowed to run virtual “marketplaces” — platforms enabling independent sellers to connect with customers. But they were barred from selling goods themselves, stopping them from functioning as online supermarkets. The vague wording of the rules, however, meant that Amazon and Flipkart — backed with billions in capital from foreign investors led by US fund Tiger Global — quickly found ways to use their balance sheets to turbo-charge growth, outraging peers in the industry. “We were flabbergasted all the while at the blatant violations of the FDI policy,” said Sanjay Sethi, chief executive of ShopClues, one of the largest rivals to the dominant duo. “We started doubting ourselves — are we not interpreting these rules correctly?” Partnering a fund controlled by Narayana Murthy, co-founder of IT services group Infosys, Amazon formed a joint venture that in turn owned Cloudtail India, a new company that would sell products ranging from electronics to breakfast cereal. Cloudtail is by far the biggest seller on Amazon’s Indian marketplace, with revenue of $1bn in the last financial year ending March 2018. Flipkart pursued a different tack. Instead of forming directly controlled sellers, it supplied many of them through a huge wholesale distributor, named Flipkart India. The distributor’s revenue has far outstripped that of the online marketplace entity, while incurring heavy losses. In the last financial year, Flipkart India made a net loss of $293m on sales of $3bn. That dwarfed the revenue of Flipkart Internet, the marketplace business, which booked sales of $398m, mostly on commissions charged to sellers. From 2016, Amazon also dramatically increased the scale of its wholesale operation. In the last financial year, that business had revenue of $1.7bn, up from $458,000 two years before. “They would strike a large deal with a brand and buy in bulk,” claimed one rival ecommerce executive, alleging that the wholesaler would then supply the goods at low prices to certain “controlled sellers”. The sellers would then offer the products on the marketplace at steep discounts from the prices available in offline shops. “This was compliant with the letter of the law, but not the spirit,” the person said. But the new rules, announced in December, strike hard at such practices. They stipulate that no seller on foreign-funded online marketplaces can source more than 25 per cent of its inventory from a wholesaler linked to the marketplace — banning sellers set up to shuttle goods between the two. They also state that no entity may sell on these marketplaces if any of its equity is owned by the marketplace or by any of the latter’s “group companies”. “The government is saying: ‘You’re a marketplace, so behave like a marketplace,’” said Rajiv Chugh, a partner at EY. Crackdown to benefit big Indian retailers Amazon said it had “always operated in compliance with the laws of the land” and was “evaluating the new guidelines to engage as necessary with the government to gain clarity so that we remain true to our commitment”. Flipkart said it hoped “to be able to work with the government to promote fair, pro-growth policies that will continue to develop this nascent sector”, adding that it would “ensure our compliance with all Indian laws”. But privately, the companies are lobbying the government to allow them more time to comply with the new rules, arguing the January 31 deadline will cause huge disruption to their businesses. “There are a lot of sellers who buy from our wholesale entity — it will be hard for them to diversify the supply base so quickly,” said a person with knowledge of Flipkart’s position. “Such a massive impact so suddenly will leave capacity under-utilised.” Amazon-backed Cloudtail, meanwhile, will be faced with “huge losses” from hundreds of millions of dollars’ worth of inventory that it will be unable to sell by January 31, warned Sanchit Vir Gogia, founder of retail research firm Greyhound Knowledge Group. Some analysts have also questioned the motives behind the government’s new rules. Arvind Singhal at Technopak, a consultancy, noted that the crackdown on foreign-backed ecommerce companies would benefit big Indian retail groups that are not subject to the new rules.  Recommended The Big Read India: the creation of a mobile phone juggernaut By far the biggest of these is Reliance Industries, controlled by Mukesh Ambani, Asia’s richest person. While most of its revenue in recent years has come from oil products, Reliance also includes the country’s biggest retail chain, and is now eyeing large-scale growth in ecommerce, after its $30bn mobile internet venture Jio signed up more than 250m users. Jio was among the local groups that took part in government consultations on ecommerce policy last year, to which Amazon and Flipkart were not invited. By imposing restrictions on foreign-backed groups but not on locally owned conglomerates, New Delhi has signalled “that international companies will not have a level playing field”, said Mr Aghi at USISPF. But the measures will prove in the interest of Indian consumers, said Kunal Bahl, co-founder of Snapdeal, which bills itself as an even-handed online marketplace for small vendors. While shoppers may lose out on short-term discounting, he argued, they will enjoy a more competitive market in the long run. “If they were providing great pricing while generating a profit, it would be a different conversation,” he said. “But everyone knows that these companies are haemorrhaging cash while giving out all these promotions, and at some point they'll want to pull this back. They’re not charitable organisations.”

[Riaz Haq]

#Pakistan registers 38 #exporters with #Amazon. #Covid19 #pandemic has increased the importance of #ecommerce manifold, making it an extremely vital sector of the #economy. State Bank of Pakistan now has regulatory framework for online cross-border trade. https://tribune.com.pk/story/2245651/2-pakistan-registers-sellers-a...

Pakistan is in the process of registering the country’s goods sellers with US e-commerce giant Amazon and has sent a list of 38 exporters for registration.

The initial list of 38 exporters comprises surgical and sports goods, and home textile sectors and the list will be expanded to other sectors in the near future, after successful trial of the shortlisted companies, announced Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood while chairing second meeting of the National e-Commerce Council on Thursday.

A video message of the World Trade Organisation (WTO) director general, who appreciated Pakistan’s e-commerce policy as a step in the right direction, was also shared with meeting participants. The adviser spoke about the progress made in the recent past on the e-commerce policy, since its approval on October 1, 2019. He appreciated coordinated efforts of public and private sectors for effective implementation of the policy.
Dawood emphasised that the trend of e-commerce had accelerated in recent years with the development and easy accessibility of internet. He added that due to the Covid-19 pandemic, the importance of e-commerce had increased manifold, making it an extremely vital sector of the economy.
He underscored the importance of directing resources towards digital adoption and connecting small and medium enterprises (SMEs) with e-platforms across the globe while exploring new market access opportunities for them.

Sharing progress, a State Bank of Pakistan (SBP) official said the regulatory framework for the facilitation of cross-border B2C (e-commerce) had been developed, which would be adopted after integration with the e-commerce module to be developed by the Federal Board of Revenue (FBR) in the Web-based One Customs (WeBOC) system. Punjab and Khyber-Pakhtunkhwa revenue authorities apprised meeting participants of the incentives being announced for the digital and e-commerce sector in provincial budgets to support it during these challenging circumstances.

Representatives of the Consumer Protection Councils of Punjab and Lahore and of the Consumer Rights Commission of Pakistan informed meeting participants that, in line with the e-commerce policy, the federal and provincial consumer laws were being amended to include e-commerce and the disputes arising from the sector.

They added that webinars were being planned to educate the academia and train judicial officers in consumer protection. Meanwhile, the Securities and Exchange Commission of Pakistan (SECP) revealed that several new initiatives were being planned to promote e-commerce, including a separate sector classification for e-commerce.

So far, 152 businesses have registered on its portal, which has reduced the time required for company registration to four hours.

Speaking on the occasion, the commerce secretary said the Ministry of Commerce was continuously engaged with Pakistan’s foreign trade missions for promoting trade and exploring new markets for exporters. In this regard, a new development is the registration of Pakistani sellers with Amazon.

[Riaz Haq]

Amazon adds Pakistan to the seller list, allowing Pakistani businessmen to sell globally

https://ohionewstime.com/amazon-adds-pakistan-to-the-seller-list-al...


E-commerce giant Amazon has added Pakistan to the list of sellers and qualified Pakistani entrepreneurs to sell on the platform, the Commerce Department announced Friday. The ministry said it will give Pakistani manufacturers access to a global e-commerce platform on Amazon, opening up a new chapter in the supply chain that Pakistani manufacturers can sell directly to their customers. “This marks the achievement of the national e-commerce policy milestone, Amazon This listing will enable manufacturers to respond to customer needs, design new products, deliver high quality at competitive prices, and access new market segments.

“It created a great opportunity for Pakistani entrepreneurs,” said Eric Broussard, vice president of Amazon International Seller Services, in a message by connecting to and forming part of a global e-commerce network. I did. As of today, Pakistani entrepreneurs have announced that they are eligible to sell on Amazon. We want to work with Pakistan’s dynamic business community, including small and medium-sized sellers, to help connect with customers around the world. Commerce Advisor Investment Abdul Razak Dawood said the Commerce Department will continue discussions with Amazon’s focus groups to further guide Pakistan’s business community to take full advantage of this opportunity.

He said that to get the most out of it, you need to do a lot of hard work in training, quality assurance, logistics improvements, payment systems, customer relationship management, and more. Pakistan remains off Amazon’s seller list despite its presence in neighboring India, and Pakistani retailers who want to sell their products on the market will have to register themselves from other countries. I will. After being added to the list, Pakistani merchants will be able to easily sell their products on the platform. However, it is reportedly time consuming to take full advantage of it. The Commerce Department initially shared the names of only 38 exporters with Amazon for registration.

[Riaz Haq]

Chinese company SpeedaF rolls out nationwide logistics services in Pakistan

https://www.app.com.pk/global/chinese-company-rolls-out-nationwide-...


The Chinese company which has rolled out nationwide logistics services across Pakistan was likely to cover about half of its population in February, Sun Chao, head of Speedaf Pakistan said on Friday.


“Moreover, we also provide China-Pakistan cross-border logistics services and warehouse and delivery services in Pakistan,” he said in an interview with China Economic Net (CEN).


As a leading logistics services provider plowing emerging markets, Speedaf initiated its business layout in Pakistan in September 2021.


Up to now, express delivery covering all the four provinces of Pakistan has become available.
“When a Pakistani buyer puts an order of a certain Chinese product online, which can be bought in Pakistani Rupees, what he needs to do next is only to wait for the parcel to be delivered to his doorstep. On the other hand, we collect cargo at Chinese ports, transport them with our own customs solutions, sort them out in Pakistan, and carry each parcel to the customer’s home”, Sun Chao explained.


To support logistic demand from cross-border trade and local online consumption, high-standard warehouses with a total area of over 7000 square meters have been set up in Islamabad, Karachi, Lahore, and Multan. This figure is still expected to rise.


“The warehouse management system allows receipt of cargo by container and delivery by piece, providing convenient options for e-commerce businesses and offline wholesale clients’, said Sun Chao.


Following the domestic delivery model in China, Speedaf Pakistan offers both economical and standard express delivery options in Pakistan. For parcels to be delivered within a city, customers can choose to receive on the very day or on the next day; for inter-city delivery within a province, packages can arrive on the next morning or later on the next day; for inter-province demand, there are overnight delivery and Third Day Delivery.


Speedaf has established close cooperation with major e-commerce platforms in Pakistan with a special focus on electronic communication equipment, intelligent security products, and 3C products (computer, communication, and consumer digital products). In addition, customized services are also available such as the return, examination, and replacement of goods, less-than-truck-load, and cash on delivery.


“Pakistan is a populous country with over 200 million people, 3.94 percent increase of GDP even amid the ravaging pandemic, booming e-commerce industry, favorable polices for investment, and sound road network linking major cities which provides convenience for logistic transport. Underpinning our business is the deep attachment between the two peoples and the two economies, Sun said.


“With an expected 200 service stations in over 50 cities in Pakistan, we will provide at least 2000 employment opportunities for local people. They will be trained to become professional talents.”


The e-commerce sector in Pakistan is progressing in leaps and bounds. The Special Assistant to the Prime Minister (SAPM) on e-commerce Aon Abbas Buppi has said that Pakistan is aiming to increase e-commerce trade volume up to $9 billion by June Building on the e-commerce boom, we will expand coverage and shorten the delivery time to bring further convenience to Pakistani people, said Sun Chao.