Not too long ago Eid spending spree was only observed at brick-and-mortar stores in Pakistan, but this year it too became visible in the internet world.
Not too long ago Eid spending spree was only observed at brick-and-mortar stores in Pakistan, but this year it too became visible in the internet world.
The growing familiarity of customers with and their trust on online shopping has well reflected in the double-digit growth of the country’s promising ecommerce market.
“All the leading internet retailers recorded 100 percent surge in sale during the Eid season concluded last week over the previous year,” said Ahmed Khan, who is about to make his ecommerce venture live.
Having parted his way as managing director from the top-grossing online shopping company Kaymu, Khan’s motivation for his new ecommerce startup Cheetay was rooted in the upward internet spending trend in the country.
“Internet retail spending in Eid season – including Ramazan – was five to 10 million dollars,” said Ali Aziz, chief executive officer at shopistan.pk, which is a leading ecommerce solutions provider. The sale accounted for 10 percent of $50 to $100 million Pakistan’s ecommerce market.
Industry observers said this figure is underestimated as there is no alliance/trade body compiling consolidated data.
“You see people think that ecommerce is when there is buying from Tohfay, Daraz or Foodpanda and don’t count e-shopping on Facebook and social media,” said Adam Dawood, who heads Pakistan’s operations of Rocket Internet’s venture Kaymu. “Then do we really tally online buying of air tickets and payment for utility bills?”
Dawood believed that if all these transactions are accounted for, “the number will be much higher.”
Kaymu’s platform is used by more than 15,000 sellers who also use Fbook as a selling outlet. The platform generates an average 3,000 orders/day.
Most of the internet sellers Money Matters talked to were excited over a rise in online buying during Eid season.
Fashion cloths, footwear, and jewelry were the most sought-after products by internet shoppers. Usually, online customers in Pakistan search for and purchase consumer electronics, apparels, footwear, watches and beauty products, showed a Kaymu’s survey.
If there are more than 29 million internet and Facebook users in Pakistan, not all of them buy online. Mostly, the internet retailers bet on brand-conscious locals and foreign customers who pay in US dollars.
“The major online shopping is for popular brands, such as Khadi and Gul Ahmed,” said Aziz, who is handling digital marketing and logistics of at least 30 internet sellers.
He said Shopistan earns 40 percent of its revenue from international customers. It generated an average 250 orders/day in Ramazan with weighted size of Rs3,000 to Rs4,000.
Markhor, well-known online footwear shop incubated at Plan9, makes a fashion enthusiast to pay out $225 (at least Rs22,500) for its Mark Loafer. “Markhor is not an average shoe company and our customers are not the average buyers,” Tajammal Sheikh, a lead at Markhor said. “People who value world-class craftsmanship and modern design without compromising on comfort buy from Markhor.”
The company recorded half of its online orders generated from foreign countries during the Eid festival.
“With the introduction of 3G/4G, locals are enjoying the convenience of searching and buying meals online than using the traditional channels,” said Nauman Sikandar, chief executive officer at EatOye, an e-food delivery service, which did aggressive below-the-line advertising in the past. “They (customers) have mobile apps to cross match offers and prices.”
EatOye saw 20 to 25 percent dip in sales during Ramazan. Eid holidays (five days) made up for the fall as it received additional 3,000 orders during the period.
Sikandar said lack of understating puts a damper on online shopping. “But, growth outlook is bright,” he added.
Shahzad Qureshi, chief resource officer at Tohfay said customers are realising that they could get what they purchased online. His shopping outlet enjoyed 50 percent growth through selling Eid gifts, like cakes, mithai, choorian, and flowers.
Payment mechanism is also one of the obstacles that hinder the real progress of ecommerce in Pakistan. Post-buying model, cash on delivery, drives 95 percent of online goods shopping in the country. That may not be an issue if order cancellation chances are eliminated.
“Right now, there is 10 to 12 percent rejection by customers at their doorsteps,” Dawood said. “Once you have good online payment solutions you can give shoppers incentives to give up post-payment.”
He said the incentives will come from the minimal rejections of delivery before cash.
Internet payment technologies are to make life easy, said Sheikh Abdul Basit of mjcollections, selling jewelries online.
Aziz agreed with the importance of online payment solutions in perking up ecommerce. Along with that, he called for the development of ecommerce ecology wherein each stakeholder lends support to and takes assistance from other.
“Presently, those having credit/debit cards have to call their banks before making an online transaction. And, this permission is for 24 hours and against Rs150,” he said. “Except Standard Chartered Bank, all other banks have this cumbersome procedure, pushing up price of end-product.” Responsibility also lies on the shoulder of internet retailers who back out of a commitment of on-time delivery. Qureshi said bad experiences also shoo shoppers away.
Khan found three challenges to ecommerce: on-time delivery, tracking and payment, and wants to improve logistics through Cheetay.
Some internet retailers capitalised on modern technologies to minimise rejection and maximise satisfaction related to shipping. For example, Shopistan has integrated virtual showcases with 100 suppliers, allowing real-time inventory management. Simply put, as the stocks end at a warehouse they are automatically removed from the online shop.
Dawood said the success factors for ecommerce are customer services, logistics, assortments, and payment solutions.
“While the central bank is pushing for online payment gateways, it is time the industry work to raise the bar,” he concluded.
The writer is a staff member
