It is fascinating to see the local companies are growing so swiftly in the market. Daraz.pk is rapidly becoming the Amazon of Pakistan. This now, household name, has evolved from times of unsure customers to convenience seekers and has now become the new way of life of the shoppers. From grocery to cosmetics; apparel and electronics – Daraz is the answer to all needs in one platform. The annual sale of Daraz 11.11 has transcended into Pakistan as one of its kind and the most awaited digital event boasting price cuts which are incomparable to its much smaller competitors. In a country of food lovers, there came Food Panda – a category name itself now. From housing, the leading high-end restaurants to home-chefs Food Panda has not only answered the gaping hole of food delivery but has also enabled aspiring entrepreneurs sitting at homes to kick-start their ventures. These examples of e-commerce giants in Pakistan have changed the terrain of online shopping forever – competition, market economics, and dynamics have now a new shade, dyed in the colors of the web, weaved by technology. This enticing treasure of opportunity calls out to savvy entrepreneurs to be quick and smart in capturing the many niches of consumers waiting to be tapped.
Implementation of traditional commerce over the internet or a part of the business that focuses on the exchange of products or services including all relevant activities that enable us to shop online is called E-commerce. The whole process is automated and has various platforms to conduct these commercial transactions seamlessly. These trans-actions are not time-bound and can be conducted during any time of the day. Currently, there are four types of E-commerce businesses are in play in the market including business to business (B2B), business to consumer (B2C), Consumer to consumer (C2C), and consumer to business (C2B). Brick-and-mortar stores or commonly known as Mom-and-Pop stores are becoming history and the main reason for this is the up-gradation of the technology and the improvements in the e-Commerce industry. Secure transaction methods are available in the market that enables customers to make transactions freely without any hassle or fear.
Opportunity in the e-Commerce Industry
It was the 11th of August, 1994 when the first online transaction happened over the internet. A man sold a DVD to his friend from his website NetMarket. Today, eCommerce has grown to $ 4 trillion across the globe and it is still growing in leaps and bounds.
Forbes is attributing a 23% year-on-year growth. This rapid growth is based on many reasons however, a few critical ones are; the technological advancements in terms of mobile phone devices, web 2.0 is creating multiple channel purchasing, exchange of goods, convenience, customization, and a great range of offerings. Time-saving can be a double edge sword. But, nothing is perfect and there are certain drawbacks including, not having a physical store experience and there is always a good chance to fall victim to online fraudulent activity. So, it is up to the choice of the customer to save time and money or the physical store experience with limited range.
Today, it is almost impossible to deceive an informed customer because with the advent of Web 2.0, consumers are technologically aware and well informed. They can access information from various platforms, sources, and reviews of the products and services to make an informed online purchase decision. Comparing different attributes of the product or service i.e. pricing, quality or reviews has never been this easy.
After the breakout of COVID-19 in January 2020, apart from the health concerns, companies, across the world faced immense losses, people lost their jobs, inventories and supplies got wasted and the sad sorry tale goes on. And this all came to pass within 6 devastating months as the modern world of today came to its knees. However, like a phoenix – E-commerce emerged as the new technological hero – the effects of pandemics including social distancing and staying at home directly impacted the E-commerce industry to flourish. Consumers are encouraged to do more online shopping rather than going to retail outlets. This brings a lot of revenue to the online companies and so as the profits.
Many online companies hit the jackpot during this coronavirus pandemic all across the globe. Similarly, many retail brands are trying to make an impact through e-commerce since, thousands of consumers are not physically going to the retail outlets – the bread and butter of many businesses.
In the first 6 months of 2020, online sales of the U.S. E-commerce industry grew at the rate of 12.7% – amounting to $60 billion. There is no single industry that was untouched by the pandemic. Online groceries have seen a major spike in the first 6 months across the world though it is hindering the shopping experience. However, convenience has increased even more by cashless delivery. Online purchase of clothing is increased by 76.7% in the U.S. and similar trends have been seen in other parts of the world. Mobile ads spending has also increased by 5% in the U.S. totaling a staggering amount of $91 billion.
Pakistani market also received the benefits of improved technology and targeted the e-commerce industry. Many businesses have flourished due to the low financial setup costs and exposure to the bigger markets online. The Ecommerce mantra is that you do not have to have the big physical retail outlets to start the business. On the darker side of the coin, however, this was advantageous for businesses to grow but online frauds and scams increased exponentially as well – especially, in the clothing industry. Consumer complaints exploded after receiving the lowest quality products shipped by the sellers and today, in Pakistan a bigger chunk of the people still do not want to shop online. In 2018, Nielsen Pakistan, a subsidiary of Nielsen Global published a report “connected commerce” in which it was revealed that 82% of the urban population of social-economic class A and upper-middle-class which is comprised of almost 4 % of the total population of Pakistan have made an online purchase, up by 6% from 2017. This is a very low growth as compared to the various other parts of the world and the catch is 60-80% of the deliveries were paid by cash because there is no customer protection for 90% of online transactions.
As per statista.com, Pakistan’s unemployment rate is 4.45% slightly increased from last year’s 4.08% – amounting to 6.65 million jobless people (dawn.com). It is an alarming situation for the 9th largest labor force in the world. On the other hand E-commerce market in Pakistan has reached $1 billion and it is projected that it will grow by 13.1% annually. This is great for Pakistan due to the fact that it is helping more and more online businesses to grow in the ecosystem and creating a huge number of opportunities for jobless people more than any other industry at the moment. Many small and medium-sized entrepreneurs are coming to the online markets with their innovative products and services to sell. Pakistan is a young country with 60% of its population below the age of 21 and these young people need clear guidance and vision to score the model of E-commerce and build their own carriers.
Ministry of Commerce and Textile submitted a draft “E-commerce policy framework of Pakistan” in August 2019. In this report, the prime focus was given to develop an (i) regulatory and facilitation framework, (ii) Financial inclusion and digitization through payment infrastructure, (iii) empowerment of youth and SMEs through E-commerce, (iv) taxation issues, (v) consumer protection in the digital environment, (vi) ICT Infrastructure and Telecom Services in Pakistan, (vii) issues relating to logistics and E-commerce (vii) data ownership/sovereignty and data localization. Now we wait and see what this brings for us. Similarly, the Karachi chamber of commerce’s research and development department has also submitted a report “A plausible solution to Pakistan’s economic woes” stating that if there is only one sector that can be used to change the fortune of Pakistan – and that is E-commerce. There are 70 million broadband subscribers and 69 million 3g/4g subscript-ions present in Pakistan yet E-commerce is not having the right place and the main reason is the lack of financial inclusion and literacy required to conduct the online transactions.
In the PTA’s annual report of 2017, Pakistan’s e-commerce market will hit $1 billion by the end of 2020. People will shop online more and Internet would be the future. However, it happened but not organically but was forced upon us due to the outbreak of COVID-19. In the coming months more and more brands will go online even the conventional businesses will have to shift digitally if they want to stay in the business. The online food industry got benefited most in times of pandemics. Apps such as Food Panda saw a big rise in the orders received because people were locked out and they had nothing but eat and watch Ertugrul! Similarly, buying groceries online becomes a norm and is quickly cashed by many service providers. They quickly made online marts to deliver the contactless delivery of grocery items.
Pakistan has immense potential in terms of talents and human resources. People just need the right direction and vision to start their journey of success. In a recent interview of Mr. Saqib Azhar, the CEO of Enablers said, ‘’Pakistan should be connected to E-commerce more as there are numerous online opportunities waiting for the people to grab immediately’’. In Pakistan, the only hurdle for online businesses is the unavailability of e payment methods likes PayPal and due to this 60% of the deliveries were on the Cash delivery method.
He explained the process of selling products on Amazon in very simpler terminologies. He said that “There are two types of people in Pakistan, one has money and wants to do business and the other has nothing but want to learn skills. So, we at Enablers want to connect them and establish good businesses with a greater workforce”. Currently, the success rate of Enablers is 60-70% meaning people who got trained from here are earning really good money. Many of them are earning more than $20K per month.
The ideology of the CEO Mr. Saqib Azhar is to reach out to the universities of Pakistan and develop incubation centers and change the vision of the students in terms of entrepreneurship. He believes that students should be encouraged to work independently and earn money by creating their own businesses rather than finding jobs. This can happen with skilled-based degrees.
In a response to a question on current circumstances related to COVID-19, he responded, “83% of the companies have cut their costs, fired their people, and shut down their stores. However, there is a sector still hiring thousands of people across the world and that is e-commerce because the overall trend has been changed after the pandemic. Customers are going more towards online shopping and that will increase the chances for people with lesser investments to establish their business online and earn for their families and contribute more towards the economy of Pakistan”. Lastly, he described the importance of mentorship. He believes that mentorship is very important in the learning process because wherever one gets stuck, the mentor will guide him or her to manage the problem and find the solution.
It is a great time to enter in the Pakistani E-commerce industry not only to sell locally but internationally. We have great mentors today in the country like Saqib Azhar from Enablers and Sunny Ali from Extreme Commerce who are willing to guide the students to engage and learn about online businesses. Students who want to work on eBay/Amazon can easily learn from them and start their own businesses. This will not only bring the dollars home but will also create a lot of employment opportunities. We have access to great stocks like sports in Sialkot, culinary items from Gujranwala and Wazirabad, clothing of every sort from Faisalabad, furniture, and whatnot. We can sell this product online globally with proper knowledge and skills. We know the future is E-commerce and we have witnessed the number of employments created by food panda and daraz.pk in terms of storage and human capital. It is a known fact that one amazon warehouse creates 20,000 jobs in the area along with 5-10% appreciation in the land value of that specific area. So, are we ready for Ebay and Amazon to land here?
How To Take Advantage
The process of transforming into an online-centric business can seem daunting for many brick and mortar retailers, but with the right approach, the outcome could bring about a well-oiled eCommerce machine in the marketplace.
No matter if you’re an e-commerce startup or an established small or medium-sized business, you’ll find plenty of helpful information to get a tasty boost in your profit margins. After interviewing the experts, it has been observed that five factors are very common behind the huge success of the renowned eCommerce stores in Pakistan. Here are five strategies to keep in mind when analyzing the market demand and shipping aspects of your business to ensure that you capture additional revenue as the e-commerce market continues to grow.
Product Hunting
Coming up with a great idea for a product to sell online will occasionally strike when you least expect it. Many times though, it’s something you need to be proactively on the lookout for. Before you begin searching the depths of the internet for business ideas and the ends of the earth for products and niche ideas, it’s always best to start with the ideas you already have. Identify the places where you can find profitable product ideas, use tools, ask for experts but always look to add new products to your store. Don’t be afraid to look at smaller product categories and niches, it makes up for that by way of fewer competitors and a more targeted audience.
Darren DeMatas suggests considering the critical steps while finding products to sell:
1) Brainstorm ideas
2) Research ideas in Google Trends
3) Find market data to see if the industry sales is growing
4) Find low competition niches within growing industries
5) Collect data such as Amazon Sales, Search Volume, keyword difficulty, etc.
6) Compare my ideas using actual data
One of the critical points is to scope out your competitors, suppliers, and manufacturers before spending any money. Look at their prices and inventory levels from day to day to see if they are successful. Always consider new markets, new features, and new ways to use the products.
Plan Your Big Buying Days
A lot of online sellers take this strategy for granted. According to Shopify research, an average store makes 40% more sales on occasions than the normal days. Study shows that even the smaller eCommerce websites see a spike in sales on days like Black Friday, Super Saturday, etc. How much you can benefit from these days depends on how prepared you are. Do you have the inventory and support system? Promote your offers in advance, build momentum, get the word out and excite your customers with discounts and special day offers.
Consumers and businesses alike are always looking for the next holiday sale opportunity. So offering holiday sales is a surefire way to boost sales and increase your revenue. When you’re looking for national holidays to include on your marketing calendar, you’ve likely already thought about the big ones, like Independence Day, Valentine’s Day, and Eid. But don’t forget about the small ones because they can really help small businesses stand out. Make a calendar at the start of the year. If your account is for all Saturdays and national holidays and different other occasions then you should have around 100 days for the sales out of 365 days.
A great way to understand the effects of a promotion is to use sales lift as a metric. This measure determines the difference between promotional and baseline sales. So you can calculate at the end of the year what worked and whatnot.
The holidays are coming up fast. Considering most small businesses bring in 20 to 40% of their annual revenue during the last two months of the year, there’s no time to waste.
Communication Strategy
During the research, it has been observed that a lot of online sellers only do paid advertising for getting leads and their pages are dead with no content at all. This action might give you some sales in the start but it will decline with time. For getting massive leads you have to think 360 degrees. Along with paid advertising, post organic shareable content on your social media pages. Don’t rely only on Facebook. Try SEO, google ad words, Instagram boost posts etc. Most importantly, identify which platform your target consumers are using. Don’t advertise your products on the wrong platform. For example, selling fashion accessories on LinkedIn is not a good decision. It’s very simple. Just research your competitors and see which platforms they are using to sell the stuff.
Another important factor in driving sales is your landing page. Just a heading and a picture will not do the job. Enrich your product pages with content relevant content. Your product page is effectively a sales page. The chances of making a sale are much higher if you have an engaging, credible, and convincing product page. According to WP e-Commerce, online stores lose 3% of buyers on average because of confusing and poor product pages. But that’s not the only drawback. The biggest source of eCommerce traffic is Google search. Google simply hates poor-quality product pages.
Don’t just sell. Engage and educate your customers. Create content that adds value. It does not only give you shares but also makes your brand credible in the marketplace. For example, a founder reported that his fruits and vegetable sales went skyrocketed when he created informational blogs on fruits and vegetables. He designed a blog campaign on each fruit and vegetable highlighting its benefits, ingredients, when to eat and what it does to your body. A social media strategy is a summary of everything you plan to do and hope to achieve on social media. The more specific your plan is, the more effective it will be.
Store Automation
Stop working hard and start working smart. Manually doing everything will consume your physical and intellectual energy. You can not grow without a proper system. Automate every step of your entire sales funnel. For example, if you are running an online store and you get 8-10 orders every day. The first thing you do is to add their details to your courier’s portal. It may take 20-25 minutes every day. Why not ask your courier to integrate with your website so you can eliminate this step and save 25 minutes every day? Think more specifically and come up with the blueprint of your online store and mark every step which can be automated.
Use software or web applications to run the daily operations including, social media, email marketing, sales, bookings, deliveries, returns, tracking, inventory management, accounting, payrolls, and so on.. Use this time to learn new skills, make connections, identify new products, finding market gaps, raising funds and scaling up.
Build Your Brand Through Customer Service
According to the Microsoft State of Global Service Report, 61% of consumers now view customer service as “very important”. And by this year, customer service is predicted to take over price and product as the main brand differentiator. So it’s not only the product or the digital marketing strategy which can make or break you. The upcoming factor is customer support. Especially in the countries like Pakistan, the consumer is always looking for security. That’s the reason most of the big online stores are offering a money-back guarantee or launched their refund policy. Clothing and shoe brands introduced the “First try then buy” policy so customers can feel comfortable before making any buying decision.
An excellent customer experience will help build trust and encourage repeat purchases. However, a negative customer experience can result in a loss of sales, a damaged reputation, and negative online reviews. Globally, 60% of consumers said they stopped doing business with a brand due to a poor customer experience. This figure increases to 68% for those aged 18-34. It’s estimated that it costs five times more to attract new customers than retain them so keeping existing customers happy is crucial if you want to be successful long-term.
If you are a new online seller and want to grow nationally and internationally then don’t try to reinvent the wheel. Simply use those techniques which are being practiced by the market leaders.
Need our print magazine subscription? Subscribe here.
