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There are many estimates floating around as to how big the ecommerce market is in Pakistan. We must first
divide up the ecommerce sector into various smaller divisions. This allows us to understand the dynamics of
each sector in a more comprehensive manner in order to estimate sales volumes.
Customer Acquisition
Massive Campaigns such as Black Friday not only help in increasing the number of transactions through
ecommerce stores, they also are a very valuable source of new customer acquisitions.
The biggest such event outside of Black Friday was GOSF the Great Online Shopping Festival which was
organised by Google and the Jang Media Group.
The event saw a dozen online stores participate in an event which led to a staggering 1 Million unique users
visiting the GOSF site. Over 25,000 orders were placed in a span of 3 days with sales estimated at around Rs.
133 million.
As we move into 2017, more and more large customer acquisition events are planned as they act as large
customer awareness programs which is crucial giving even the largest of ecommerce companies do not have the
budgets necessary to sustain long TVC campaigns like they do in India.
An Unbanked Populace
We are living in a country where the majority of the population is unbanked. Those customers who have a bank
account cannot even use their debit/credit cards online as they are by default restricted from being used for
online shopping.
Unmapped Areas
Another challenge is posed by the lack of identifiable locations. Customers living outside of the major cities of
the country, at many times, fail to have specific addresses that identify the actual place of delivery. This can
make life extremely difficult for logistic companies and many orders experience long delays due to this issue.
Customers get understandably annoyed and many choose to abandon their orders.
Fulfillment Failures
The biggest challenge facing our industry is that of fulfillment failures. Failed deliveries occur as a result of
customer cancellations and even refusals to accept order by customer at their own doorsteps, but these are more
or less commonplace occurrences in the ecommerce business.
Where Pakistans ecommerce industry takes a bigger hit than it would in other places is in terms of ecommerce
stores not being able to fulfill their products 100% of the time due to unavailability. Even when customer
cancellations and refusal at doorsteps are taken into account, the number of orders that are cancelled due to the
vendor listing inaccurate stock levels or information, is far too high.
Regardless of the reasons regarding whether the vendor, the marketplace, the warehouse or the manufacturer is
to blame, and regardless of whether the solutions is technological, manual or has to do with planning, this
problem needs to be rectified quickly.
Since for many online customers ecommerce is still a relatively new retail channel. Delivery failures will only
make customers more reluctant to place their orders online a second time. This loss of trust by customers will
hurt our entire industry and not just the vendor who fails to meet his customers demand. This problem will lead
to reduced repurchase rates and cause increasingly bad word of mouth for the whole sector.
If this industry wants to make a dent in the retail market this issue needs to be addressed as growth will not be
achieved by simply hosting massive sales events every few months. We need to ensure that the customer who
purchases a Rs 200 charging cable and expects it to be delivered in 2 days gets it in 2 days rather than waiting 5
days only find out that the order has been canceled.
When customers shop online they do so for the convenience that online shopping offers. If they find that instead
of convenience they experience aggravation then the whole purpose of online shopping is defeated and its future
in a country like ours will not flourish.
Vendors without vendors the ecommerce industry would not have any products to display. Vendors are
crucial to marketplaces in particular where any delay in receiving the product can ruin the customer experience.
Logistics: Once the product is procured having the right delivery partner is crucial. Factors such as service
quality and cost are both equally important as well as providing live tracking data and support.
Payments: Whether the payments is handled by the logistics players through COD or by Credit Card
merchants how easy and accessible the payment method is crucial for both the customer and the ecommerce
player. The ecommerce player needs to ensure he receives his payment on time otherwise can suffer greatly
from lack of working capital.
Technology: The backbone of the ecommerce site, technology whether its just the web store, the seller centre,
the warehouse management system or the customer support system. Without the right technology no
ecommerce company can succeed. Whether the technology is custom developed or bought is irrelevant,
however its requirement and proper usage is crucial to succeed.
Trust: Only when all of these elements are working properly will the customer end up getting a good
experience and therefore start to build trust in the overall sector. This will result in higher repurchase rates and
therefore retention which itself will then drive further acquisitions of new customers.
Conclusion
We have over the past 2 years seen massive strides in ecommerce. With the launch of 3G there was an
immediate boom in the industry, now as 3 of the 4 mobile networks have 4G/LTE we might be in for another
round of growth especially if we start getting cheaper 4G handsets.
Traditionally retail industries have also started to aggressively explore entry into ecommerce, either directly or
through marketplaces. The mobile networks are innovating rapidly and entering into the FinTech space. The
FinTech space is also seeing new entrants directly and the banks have started to consider digitisation. The
logistics players are trying to innovate more with two of the incumbents getting funding last year.
Overall I think we are on the cusp of a very exciting phase in ecommerce within Pakistan. There are still
significant challenges ahead, however we are also in the lucky position of not having to set this up from scratch.
The US ecommerce market currently sits at around 8-9% of total retail sales, while China is around 18-20%.
Pakistans ecommerce isnt even close to 0.1% of total retail sales as yet but considering the overall size of our
market we should be able to achieve better results soon.
As Benedict Evans of A16Z stated Everything bad that the internet did to media companies is going to happen
to retailers, if it hasnt already. We are in a market that is growing and it is upto us to ensure we look after all
customers who do come online to shop so that we create an online shopper for a lifetime.
Adam Dawood heads Yayvo and has over 5 years of experience in the eCommerce industry. He is an MBA
from Tsinghua University and has a Finance degree from Durham University, Prior to joining Yayvo, Adam
Dawood was the Managing Director of Kaymu in Pakistan.