Project Part II: Amazon.

com

Submitted to:
Sir, Muntazir Haider

Submitted by:
Muhammad Khan (1425115)
Farrukh Mustafa (1425109)

Date of Submission
28/10/2015
 Amazon.com
Online shopping trends in Pakistan

The fact that the new online marketplace is expanding and consolidating itself is reflected in the growth of
numerous C2C (consumer-to-consumer) and B2C (business-to-consumer) startups, focusing on online
marketing and selling and offering a wide range of products - fashion-wear, footwear, casual clothing, jeweler,
electronics, computers, handsets, books, gifts, toys, and what not - to be sold and bought online.

The major catalyst of this changing trend are mostly foreign investors, who see enormous potential for the
online retail business to grow in a country with a large population of 180 million people and a burgeoning urban
middle class and a massive youth bulge.

“The investments made by the global firms show their confidence in the future of e-commerce in this country,”
argues Ahmed Jahangir, managing director of kaymu.pk, one of the fast growing online marketplaces in
Pakistan, in an interview with Dawn.

As popularity for E-commerce nurtured in Pakistan and a number of online shopping websites popped up,
Pakistan started experimenting with other models of payments as well, which provided the convenience for job.
People are perpetually short of time and want to devote their focus on compelling activities rather than having
to do mundane tasks like doing groceries, spending time at the mall shopping for items. Especially when they
have the option of online shopping, if you are a working woman living in Pakistan, you would understand that
managing both the house as well as the office drains out all your energy. It is for this reason online shopping is
picking up in countries like Pakistan. Now you can leave the hassle of tangible purchase and carriage of
shopping to the seller. With a simple laptop, cell phone and a Wi-Fi you have the world in your hand

There are several factors that have impacted growth of e-commerce industry in Pakistan; some f them are,
availability of fast-speed internet to a limited segment of population, power shortages, lack of public trust on
portals conducting e-commerce and awareness about the online marketplace, payment solutions, and delivery
logistics infrastructure. Since most people do not have access to credit or debit cards or do not want to use
plastic money for shopping only owing to security concerns, majority of e-commerce companies like kaymu.pk
have adopted the ‘cash on delivery’ model.
 Demographics of Online shoppers:

2.1 Age Groups

Through the research it can be observed that the younger population - between 18-34 years - is most actively
involved in e-commerce trade, as compared to the rest of population. Moreover, those falling between the age
brackets of 25-34 years account for the highest number of users, with the 18-24 brackets falling at second place.
One of the most significant reasons for this observation is the fact that people above the age of 35 are less inclined
towards technology and its uses, whereas youth between 18-34 years are at forefront of the technological
revolution and are more open towards online shopping.

Percentage of User by Age

2.2 Gender

If we look at the overall e-commerce activity in terms of gender and compare the males vs females ratio for e -
commerce in Pakistan, we can observe that out of the total e -commerce activities carried out, 70% comprised of
males, with females involved in only 30% of the total. However, if we compare the average e -commerce conversion
rate 1 between the two genders, we will be amazed to figure out that it was nearly similar.

Male

Female

E-commerce Conversion Rate: The percentage of website visitors that actually buy online. For example, if hundred
visitors landed on a website and only two of them purchased the product, the e -Commerce conversion rate would
be 2%.

2.3 Geographic Trends

Lahore being the capital city of the province of Punjab and the cultural heart of Pakistan, prevails the list of yearly
e-commerce activity in the country with 21% of total traffic, and is closely followed by Pakistan’s largest
metropolitan city Karachi at 20%. Islamabad (the capital city of Pakistan) and Rawalpindi, which are collectively less
populated as compared to Lahore and Karachi, stands at third place with 15% of the country’s total e -commerce
activity each year. Other cities with the highest inclination towards e-commerce following Lahore, Karachi and
Islamabad include Gujranwala, Sialkot, Multan, Faisalabad, Peshawar and Rawalpindi respectively.
More than 50% of the e-commerce transactions 2 are carried out in three major areas of Pakistan.

Lahore
Karachi
Islamabad & Rawalpindi

3. User Interests

3.1 Affinity

By classifying modern day e-commerce trends in Pakistan with respect to users’ interests, Kaymu observed that
technophiles3 lead the list with 8% of the total e-commerce activity in the country, followed by movie lovers at 7%,
music lovers at 6%, shutterbugs 4 at 5%, TV lovers at 5%, entertainment & celebrity news junkies at 4%, avid readers
with 4%, sports fans at 3%, shopaholics / shoppers at 3% and political junkies with 3% share of the total e -
commerce activity across Pakistan.

3.2 In-Market Segment

E-commerce trends across Pakistan pertaining to in-market segment have remained muchinclined towards
electronics and mobile phones lately. The facts show that online customers in Pakistan are mostly interested in
searching about and purchasing Consumer Electronics & Mobil e Phones, followed by Employment Queries, Online
Education & Counseling, Sale / Purchase & Information Gathering for Autos & Vehicles, Computers & Accessories,
Financial Services, Laptops & Notebooks, Motor Vehicles by Brand, Test Preparation & Tutoring an d last but not the
least, Apparel & Accessories.

Consumer Electronics / Mobile phones

Auto Vehicles / Motor Vehicles
Auto Vehicles / Motor Vehicles by Brand/Suzuki
Computers / Accessories & components
Computers / Laptops / Notebooks
Apparel & Accessories
Employment
Education / Post-Secondary Education
Education / Tests preparation & Tutoring

Financial Services
4. User Behavior
4.1 New vs Return Traffic

While conducting analysis of Pakistan’s e-commerce trends with respect to user behavior, it has been concluded
that the conversion rate of returning visitors 5 has remained double than the first time visitors. To be more specific:
it is 98.5% more than that of the new customers.

Moreover, the average session duration for the new visitors 6 is 3 minutes, whereas for the returning visitors, it is 5
minutes. There are several reasons for high session time 7 and better conversion rate for return visitors. A few
important reasons are:

Out of the total e-commerce visits in a year, 56% are estimated to be new visitors, whereas the remaining 44% are
returning visitors. One of the reasons for considerably good percentage of returning visitors is the low number of e -
commerce competitors in Pakistan. Visitors have limited options available for online shopping stores .

2. 5 Major Competitors

Symbois.pk

Kaymu.pk

Daraz.pk

Home Shopping.pk
 Huge Variety of Products  High inventory risk - seasonality
 Ability to cater large orders  Lack of Customer Database
 Up-to-date technology and software  Unfamiliarity with culture
 High brand name recognition  Unestablished Delivery Network
 Corporate culture  Small number of vendors
 High inventory turnover
 Large warehouse

 Emerging online shopping trends  Law and order situation

 Rapid increase in internet users  Poor infrastructure
 Customer spending increased  Low Protection against Cyber Crimes
 Broadband access technology  Aggressive competition
 Online sales predicted to increase  High interest rate

 Low Profit Margins

 Feasible modes of Payment  Operates in fewer categories
 Offers Ubiquity to customers  Poor After sales services
 Diverse branded products in clothing category  Small number of vendors
 Familiarity with the Culture  High Delivery time (5-7)
 Partnership with DHL to make international Presence Through their own Delivery system

 Emerging online shopping trends  Law and order situation

 Rapid increase in internet users  Poor infrastructure
 Customer spending increased  Low Protection against Cyber Crimes
 Online sales predicted to increase  Aggressive competition
 Broadband access technology  High interest rate
  Low Profit Margins
 Diverse branded products in electronics category  Operates in fewer categories
 Familiarity with the Culture (Electronics and Fashion)
 Own Delivery Network  Small Ware houses
 Owns some of the Outlets

 Emerging online shopping trends  Law and order situation

 Rapid increase in internet users  Poor infrastructure
 Customer spending increased  Low Protection against Cyber Crimes
 Online sales predicted to increase  Aggressive competition
 Broadband access technology  High interest rate

 Had first e-commerce portal in Pakistan (2009)  Small Ware houses

 Offers fast delivery all over the country (24-48  No Physical outlets
hours) (TCS, Leopard, Blue EX)  Slightly Higher Prices
 Web portal offers easy and fast access  Low Marketing Budgets
(30,000 visits daily)
 Source products from Singapore and Dubai to
offer best prices.

 Emerging online shopping trends  Law and order situation

 Rapid increase in internet users  Poor infrastructure
 Customer spending increased  Low Protection against Cyber Crimes
 Online sales predicted to increase  Aggressive competition
 Broadband access technology  High interest rate
 Marketplace community for sellers.
(Technically they don’t sell anything of their own rather  Mode of Payment (Only COD) .
charge commissions to sellers who use their platform).
 Huge number of sellers on the platform  Less control over quality checks.
 Offer Service Deals.  Less control over Prices.
 To use a Professional delivery platform is pre-requisit for  Less Marketing campaigns
sellers.
 Dependency over sellers
(To fulfill customer orders)

 Emerging online shopping trends  Law and order situation

 Broadband access technology  Poor infrastructure
 Rapid increase in internet users  Low Protection against Cyber Crimes
 Customer spending increased  Aggressive competition
 Online sales predicted to increase  High interest rate


 Less Marketing campaigns
 Exclusive Products/deals for Women and Kids  Charges much higher prices
 Variety of Payment Options  Poor after sales services/responses
 Different Delivery Partners for different type (Warranty claims).
of Products.  Poor sales teams’ communication skills

 Law and order situation

 Emerging online shopping trends
 Poor infrastructure
 Broadband access technology
 Low Protection against Cyber Crimes
 Rapid increase in internet users
 Aggressive competition
 Customer spending increased
 High interest rate
 Online sales predicted to increase
 Competitive Mapping

High Price & low Quality High Price & High Quality

Price
Daraz.pk (branded)
ishopping.pk (Fashion items)
HomeShopping.pk+Symbios.pk (Electronics)

Amazon.com (Electronics)

ishopping.pk (Electronics)
Kaymu.pk (Footwear)

Quality Quality
Kaymu.pk (clothing)
Amazon.com (Sale items)

Kaymu.pk (Accessories)

Low Price & Low Quality Low Price & High Quality
Price
Financial Competencies:

High Availability of funds

 (US$ 88.988 billion revenue (2014)

Technical Competencies:

Advanced technology
 Up-to-date technology

Operational Competencies:

High operational competency level Due to

 Ability to cater to large orders

 Advanced technology
 Experienced work force

Financial Competencies:

 Good Financial support (Owned by Rocket Internet)

 $25 million Investment to be done in Pakistan

Technical Competencies:

 Better Technology (Relatively better Than other online shopping stores in Pakistan)

Operational Competencies:

 Majorly depending on the suppliers to cater the demands of customers.

Financial Competencies:

 Good financial position (Low dependency on Suppliers)

Technical Competencies:

 Better Technology (ERP System)

Operational Competencies:

 Experienced work force

 Fast delivery System (Personally experienced)
 Own warehouse and outlet

Financial Competencies:

 Operates on Margins from suppliers (Works as an intermediary)

Technical Competencies:

 Use Basic Technology

Operational Competencies:

 Heavily depend over sellers to fulfill orders.

 Financial Competencies:

Financially strong (As they were the first to have e-commerce portal in Pakistan)

 They procure products from Dubai and Singapore in order to offer best prices.

Technical Competencies:

 Moderate level of technology

Operational Competencies:

 Ability to cater large orders. (As they have some of their own warehouses)
 Ability to lower prices (Supplier relations/Bulk Buying and Economies of scale).

Mainly focuses on selling branded Products.

Price Beating Policy

Let suppliers access to their web portal and assist them to place their products on their site.

First mover advantage (2009)

 Marketing Strategies of Amazon.com

Product: Selling products in the category of books, clothing, footwear, jewelry, accessories of Men, Women
and Kids, tools, technological gadgets and much more.

Price: It offers products at low prices. (As they claim “everyday low prices” and follow cost leadership strategy)

Place: It brings products form different manufacturer to their warehouse and then to their online web portal
and then delivers directly at the doorstep of customers.

Promotion: It promotes through advertisements on various websites, Social Platforms, via providing
discounts/offers and through weekend, annual and seasonal sales.
 References:

http://www.pakistantoday.com.pk/2013/07/01/business/onilne-shopping-the-new-trend-in-pakistan/

http://www.cnbc.com/2015/10/27/amazoncom-dominance-of-retail-industry-hits-high.html

http://www.ishopping.pk/

http://www.symbios.pk/

http://www.amazon.com/

http://tns.thenews.com.pk/shop-online-from-home/#.VjDynLXnHIU

http://www.slideshare.net/aftabssm/amazon-ppt

http://www.slideshare.net/search/slideshow?searchfrom=header&q=Daraz.pk

https://www.daraz.pk/?wt_s1=13707722663_56673391703&wt_sk1=Exact_13707722663_daraz+pk&gclid=
Cj0KEQjw5MGxBRDiuZm2icXX2-
sBEiQA619bq1G0E8SJeOLKYKVfk_SlhpVYmvO2EL6xC7hj4hA_MnYaAjGd8P8HAQ

https://www.google.com.pk/?gws_rd=cr,ssl&ei=HPMwVtmxHcaPsgHGlKboDA#q=Kaymu.pk

http://www.dailymail.co.uk/wires/afp/article-3006186/No-Amazon-No-problem-Pakistans-e-commerce-
pioneers.html

http://tribune.com.pk/story/924038/e-commerce-growth-proving-to-be-a-steady-breadwinner/