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
Percentage are more
of User by open towards online shopping.
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
Male between the two genders, we will be amazed to figure out that it was nearly similar.
1

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 48% of the total e-commerce activity in the country, followed by movie lovers at
music lovers at 6%, shutterbugs at 5%, TV lovers at 5%, entertainment & celebrity news junkies at 4%, avid
7%,
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
Consumer Electronics / Mobile phones
least, Apparel &
Auto Vehicles / Motor Vehicles
Accessories.
Auto Vehicles / Motor Vehicles by
Brand/Suzuki Computers / Accessories &
components Computers / Laptops /
Notebooks
Apparel & Accessories
Employment
Education / Post-Secondary Education
Financial
Education / Tests preparation & Tutoring
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
it is 98.5% more than that of the new
specific:
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
Customer spending increased infrastructure
Low Protection against Cyber Crimes
Broadband access technology Aggressive
Online sales predicted to increase competition
High interest rate

Low Profit Margins

Feasible modes of Payment Operates in fewer
Offers Ubiquity to customers categories
Poor After sales services
Diverse branded products in clothing category Small number of
Familiarity with the Culture vendors
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
Customer spending increased infrastructure
Low Protection against Cyber Crimes
Online sales predicted to increase Aggressive
Broadband access technology competition
High interest rate
 Low Profit Margins
Diverse branded products in electronics category Operates in fewer
Familiarity with the Culture categories
(Electronics and Fashion)
Own Delivery Network Small Ware
Owns some of the Outlets houses

Emerging online shopping trends Law and order situation

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

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

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

Emerging online shopping trends Law and order situation

Rapid increase in internet users Poor
Customer spending increased infrastructure
Low Protection against Cyber Crimes
Online sales predicted to increase Aggressive
Broadband access technology competition
High interest rate
Marketplace communityfor sellers.
(Technicallythey 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 deliveryplatform 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
Rapid increase in internet users infrastructure
Low Protection against Cyber Crimes
Customer spending increased Aggressive
Online sales predicted to increase competition
High interest rate

Less Marketing campaigns

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

Law and order situation

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

High Price & low Quality High Price & High Quality

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

Amazon.
Kaymu.pk (Footwear)
ishopping.pk (Electronics)
Quality Quality
Kaymu.pk (clothing)
Amazon.com e items)
(Sal
Kaymu.pk (Accessories)

Low Price & Low Quality Quality

Low Price & High
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_r d=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/