Growth Story of Online Retailing & E-Commerce in India
Competitive &industry Analysis of Amazon in Pakistan
1. Project Part II: Amazon.com
Submitted to:
Sir, Muntazir Haider
Submitted by:
Muhammad Khan (1425115)
Farrukh Mustafa (1425109)
Date of Submission
28/10/2015
2. 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.
3. 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
involvedin e-commerce trade, as compared to the rest of population. Moreover, those falling betweenthe 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 lessinclined
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 femalesratio for e-
commerce in Pakistan, we can observe that out of the total e-commerce activities carried out, 70% comprised of
males, with females involvedin only 30% of the total. However, if we compare the average e-commerce conversion
rate1
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 followedby Pakistan’s largest
metropolitan city Karachi at 20%. Islamabad (the capital city of Pakistan) and Rawalpindi, which are collectivelyless
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.
4. More than 50% of the e-commerce transactions2
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%, shutterbugs4
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 & Mobile 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 and last but not the
least, Apparel & Accessories.
Consumer Electronics / Mobile phones
Auto Vehicles/ Motor Vehicles
Auto Vehicles/ Motor Vehiclesby Brand/Suzuki
Computers / Accessories & components
Computers / Laptops / Notebooks
Apparel & Accessories
Employment
Education / Post-Secondary Education
Education / Tests preparation & Tutoring
Financial Services
5. 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 visitors5 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 sessionduration for the new visitors6
is 3 minutes, whereas for the returning visitors, it is 5
minutes. There are several reasons for high session time7
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. Visitorshave limitedoptions available for online shopping stores.
2. 5 Major Competitors
Symbois.pk
Kaymu.pk
Daraz.pk
Home Shopping.pk
6. Huge Varietyof Products
Abilitytocaterlarge orders
Up-to-date technologyandsoftware
Highbrand name recognition
Corporate culture
Highinventory turnover
Large warehouse
Highinventoryrisk - seasonality
Lack of CustomerDatabase
Unfamiliaritywithculture
UnestablishedDeliveryNetwork
Small numberof vendors
Emergingonline shoppingtrends
Rapidincrease ininternetusers
Customerspendingincreased
Broadbandaccess technology
Online salespredictedtoincrease
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
Feasible modes of Payment
Offers Ubiquity to customers
Diverse branded products in clothing category
Familiarity with the Culture
PartnershipwithDHLto make international Presence
Low ProfitMargins
Operatesinfewercategories
PoorAftersalesservices
Small numberof vendors
HighDeliverytime (5-7)
Through their own Delivery system
Emergingonline shoppingtrends
Rapidincrease ininternetusers
Customerspendingincreased
Online salespredictedtoincrease
Broadbandaccess technology
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
7. Diverse branded products in electronics category
Familiarity with the Culture
Own Delivery Network
Owns some of the Outlets
Low ProfitMargins
Operatesinfewercategories
(ElectronicsandFashion)
Small Ware houses
Emergingonline shoppingtrends
Rapidincrease ininternetusers
Customerspendingincreased
Online salespredictedtoincrease
Broadbandaccess technology
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
Had firste-commerce portal inPakistan (2009)
Offersfastdeliveryall overthe country(24-48
hours) (TCS,Leopard,Blue EX)
Webportal offerseasyandfastaccess
(30,000 visitsdaily)
Source productsfrom Singapore andDubai to
offerbestprices.
Small Ware houses
No Physical outlets
SlightlyHigherPrices
Low MarketingBudgets
Emergingonline shoppingtrends
Rapidincrease ininternetusers
Customerspendingincreased
Online salespredictedto increase
Broadbandaccess technology
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
8. Marketplace communityfor sellers.
(Technicallythey don’t sell anything of their own rather
charge commissions to sellers who use their platform).
Huge number ofsellers on the platform
Offer Service Deals.
To use a Professional deliveryplatform is pre-requisitfor
sellers.
Mode of Payment(OnlyCOD).
Lesscontrol overqualitychecks.
Lesscontrol overPrices.
LessMarketingcampaigns
Dependencyoversellers
(To fulfill customerorders)
Emergingonline shoppingtrends
Broadbandaccess technology
Rapidincrease ininternetusers
Customerspendingincreased
Online salespredictedtoincrease
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
Exclusive Products/dealsforWomenandKids
Varietyof PaymentOptions
DifferentDeliveryPartnersfordifferenttype
of Products.
LessMarketingcampaigns
Chargesmuch higherprices
Poorafter salesservices/responses
(Warrantyclaims).
Poorsalesteams’communicationskills
Emergingonline shoppingtrends
Broadbandaccess technology
Rapidincrease ininternetusers
Customerspendingincreased
Online salespredictedtoincrease
Law and ordersituation
Poorinfrastructure
Low ProtectionagainstCyberCrimes
Aggressive competition
Highinterestrate
10. 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(OwnedbyRocketInternet)
$25 millionInvestmenttobe done inPakistan
Technical Competencies:
BetterTechnology(RelativelybetterThanotheronline shoppingstoresinPakistan)
Operational Competencies:
Majorly depending on the suppliers to cater the demands of customers.
11. 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.
12. 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)
13. 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)
14. 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.
