Adam Dawood is the founding partner of DYL Ventures, a Pakistan-centric venture capital and consultancy firm. One of the first employees of Daraz.pk and its product manager for over six months, Adam has now returned to the family business, DYL Motorcycles, and is looking to the future in both the motorcycle and e-commerce industry. You can find him on Twitter as @adamdawood.
The internet industry in Pakistan is currently at an extremely exciting point, and the outlook for local entrepreneurs and venture capitalists is strong in the mid to long run. Being the sixth largest country in the world in terms of population, Pakistan has an ever-expanding internet base which currently stands at 22 million users, with eight million now on Facebook.
With such a wide array of currently undeveloped markets to compete in, the need for online stores will only increase over the course of time. When one further considers the high cost of establishing a traditional brick-and-mortar store, one realizes the advantages online entrepreneurs are privy to.
The Internet industry dynamics have also changed quite dramatically in recent times with 2012 being a possible turning point for rapid growth. As a result of heavy investment in the arena by three major players – the largest courier company in Pakistan, a major retail outlet, and one of the largest venture builders globally – a string of competitors have started to emerge. More on those later.
Building internet businesses has traditionally not come easily to Pakistan. Our first e-commerce venture began in 2001 with the establishment of Beliscity.pk by Abid Beli. Although initially started as an information website for mobiles and computers, it soon turned into an e-commerce store as a result of its growing popularity.
You might then expect this venture to have turned out a success story, with Beliscity ending up being the equivalent to Amazon in Pakistan. Unfortunately this was not the case. Owing to many complications and troubles, not only was Beliscity forced to changed its name to Gulf Dealz, it also fell into obscurity competing with countless other players in the online retail arena.
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Those, however, were just the early days and the environment seems much more conducive to starting e-commerce ventures now. 2012, I believe, will go on record as a landmark year for internet businesses in the nation. The year saw the launch of three very different and important companies taking off with their own e-commerce portals:
- TCS Connect is the online portal of TCS Couriers, Pakistan’s most reliable and wide-reaching logistics company. In May 2012, TCS launched its online shopping portal, TCS Connect, which has products like computers, mobile phones, home and kitchen appliances, and even automobile accessories.
- Labels eStore is the online store for Pakistan’s largest high-end fashion outlets. With its product lines covering the biggest fashion designers in Pakistan, it targets high-end consumers in the local market and the Pakistani diaspora across the world.
- Daraz.pk represents the fashion vertical of the global venture developers, Rocket Internet. The company did not enter into our local online market arena at the behest of Pakistani entrepreneurs who sought funding, but rather as a ‘top-down’ decision by Oliver Samwer to capture the developing Pakistani market in the long-term.
The establishment and subsequent success of these and other businesses have led to a greater focus on e-commerce sites. Whether they be other clothing brands expanding their businesses online, logistics companies either starting online stores themselves or providing tools and consultancy for brick-and-mortar retail owners to start a digital side to their existing businesses, or young entrepreneurs themselves wanting to get into this nascent business – whatever the case, online stores are here to stay in Pakistan and will only attain a larger customer base going forward.
The success of Rocket Internet’s Daraz has also made other venture capital firms take notice and start making initial contact with local players in the industry to fund entrepreneurs.
Future outlook, untapped space
With this hive of activity, the future for Pakistan’s e-commerce and internet industry has a positive outlook. Local entrepreneurs should seize this opportunity to capitalise on the open market space. The diagram below illustrates the vast amount of untouched market space, ready and waiting to be capitalized on. Being a strong first-mover will undoubtedly be an advantage for entrepreneurs and investors alike:
Disclosure: As mentioned above, Adam was one of the first employees of Daraz.pk and its former product manager for over six months. Please see our ethics statement for further information
(Editing by Steven Millward and Sara Sultan)