Handset industry – Next battlefield between Online and Conventional Trade Channel?
The time was somewhere in 2015 when Daraz.pk started to establish itself as Pakistan’s premier e-commerce platform. Led by Muneeb Mayar, they were acting as traditional e-commerce platform running on the inventory based business model with the key highlight of COD payment.
Though many people have tried prior to daraz arrival, no one used the COD USP the way Daraz did prior to that period which ultimately helped Daraz.pk becoming the leading e-commerce torchbearer in Pakistan but also helped Pakistan’s still novice e-commerce industry to establish as a reliable counterpart to the traditional retail channel. And by the end of 2015, when Daraz.pk smartly used Black Friday as a marketing ploy to establish not just Daraz ascend to the top of the online pyramid but also established Black Friday as a big retail occasion for Pakistani consumers.
The above preamble is not to rave about the obvious success of Daraz, rather it is to highlight the sudden emergence of e-commerce success stories which paved the way for more serious e-commerce players such as Yavo.com, mygerry’s.com, goto.com, and ishopping.com. All these e-commerce sites have now assembled a formidable alternate retail channel which wasn’t available to our consumers prior to 2014/15.
With the relative success and continued growth of online sales, the product category which has been at the forefront of giving growth to these online stores have been Mobile phones. Apart from Apparels, the next highest sales volume at these e-commerce platforms have come from Mobile phones and associated products. In short, it seems that Pakistani loves to buy their phones from online stores.
Pakistan mobile phone industry has seen long growth phases with double digit growth in last 10 years. As of today, around 1.6 million mobile phones are being sold in Pakistan every month and out of that 45% are smart phones and 55% are feature phones. So taking this enormous volume in consideration the e-commerce platform contribution looks like peanuts roughly less than 4% volume contribution against the more conventional sales channel including traditional trade channel comprising on retailer and whole seller along with modern retail and enterprises sales channel.
So it means for all the hype surrounding online sales as a big threat to the hegemony of traditional trade, e-commerce platforms still have to go along way before even emulating something like have happened in India’s handset industry where online sales now constitute 30% of total sales coming from all channels.