Alibaba and Amazon Entry to Accelerate E-Commerce in Pakistan?
By Riaz Haq
CA
Media reports suggest global e-commerce behemoth Amazon.com could purchase substantial stake in Pakistan's e-commerce site Clicky.pk. This comes on the heels of a Bloomberg story that quoted anonymous sources indicating Chinese e-commerce giant Alibaba is in serious negotiations to acquire Daraz.pk.
Online sales in Pakistan's $152 billion retail market are doubling every year, according to Adam Dawood of Yayvo online portal. He expects them to pass $1 billion in the current fiscal year (2017-18), two years earlier than the previous forecast.
Amazon's Presence in Pakistan
Amazon already owns about 33% stake in Clicky.pk through its acquisition in 2017 of Dubai-based online retailer Souq. Souq acquired this stake in the Pakistani company in late 2016.
In March this year, Bloomberg cited sources saying that Alibaba and Daraz.pk are negotiating a price for the acquisition. It said that the "deliberations are an early state and no decisions have been made".
E-Commerce Market Growth
Online sales in Pakistan's $152 billion retail market are growing much faster than the brick-and-mortar retail sales. Adam Dawood of Yayvo online portal estimates that e-tail sales are doubling every year. He expects them to pass $1 billion in the current fiscal year (2017-18), two years earlier than the previous forecast.
E-commerce in Pakistan is being enabled by increasingbroadband penetration and new online payment options. Ant Financial, an Alibaba subsidiary, has just announced the purchase of 45% stake in Pakistan-based Telenor Microfinance Bank.
Payment Options
Mobile wallets, also called m-wallets, are smartphone applications linked to bank accounts that allow users to make payments for transactions such as retail purchases. According to recent State Bank statistics on the branchless banking (BB) sector, mobile wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% seen in Jul-Sep 2017 over previous quarter. Share of active m-wallets has also seen significant growth from a low of 35% in June 2015 to 45% in September 2017.
Summary:Online sales in Pakistan's $152 billion retail market are doubling every year, according to Adam Dawood of Yayvo online portal. The country's retail market is the fastest growing in the world, according to Euromonitor. Expanding middle class, particularly millennials with rising disposable incomes, is demanding branded and packaged consumer goods ranging from personal and baby care items to food and beverage products. Strong demand for fast moving consumer goods is drawing large new investments of hundreds of millions of dollars. Rapid growth in sales of consumer products and services is driving other sectors, including retail, e-commerce, paper and packaging, advertising, media, sports and entertainment. Potential downsides of soaring consumption include increased amount of solid waste and decline in domestic savings and investment rates.
(RiazHaq is a Silicon Valley based Pakistani-American analyst and writer. He blogs at www.riazhaq.com)
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