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October 14, 2018

Chinese venture pioneers cross-border retail in underserved market

Business

October 14, 2018

KARACHI: Cross-border retail bumped up Chinese Alibaba to a world’s leading ecommerce behemoth, which was an implicit impetus for two Pakistani entrepreneurs to pioneer a replica in the country where consumers cough up money on otherwise low-priced foreign products and vendors virtually lack global online presence.

EzBuy has recently been launched in Pakistan after having made inroads into Malaysia, Singapore, Indonesia and Thailand.

Starting with 4.5 million listings, the platform is a cross-border aggregator aimed at to reduce cost of buying products from foreign online retailers and fill the gap due to absence of singular payment gateway.

“But, we are also here to provide local suppliers a platform to connect with the world,” Naeem Shahab, co-founder of EzBuy Pakistan said.

Along with Shahab, Kamran Shaukat made a joint-venture with a Chinese ecommerce company EzBuy to leverage technology and warehousing to tap growth retail market.

Both, in their middle ages, have rich experience of working with Shell, McDonald’s, Wal Mart, Phillips and other internationally-acclaimed corporations of that ilk.

Shahab, who serves as the company's chief operating officer, said foreign currency regime is extremely cumbersome and painful in Pakistan “when you import”.

“Any company which would come would require smooth, easy to manage operation (and) our operation is difficult to manage that is the fundamental challenge,” he responded to the absence of foreign payment gateways like PayPal.

“If ecommerce increases, for PayPal the market will become lucrative and hence they will see the market where they have to be despite all the challenges.”

Chief Executive Officer Shaukat said for ecommerce to happen anywhere or in any country: Indonesia, India or us, you need last mile delivery, logistics, payment gateway partner and supply chain activity.

“Over the last three to four years, Pakistan has had these things. But, what is the level of their maturity is a separate question,” he added.

Shaukat said the growth headroom for ecommerce market is huge.

“Headroom is 99.5 percent. We believe it is underserved market in terms of products and services. Right now, online outlets have products that are one percent of the global market.”

Shahab estimated the retail market’s size at $168 billion, around 17 percent of one trillion dollar economy based on power purchasing parity (PPP).

He foresees the ecommerce market to reach $25 billion in the next 10 years considering its double-digit growth from the existing 0.2 percent of the PPP economy.

The central bank, in a report, underscored a need of a platform that is compatible with the transfer operations of all commercial banks and offer low-cost funds transfer.

It said a total of 571 local ecommerce merchants were accepting payments through banking channels as of end-June 2017, with cumulative annual sales worth Rs9.8 billion.

Ninety percent of online orders were still fulfilled using cash-on-delivery.

But, since the market is virgin, online retailers are coming to cash in on the opportunity.

Daraz, incubated by Berlin-based incubator Rocket Internet, is working to ramp up listings on its platform and turn to cross-border retail model after having been acquired by Alibaba.

EzBuy has already started uploading products which are not available to consumers. It has local call centres to deal with customer queries.

“Our key difference is we buy the world for you and customers have to pay in rupees. We think we can keep people happy at a fraction of cost… small things can change their lifestyles,” Shaukat said.

EzBuy landed to serve masses by providing convenient foreign products at the doorsteps of customers.

“But, we also want to change the brand image of Pakistan slowly… the positioning,” Shaukat added.

“We can serve 10 million expats abroad by providing them what they crave for from Pakistan and which are exclusive to Pakistan’s fashion designers.”

The portal’s vertical called ‘haute shop’ aims at to promote locally-made jewelries, garments, footwear and other fashion products globally. It has 40 merchants onboard who use the ecommerce platform to sell their products abroad.

Shahab said online shop involves less human capital and low input cost compared to brick-and-mortar business. “There is a certain mileage in going online as fixed cost is less.”

EzBuy’s third business-to-business vertical was developed to overcome problems currently involved in segmented and disjointed procurement.

It will feed businesses with items whose cost escalates after going through lengthy distribution channels.

“We have waves coming through and I think all the waves would be running up in a year,” Shaukat concluded.

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