The Current State of eCommerce in Pakistan (Part 1)

This article is the start of a series which will aim to provide the reader with an understanding of the e-commerce industry in Pakistan, with a special emphasis on the online retail market.

We will start by looking at the genesis of the industry, its key players and where all of them stand today. We will continue on to analyse why certain sectors seem to be doing better than others. In part 2 we will focus on the retail e-commerce sector in much more depth and look at the challenges they are facing both internally and external threats that may arise in the near future.

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History of e-commerce in Pakistan

The e-commerce market in Pakistan has existed for nearly 18 years. The first online store named Beliscity started in 2001 and even though it no longer exists today, other early stores such as Shophive (2005), Symbios (2006) and HomeShopping (2008) still do. While each of these websites continues to serve its customers even today, none of them have blossomed into homegrown successes stories as the likes of Flipkart or Coupang.

In 2012 Rocket Internet decided to enter the Pakistani market. Within the first 6 months they had already launched three ventures namely Azmalo, Daraz and FoodPanda. Azmalo shut down within its first 2 months but was later re-envisioned as a drop-shipment site that too eventually changed its name to Kaymu. Kaymu then went on to be acquired by Daraz in 2016. Daraz started as a fashion focused portal and in early 2015 transitioned to a managed marketplace focused on all categories and was subsequently acquired by AliBaba in the summer of 2018. They also subsequently launched 5 other ventures which were eventually shut down.

The oldest foreign entrant is OLX, which started its operations in 2010 and continues to operate today. Other large global startups include Careem and Uber in 2015 and 2016 respectively. In the ride-hailing category, the largest local player is Bykea, and you have regional players such as Cheetay in Lahore.

Other large Pakistani startups of note include, which started as side project of Naseeb Networks in 2006, and, Pakistan’s largest property classified player, which also started up at around the same time in 2007. The oldest however is PakWheels which started in 2003, initially, as a community forum for automobile enthusiasts in the country.

E-commerce landscape

E-commerce is an all-encompassing term incorporating multiple verticals or sectors within it. For this article we have focused on the largest of these verticals to give a sense of the depth and kind of services that are offered.

  • Retail e-commerce is defined as the online sale of physical goods and consumables. These can be subdivided into two sectors: marketplaces and brands. An online marketplace can be described as a virtual mall hosting and selling numerous different brand offerings. Online brand stores, on the other hand, only deal in products they themselves produce. Marketplace competitors include names such as Daraz, Yayvo, HumMart and others while the list for brand store competitors include Khaadi, Ego as well and various other Facebook stores. Our primary focus for this article will be on the marketplace competitors.
  • E-ticketing includes startups such as, Easytickets, and Sastatickets. It’s important to note that this sector also comprises of owned & operated, online ticketing businesses built for large transportation service providers such as PIA, Daewoo, and Pakistan Railways.
  • Ride hailing has been overtaken mostly by the global and regional giants Uber and Careem. A local player has also emerged under the guise of a startup named Bykea which takes a much more indigenous and hyper-local approach to product development and marketing, and has seen fast growth in its key motorcycle-powered ride sharing and parcel delivery business.
  • Classifieds cover a wide range of verticals from real estate, to human resources, to used cars. Sites such as OLX act as a marketplace offering all these services and more. Other sites such as Zameen, PakWheels, Rozee, on the other hand, have placed their focus on specific verticals and in doing so have successfully created a niche for themselves.
  • Food Delivery service providers include startups such as FoodPanda (an acquisition of FoodPanda and local startup, EatOye) and Eat Mubarak.

To analyse and compare the market we will be using several data points, combining both anecdotes and expert opinion. We will compare each of the verticals in terms of their fulfilment speed and accuracy, their payment methods, the share of mind they capture amongst the customer base and what the alternatives were before they arrived.

Current Scenario

The e-commerce market has changed rapidly in the last 5 years. With big funding rounds for the largest players, most have made a sizeable impact on the internet economy.

Sectors such as classifieds and ride hailing are fairly saturated right now. OLX globally has close to no competitors. A few years ago Schibsted entered Pakistan with However, OLX soon bought them out. In the property, automobile and jobs space there is Zameen, PakWheels and Rozee, all of whom have a very high brand recognition in their respective categories. Both Zameen and Pakwheels have also enjoyed the validation of outliving the Rocket Internet funded startups such as Lamudi and Carmudi.

Ticketing we believe is still an open field because even through there are three viable competitors in the market, no one has really managed to dominate the space yet. This is also due to the fact that many direct carriers have still not opened their sales to online channels. None of the ventures in the industry have received any major funding as yet also, with the largest funding announced to date being $1.5M into Sastaticket. A Rocket Internet company by the name of Jovago was also competing in the hotel booking market, but they shut down after 3 years.

Retail e-commerce is an anomaly in that it has received a lot of heavy funding especially Daraz, Kaymu and Yayvo, yet the market is not as saturated as one might expect.

So why does retail e-commerce seem to be lagging behind the other e-commerce verticals? This is even more surprising given that in more established markets, after classifieds, the retail e-commerce market always exhibits the strongest growth.

Each of these verticals have their overall customer service challenges as well. However, the general consensus seems to be that customer complaints within the retail e-commerce sector are much higher than those registered in all the other sectors.

We will explore each of the verticals one by one against their offline competitor to get a full answer.

Detailed Analysis of Sectors

To do a full comparison as to why the retail marketplaces might have not grown as rapidly, we take a look at a multitude of variables including cultural factors, fulfillment rate, and payment methods. We start by noting how each of these services was delivered before e-commerce players entered the market.

Ride hailing

The ride hailing sector is the one that has probably enjoyed the most growth within Pakistan. Uber, the global leader and Careem, the regional leader, are competing aggressively to win their share and stake of the market. Bykea, a local startup focused on motorcycle rides and deliveries, has also done well to carve out a niche for itself as the first online company to introduce motorcycle rides in the country.

Once the average fulfilment time for taxis was 45–90 mins. The startup market has successfully managed to bring this down to just a few minutes while simultaneously making the rides much cheaper on average. This is the primary cause of this tremendous growth. Mobility has always been a challenge in Pakistan, especially for the underserved and female population. By bringing air-conditioned cars at multiple price points, the market has grown tremendously over the last 3 years.

The biggest challenge still facing the ride hailing market is accessibility. Their addressable market is currently limited only to those customers who have a smartphone and an internet connection. While internet penetration is growing, there is still a lot of opportunity to solve the mobility problem of the population that remains online. .

Food Delivery

The food ordering sector has also done well, even though its growth hasn’t been as swift as that of the ride sharing sector. Online food ordering companies have had no competitors for the last three years after Foodpanda bought out EatOye. However, August witnessed the launch of Eat Mubarak, a new service that offers for the first time offer a viable alternative to FoodPanda that seems to be gaining traction. Cheetay, a startup focused on the Lahore market, also offers food delivery alongside groceries and other commodities. Competition in the market will increase in 2019 with Careem and Uber also launching their food delivery services in the first quarter.

As you can see, although online food apps have drastically increased the ease of ordering(bringing it down to just a few short clicks), the overall fulfilment time is still the same. This might be one of the reasons why the market hasn’t matched up to the break-neck speed of ride-hailing startups. Nevertheless, it does continue to gain strength.

Typically, the food culture in Pakistan differs from city to city. The online food market is much larger in Karachi than in Lahore. Apart from its market size, one of the cultural reasons for this is that in Lahore dining out is more of a preferred experience whereas in Karachi ordering in is far more widely accepted.

Retail e-commerce

The retail e-commerce market has the greatest revenue generating potential within the entire e-commerce sector.

The biggest differential between all the verticals is that the fulfilment time in the retail e-commerce sector is far higher than what is expected from the other sectors, averaging 3–5 days as compared to less than an hour for all other verticals. The fulfilment success ratio is also lower with on average less than 80% of customers ending up actually receiving the order they place.

The above table makes a very vital case for fulfilment time being a major impediment in the growth of online retail. Even though e-commerce provides the convenience of not having to leave your house to place an order, there are other deterrents which stem from traditional and cultural factors. E-commerce could never replace the experiential element of families going to the mall together where impulse led shopping is a powerful tool. Traditional shopping methods also allow one to see the product being bought and prices can be haggled down. One also knows exactly where to go to return or exchange a product, an issue which in traditional shopping can be dealt with on an immediate basis. These factors have contributed to be a huge impediment to online shopping and unless they can offer a more reliable and quick service, they will forever play second fiddle to brick and mortar retail.


While the overall e-commerce market has doubled in the last year alone and many of the large retail e-commerce ventures will have also grown at this rate or higher themselves, we believe that if retail e-commerce ventures had addressed their fulfilment challenges earlier, their growth rate might have been closer to 5-10x per annum rather than 2-3x. This growth would have been possible as returning customers would have helped spread the word and there would be a lot more trust overall within the retail marketplace vertical.

It is for these reasons that we believe this market segment is still open for disruption and believe that this disruption could potentially come from the upcoming super-apps or the growth of direct-to-consumer (D2C) business models within the next two to three years. I discuss these business opportunities and how the retail e-commerce vertical can secure itself against such threats in part 2.

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Slowing Down Digital Banking in Pakistan


After the infamous Bank Islami Hacking incident, that took place in October, the State Bank of Pakistan’s Payment System Department (PSD) released a circular last week in a concerted effort to fortify the security systems under which all banks in the country operate. As well intentioned as these new measures may be it is the belief of many in the industry that they will slow down the growth of the banking sector; specifically in terms of customer growth and its pace of innovation.

The full circular can be read here.

Positive Elements

Let us begin by first discussing the positive elements of the circular which indeed will strengthen the integrity of banks and offer customers more protection. The PSD is to be commended on its actions regarding the following concepts.

Undeniably, measures had to be introduced to protect banks and their customers and the PSD has done very well in enacting article 3 stipulating free transactional sms and emails to be sent to all customers. This will greatly help in the detection of fraud on an immediate basis. It also promotes a constant dialogue between the banks and their respective customers reducing any existing barriers between them.

In the same spirit article 17 stipulates that banks should inform customers within 48 hours of any breach and make reparations within the same timeline. This ensures that no bank could ever try to hide any possible breach from its customers therefore complete transparency will be the norm for the future.

Both of these measures will help establish a strong platform of trust and provide customers with the rights they need in order to further their existing financial service requirements.

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Articles 6 states that the majority of plastic cards in the country be replaced with new cards supporting an EMV chip and pin complaint system. This will be a major breakthrough as current magnetic based cards can be duplicated while chip and PIN formats cannot. This will also replace the act of requiring a signature at the point of sales with the requirement of typing in a PIN number instead. Many believe this to be a far more secure method of payment and it provides customers with the confidence that their cards are less likely to be misused if lost.

Finally, article 13 states that banks must submit an implementation plan for 3D Secure protocol on online payments. If implementations for all banks are completed within the next 2 years, this could be very helpful for the growth of the eCommerce market in Pakistan.

Catch 22

As commendable as their efforts have been the PSD has in all earnest implemented a few troubling measures which could seriously threaten the future development of Pakistan’s financial sector.

Article 4: Activating mobile banking at branch offices

iv) Henceforth, banks/MFBs shall activate/reactivate online banking services including internet/mobile banking for their customers after biometric verification at any branch of their bank. At the time of activation of online services, banks’/MFBs’ relevant staff shall educate customers about various types of online banking frauds as well as the corresponding preventive measures. Banks/MFBs shall be solely responsible for ensuring customer authentication for activation of any ADC and any loss of customer funds due to false activation of any ADCs shall be compensated by the respective bank/MFB.

This paragraph alone will hurt a lot of the micro-finance banks and large banks that were doing online activation of customers to create accounts without the need of visiting a branch. How are digital banks supposed to operate when such a stringent requirement is put on activating customer accounts? Small banks that do not have a large footprint in terms of branches have now also been put at a severe disadvantage.

** Correction. Wallets which operate under the branchless banking regulation’s are not specifically mentioned as having to comply with these regulations. Therefore wallets such as SimSim and others are not required to enact these measures. This might even give them an advantage in the short run, and in the medium term we might see the larger banks opting to create wallets under the branchless banking act. **

̶W̶a̶l̶l̶e̶t̶s̶ ̶s̶u̶c̶h̶ ̶a̶s̶ ̶J̶a̶z̶z̶c̶a̶s̶h̶ ̶a̶n̶d̶ ̶S̶i̶m̶S̶i̶m̶ ̶w̶h̶o̶ ̶w̶e̶r̶e̶ ̶o̶n̶b̶o̶a̶r̶d̶i̶n̶g̶ ̶f̶u̶l̶l̶y̶ ̶w̶i̶t̶h̶i̶n̶ ̶t̶h̶e̶i̶r̶ ̶a̶p̶p̶s̶ ̶w̶i̶l̶l̶ ̶n̶o̶w̶ ̶h̶a̶v̶e̶ ̶t̶o̶ ̶t̶e̶l̶l̶ ̶c̶u̶s̶t̶o̶m̶e̶r̶s̶ ̶t̶o̶ ̶g̶o̶ ̶t̶o̶ ̶a̶ ̶b̶r̶a̶n̶c̶h̶ ̶t̶o̶ ̶c̶o̶m̶p̶l̶e̶t̶e̶ ̶r̶e̶g̶i̶s̶t̶r̶a̶t̶i̶o̶n̶.̶ ̶J̶S̶ ̶B̶a̶n̶k̶ ̶w̶h̶i̶c̶h̶ ̶h̶a̶d̶ ̶v̶e̶r̶y̶ ̶i̶m̶p̶r̶e̶s̶s̶i̶v̶e̶l̶y̶ ̶i̶n̶t̶r̶o̶d̶u̶c̶e̶d̶ ̶a̶n̶d̶ ̶d̶e̶p̶l̶o̶y̶e̶d̶ ̶f̶i̶n̶g̶e̶r̶p̶r̶i̶n̶t̶ ̶s̶c̶a̶n̶n̶i̶n̶g̶ ̶v̶i̶a̶ ̶s̶m̶a̶r̶t̶p̶h̶o̶n̶e̶ ̶c̶a̶m̶e̶r̶a̶s̶ ̶f̶o̶r̶ ̶i̶d̶e̶n̶t̶i̶t̶y̶ ̶v̶e̶r̶i̶f̶i̶c̶a̶t̶i̶o̶n̶ ̶w̶i̶l̶l̶ ̶n̶o̶w̶ ̶s̶a̶d̶l̶y̶ ̶n̶o̶t̶ ̶b̶e̶ ̶a̶b̶l̶e̶ ̶t̶o̶ ̶c̶a̶p̶i̶t̶a̶l̶i̶s̶e̶ ̶o̶n̶ ̶t̶h̶e̶i̶r̶ ̶i̶n̶n̶o̶v̶a̶t̶i̶o̶n̶.̶ ̶T̶h̶e̶s̶e̶ ̶a̶r̶e̶ ̶j̶u̶s̶t̶ ̶a̶ ̶f̶e̶w̶ ̶e̶x̶a̶m̶p̶l̶e̶s̶ ̶o̶f̶ ̶a̶ ̶f̶i̶n̶t̶e̶c̶h̶ ̶s̶e̶c̶t̶o̶r̶ ̶t̶h̶a̶t̶ ̶w̶a̶s̶ ̶o̶n̶ ̶t̶h̶e̶ ̶v̶e̶r̶g̶e̶ ̶o̶f̶ ̶b̶l̶o̶s̶s̶o̶m̶i̶n̶g̶ ̶t̶h̶a̶t̶ ̶i̶s̶ ̶n̶o̶w̶ ̶b̶e̶i̶n̶g̶ ̶h̶e̶l̶d̶ ̶b̶a̶c̶k̶ ̶b̶y̶ ̶t̶h̶e̶ ̶s̶h̶a̶c̶k̶l̶e̶s̶ ̶o̶f̶ ̶p̶r̶o̶t̶e̶c̶t̶i̶v̶e̶ ̶m̶e̶a̶s̶u̶r̶e̶s̶.̶ ̶L̶e̶g̶i̶s̶l̶a̶t̶i̶o̶n̶ ̶n̶e̶e̶d̶s̶ ̶t̶o̶ ̶w̶o̶r̶k̶ ̶t̶o̶g̶e̶t̶h̶e̶r̶ ̶w̶i̶t̶h̶ ̶t̶e̶c̶h̶n̶o̶l̶o̶g̶y̶ ̶i̶n̶ ̶o̶r̶d̶e̶r̶ ̶f̶o̶r̶ ̶P̶a̶k̶i̶s̶t̶a̶n̶’̶s̶ ̶f̶i̶n̶a̶n̶c̶i̶a̶l̶ ̶m̶a̶r̶k̶e̶t̶s̶ ̶t̶o̶ ̶b̶e̶ ̶t̶r̶u̶l̶y̶ ̶e̶f̶f̶e̶c̶t̶i̶v̶e̶ ̶a̶n̶d̶ ̶p̶r̶o̶d̶u̶c̶t̶i̶v̶e̶ ̶i̶n̶ ̶a̶ ̶s̶a̶f̶e̶ ̶a̶ ̶s̶e̶c̶u̶r̶e̶ ̶f̶a̶s̶h̶i̶o̶n̶.̶

Article 10: Banks to decide daily spending limits

x) All payment-card issuing banks/MFBs shall immediately set reasonable per-day transaction limits commensurate with their risk appetite and transaction volume with the Payment Schemes especially for cross-border usage. Banks/MFBs shall ensure that their risk exposure remains within the pre-agreed limits set with the international/domestic payment schemes through legally binding contractual arrangements.

Article 10 should be a concern for customers because it takes rights directly away from them. Why can a customer not decide and set their own limits on their daily spending. Why must it be dictated to them as if they were children unable to know what is best for them. Surely this disregards the customers’ rights to the amount he or she wishes of his or her own money on a daily basis if it, perchance exceeds the dictated norm. The daily limit is not set to the customers’ requirements but instead in order to comply with the risk appetite of the bank. This is a perfect example of institutional dictates which hold a market back from prospering to the level of success it could naturally attain. The implementation of spending limits will be a huge impediment to future growth and should be seriously reconsidered by existing authorities.

Smarter options are available which have been employed by multiple fintechs in Europe. It is the hope of many in our industry that Pakistan will follow the examples of success stories where banking systems worked closely with new technologies to bridge gaps in security and verification methods. In this highly competitive era if we are to see Pakistan achieve it’s true potential as the financial giant it could very really be, we need to learn from the best.

Examples of great digital banks

Challenger banks which are emerging in the UK and Europe are some of the most user friendly, interactive and secure financial service institutions currently in place. They allow a whole host of security features that not only make transactions more secure but they also empower customers at the same time.

The offer very in-depth security features and all of them are available directly to consumers through their app. Features which allow you to freeze your card, set spending limits, allow ATM or online transactions are available as options directly to the customer without the need to call their bank.

We should be using these as examples and asking our banks to be innovative and customer oriented while also ensuring that their database security features are top notch. Pakistan’s financial sector can not risk hampering its development at this crucial stage when on the sheer size of it population alone we could stand to be at the forefront of technological innovation. We need to get more and more customers onboard with online financial services in the best most effective and secure methods possible.

Example of how Revolut gives its customer power over features
Security settings for each card within Revolut
Additional spending restrictions per card and instant notifications on payments


Successful companies do not have to choose between customer security and ease of use; they do both. The best of companies are those which are able to reduce the friction a customer feels when interacting with their products, while at the same time ensuring a high level of security and data protection.

When problems do come up, we should not look to over-regulate but instead use it as way to foster innovate change and move forward with smart solutions. Only then will our un-banked and under-banked populations come to trust the industry and use the banking channels available to them more regularly and with greater ease. We are a nation of more than two hundred million minds and we need to create a digital infrastructure that will ultimately lead to a safer and more secure future together – with customers and financial service providers alike!

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The Digital Rupee

Today, Pakistan is one of the least developed countries in terms of financial literacy and inclusion. While I won’t go into the reasons behind it, I want to discuss how we can advance our financial inclusion numbers quickly and substantially by creating a cryptocurrency out of the Pakistani Rupee (PakCoin or Digital Rupee).

I also fully understand that for an initiative like this to be pulled off would require an immense amount of political capital — — eeee-

Why Create a Crypto Asset

We need to create a cryptocurrency out of the rupee for three main reasons:

1. The ability to deploy smart contracts will be crucial in increasing adoption in the early stages (more below), while later on, it can be used to create a smart government.

2. The ability to be globally traded with minimal fees in the long-run will help with the inflow of capital into Pakistan (consequently outflows will also become easier, and I will address this later on)9

3. Have the PakCoin become a reserve currency in the future, the same way as the USD or the Yuan is today

In this article, we will not go into the details of the technical elements, but I will use a subsequent article to cover those topics. However, just to give you a rough idea; we will be creating a coin on top of an already existing protocol such as Ethereum, Neo, Stellar or others. We will also want to list the coin for direct trading on exchanges at some point in the future. One topic that this article will also very briefly touch on is the miner fees, which could become crucial to any large-scale implementation.

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Key Objectives

• The coin must help in making Pakistan more financially inclusive

• The coin must be backed by PKR i.e. as a store of value

• The coin must be used regularly and become a medium of exchange

• The coin must be accepted by merchants, banks, and all govt. institutions

• Coins can be kept in a wallet or be deposited in a bank account

• The protocol must maintain the privacy of the users

The PakCoin Wallet Requirements

While the PakCoin will be built on top of a protocol like Ethereum, I also envision a PakCoin Wallet to be created in parallel to give additional features to Pakistani citizens.

The PakCoin wallet will be built for primarily Android and iPhone users. However, certain features will also be available for feature phone users via USSD.

The requirements include:

  • Ability to create a wallet using NADRA (National Database and Registration Authority) verification
  • Creating and issuing 3 types of public keys (Long alphanumeric string, e.g., 0x562bb56de196bcd30dac3835055316078733fb83; Verified phone number, 03008561123; Domain name similar to ENS, e.g., adamdawood.eth)
  • The private key will also be created and held within the wallet
  • Simple QR code features to receive and send money from wallet to wallet
  • Money transfer facility via IBFT to local bank accounts
  • Receive money via IBFT (pull & push) from local bank accounts
  • Access dApps (eventually)

Becoming a Medium of Exchange

For the PakCoin to become a medium of exchange, I propose the following:

  1. The SBP to issue newly issued coins to all registered wallets (1 wallet per CNIC) every X period
  2. The newly issued coins to be available in the individual’s wallet for a period of Y days
  3. For every newly minted PakCoin that is transacted within the Y days’ period, it should be converted into a permanent coin
  4. All coins that have not been used in a transaction during the period to be destroyed
  5. After all unused coins are destroyed, a new round of coins to be issued. However, a greater portion of coins should be given to those who are doing a larger number of transactions with the largest number of people or those who have more coins stored in their wallet. This will incentivise people to spend their coins.

Doing this for a period of 6–9 months should result in high levels of adoption. Also, those who directly credit more coins into their account via their bank account should also be given a large subset of coins during each free coin distribution.

The Cypto Bank of Pakistan

The Crypto Bank of Pakistan (CBP) will be a new Bank that will be incorporated and run by the State Bank of Pakistan. Its primary purpose will not be to do any conventional banking for customers (i.e., loans/savings accounts, etc.); instead, it will act as the custodian for all coins that are issued and will hold an equivalent amount in its reserves to maintain the parity of 1 PakCoin to 1 PKR. We will in effect be creating a stablecoin or an IOU coin as commonly referred within the crypto space.

The bank will also provide a mechanism whereby coins from customers’ wallets can be moved into traditional banking channels, hence facilitate IBFT movements to other banks as well as from the banks to customers’ wallets.

However, one crucial issue that needs to be discussed further is the question of who will decide on the issuance of new coins should there be any. I think we could set up a standard formula such as Milton Friedman’s k-percent rule to determine growth in the increase of the money supply by a fixed percentage each year.

While I understand the logic behind having a fully decentralised currency, I feel a larger debate would also be necessary to determine whether a nation should have some powers to shore up the currency when required.

Default Currency for Global Exchange (slowly)

When we create the Digital Rupee, it will end up being a link between the world of fiat currencies and digital currencies. Being a potential go-between will also mean that the currency can quickly flow out of the country causing a major problem in our already large deficit.

To counteract this, we will take a measured approach to making the PakCoin a global standard with some of the key points being:

  1. At launch, only those possessing a NIC card will be able to buy/hold/sell the coin.
  2. We will then open it up for purchases by non-Pakistanis who can hold the currency in CBP denominated wallets only.
  3. In addition, we will gradually open up the currency for active trading on third-party exchanges such as Binance. We will only open up the currency to global exchanges slowly.

Major Questions

  1. Will the state bank be allowed to print more money (quantitative easing) or should we let the money supply be locked in perpetuity like bitcoin after the initial growth period?
  2. How many coins will we need to issue in the growth period to ensure a large number of the population actually start using the wallets?
  3. Will the wallet be available only to smartphones, or should we create a feature phone equivalent as well?

Using Smart Contracts for a Smart Government

We can use smart contracts to create a smart government.

  • For all local taxes that are paid, the taxpayer can directly deposit a percentage of their taxes to a government department of their choice
  • Auto-deposit 10% of all parking tickets into a driver training program
  • Auto-depositing 50% of littering fines as an added budget for local maintenance/clean-up teams

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References & Reading Material





A Napster in the Blockchain age

Imagine if Napster was built today, but this time it was legal and used blockchain to create a decentralised platform to share and sell music.


Napster was a roaring success when it first launched due to its easy ability to share music (illegally) and more importantly get music. It has since been overtaken by iTunes initially and now through subscription music services such as Spotify and Apple Music.

With services such as iTunes and Spotify however, you cannot share your music like you could back when you had cd’s, and although I subscribe to many services, I’m not a fan of the model as in the long run you never end up owning anything.

What follows are my thoughts on what a decentralised music platform could look like in today’s world and how it would benefit both music lovers and those who create music also.

Customer (Music Owner’s) Journey:

  1. First step purchase a song or album and enjoy it.
  2. You want to share it with a friend. So you send it to them. The copy leaves your collection and arrives in theirs. You cannot listen to it, the same as if it was a physical cd.
  3. But let’s build in a smart contract. The album/song you have given has a smart contract built in saying it will be returned back within 7 days. Boom, never have to worry again about losing my “cd” and I own the music too rather than subscribing to Spotify where I lose my entire music collection the minute I end my subscription.

Customer (Music Borrower’s) Journey:

  1. Sign up and find my friends on the platform.
  2. Request the rights to a song/album they have (borrowing from friends has a $1/month subscription, to borrow music directly from artists is free)
  3. Once rights given, listen to the music. After 7 days the music is returned back to the owner.
  4. Buy the album from the artist directly and listen to it permanently.

Musicians Journey:

  1. Upload latest songs/album
  2. Create 1,000 copies of it. To reward most loyal fans the first 10 copies are given for free to whoever downloads it, next 90 are given at $2, the next 400 at $5, finally last 500 at $10.
  3. The artist can issue copies of his album to prospective fans for 7 days as well to see if they like it. If they do, they can purchase it, if not its feedback for the musician.
  4. Start marketing their music via the platform. The more fans and listens you have the greater the chance of getting discovered.

Platforms Journey:

  1. For every music album that’s sold they make a cut of the revenue.
  2. For every song/album that is listed on their platform they take a small listing fee that is tied to the number of copies created.
  3. For every customer on their platform that listens to borrowed music from friends a nominal $1 per month subscription fee to cover costs. First 5–10 albums borrowed would be free to listen.


For Music Lover’s

While the overall market for subscriptions is growing rapidly, soon customers will realise that the cost of subscriptions is much higher in the long run. Imagine running into some financial trouble or if prices are raised, and realising the Spotify monthly cost is far greater than you can afford. You automatically then lose access to your music collection.

With purchasing you at least know that you own the music forever, and regardless of your circumstances in the future, you will be able to listen to your favourite music however you choose to and wherever you want to.

For Musicians

The life of a musician is very tough. In the US musicians receive only 12% of industry revenue, with the industry heavily geared towards megastars. The long tail of musicians simply do not end up making a sustainable income.

By creating a platform where musicians can offer discounted rates to loyal fans, and offer their music album for free, with the knowledge it cannot be replicated by the customer they will be able to create and generate a very loyal fan base while giving customers the ability to purchase from them directly as well.

Other potential markets where this could be replicated:

  • eBooks
  • Movies/TV Shows
  • Apps and or subscriptions e.g Medium, the Economist, Games
  • Airline Tickets and other tickets in general
  • Credit Cards ( share with a person to spend a specific amount at specific stores)

Pakistan’s eCommerce Market Size to Cross $1.2 Billion in 2018

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Pakistan’s E-Commerce Market Size Exceeded $600 Million in 2017

The State Bank of Pakistan has released their official numbers showing the actual size of the e-commerce market. Before delving into its analysis, let us first take a look at the numbers in full.

Data Sources

The two primary sources of the data are:

  1. Annual Performance Review (APR) 2016–2017 — Payment Systems — link
  2. First Quarterly Report (FQR) 2017–2018, Special Section 2 — Online Payments Platform — link

Quick Analysis

Based on the report, we can deduce that, on average, every prepayment order in Pakistan had a basket size greater than Rs. 8,000 and each of the 571 merchants processed about Rs. 17M in prepayment orders on average.

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Judging the “Cash on Delivery” Market Size

Not all e-commerce transactions are done through pre-payment. For instance, in the large marketplaces and brand stores, most of the payments are made via cash on delivery terms. To accurately gauge the e-commerce market size, we have to make an assumption on the volume of transactions processed via Cash on Delivery (COD).

Most of the other industry professionals claim that payments made through Cash on Delivery account for about 90% of all e-commerce transactions. However, that figure represents the number of transactions rather than the volume of transactions.

In my analysis, I have found that customers are more likely to pay for higher value orders via prepayment rather than COD. Yayvo, for example, had 76% of its orders below Rs. 1500 paid via COD, while 60% of its orders above Rs. 5000 were paid via prepayment.

I still believe that during the Fiscal Year 2017, the market was still very nascent to the idea of prepayment. I would estimate that COD was at minimum 85% of the total market for payments. This means that the e-commerce market size in Pakistan is ~Rs. 65 Billion or ~$620 Million.

Other Assumptions

Not all e-commerce sites process their online payments in Pakistan. Within the fiscal year ending in 2017 (July 2016 — June 2017), large e-commerce players such as Careem, Uber, and FoodPanda processed their payments via international gateways. Their prepayment revenue is unlikely to be counted within the local e-commerce market size but is counted in the international volume of transactions instead.

I am assuming that there was no duplication of the online acquirers when the State Bank was collecting this data. For example, JazzCash and EasyPay both used the MCB e-Gateway to power their platforms during this period. I am assuming that the State Bank did not count these numbers twice when collecting the figures submitted by EasyPay/JazzCash and MCB respectively. This is especially important given that EasyPay had over 350 merchants and JazzCash over 150 merchants by June 2017, which possibly makes them the largest online acquirer’s in Pakistan.

E-commerce Merchants

According to the State Bank, there are 571 e-commerce merchants in Pakistan. Typically, the e-commerce merchants that come to mind are players such as and We have to dismiss players like FoodPanda, Careem, and Uber because their payments are not processed in Pakistan.

Other large merchants include ticketing platforms such as Pakistan Railway and PIA, amongst others. Pakistan Railway, in its first two months, reported a revenue of Rs. 100M from online sales. In addition, an article in November 2017 stated that UBL had made more than Rs. 1 Billion from online sales through Pakistan railway alone.


The overall e-commerce market size is much bigger than what many industry insiders estimate. After reviewing and examining the numbers, my conclusion is that the e-commerce market size transcended $600M in the 12-months period between July 2016 and June 2017.

I believe the number will be much higher in the current financial year (June 2017 to July 2018). A case in point is Yayvo, which is on course to grow their revenue by at least 3x this year. Therefore, the overall market, even with 2x growth, would rise to approximately $1.2 Billion. This means we will be crossing the $ 1 Billion e-commerce revenue mark two years before the 2020 deadline we had set.

[1] There is a difference in the volume of transactions indicated in the two reports. I will be taking into account the numbers given in the FQR because those stated in the APR are provisional. However, the FQR does not show the number of transactions (my assumption is that they would have risen). Therefore, since the FQR does not give full information, I will use the APR numbers.

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Using A Data Driven Approach to Upgrade the Yayvo Website

Originally published on ProPakistani

When Yayvo launched in September 2015, we inherited our website from our past moniker, TCS Connect. That site, though functional, was not considered visually appealing or user-friendly.

Since December we have started to place a lot of emphasis on our UI (User Interface). Being an e-commerce company we wanted to be fully data driven and over the course of the last three months, we have made some impressive strides. This article aims to share some of our learning experiences in the hope that you may also be able to start your journey to providing a bigger and better user experience for your customers.

Typical journey for an eCommerce customer

Yayvo’s integral aim has always been to provide their patrons with as seamless a customer experience as possible, helping them through each stage of their journey while showcasing Yayvo’s strengths in terms of delivery and customer experience.

Before we discuss the aspect of data, it is important to give credit to the Product, Design and Technology teams at Yayvo, who have put in many hours into what will be just the start of our User Experience (UX) journey.

Data Driven Design

Our team began with having to make an extremely important decision — which A/B or Multivariate testing tool to employ. We considered two options: Optimizely or Visual Website Optimiser (VWO). Due to its user-friendliness and simple technical implementation, VWO came out on top. (Tip: Don’t directly trust the data provided by VWO, verify the results by checking them within Google Analytics as well.)

Test 1: Product Page Call To Action

Our first major task was to see what portion of our product page attracted of the highest Call to Action (CTA).

End Goal: A better CTA

  • Describes Next Action vs. End Result (e.g. — ‘Add to Cart’ vs. ‘Buy now’)
  • Must contain a trigger word (e.g. — “Buy” or “Add”)
  • Gentle Nudge vs. Commitment Requirement (e.g. — ‘Add to Cart’ vs. ‘Buy now’)

Hypothesis: Instead of using the simple word ‘Buy’ as the CTA in product pages, use variations which contain the aspects mentioned above.

  • Control — Buy
  • Variation 1 — Buy Now
  • Variation 2 — Add to Cart
  • Variation 3 — Order Now

After running the test with 2800+ users, we determined quite conclusively that “Add to Cart” was the best conversion-driven CTA. Its conversion rate was 2% greater than the incumbent CTA, with a 100% degree of certainty.

The winning variation, ‘Add to cart’, has the following characteristics:

  • It indicates the exact event that happens after the click.
  • It does not rush the user (less commitment than having ‘Buy’ or ‘Buy Now’).

Test 2: Color of the Call to Action

We then decided to run a test on the CTA color of our product page. We wanted to test variations based on our research about the strongest colors for CTA’s. The existing red was our control and we added green as the variant. Green was selected because we felt it was the tone that contrasted most against red. This was important as our website has red as its primary color.

The results showed that the green button led to a higher conversion rate over the red button.

The fact that Green was the highest converter contradicted three studies we came across that seemed to show that red was a much better converter: DMix, HubSpot, VWO.

If Red was such a good converter, then having a website with numerous red elements could potentially be a distraction to users which may result in a lower overall conversion rate. Our team also felt that the overtly red overtone of the website was overpowering. This led to our decision to reduce where possible the red elements of the website.

Reducing the Red Impact

Yayvo from the start has always had a red theme associated with it. However, from a personal perspective and comments from users we knew it had to be re-evaluated.

At this point, we decided to take a visceral approach to design rather than conduct tests. Our goal was simple — keep a customer’s focus only the essential task at hand on every page by limiting distractions.

We made the following changes on the homepage:

  1. Replaced the red color in the category header bar with Grey, while making the category drop down red.
  2. Removed the partner websites from the header and placed them below the fold in the footer.
  3. Changed the red color of the category selector (just below the sliders) to orange.

After the changes the tone of the overall website changed quite dramatically.

Product Page Overhaul

The product page also underwent a fairly large change. We conducted focus groups and internal surveys that led to the realisation our product page needed to become more convincing in pushing users to purchase. Further still we conducted heat map tests on our product page to identify the most used features and those that were surplus to requirements.

Design Principles: Focused Push Towards Conversion

  • Show the customer as large an image as technically possible.
  • Show a clear CTA.
  • Make it straightforward and intuitive to choose options.
  • Easy and precise identification of mistakes.

Checkout Overhaul

The checkout page is the final hurdle a customer has to face before they commit. Given the sheer amount of information required at this phase, customers can easily bounce off the page and not complete their transaction.

Design Principles: A Simple & Intuitive Process

  • Keep information requirements to a minimum.
  • Guide the user through the next steps
  • Limit distractions
  • Easily identifiable any mistakes in input

Design Changes:

  • Removed all elements of the Header and Footer except the logo and the Contact Number Bar
  • The logo is no longer clickable to the homepage thereby reducing to three the ways in which you can move away from the page:
  • The back button;
  • Edit Product Option in Section 4 and;
  • Close the Tab/Browser.
  • Clear CTA — “I Confirm My Order” — which due to its size and color is the most prominent element of the page.
  • Reduced number of fields required in the shipping and billing option.
  • Hide the booking code requirement — which is only used by a tiny subset of users.

Performance & Results

With each major change we also monitor our overall conversion rate after implementation. While it is difficult to attribute any increase or decrease in conversion rate directly to any one change, factors such as marketing campaigns, exclusive stock availability, new product launches all can affect the overall conversion rate in a significant way, however we try and control for these by filtering down to the most common attributes when we measure the results.

To check the success of the overall checkout page we created filters so that only direct traffic and desktops views would be counted. When we did this we noticed that our conversion rate had increased by a significant 31–54% over 2 weeks.

direct and desktop traffic

Next Steps

The changes and tests we have run is just a first step for us. While we have decided to start with the overall UI of the website, what is far more important is the user experience we can create. More than color testing the buttons on the online portal, we feel that creating a sustainable business is about providing a good delivery experience.

Primed for Growth: An Analysis of Pakistan’s eCommerce Market in 2016

Originally published on ProPakistani

Last year has resulted in exponential growth of the ecommerce industry in Pakistan. We have witnessed strong movement in the sector in terms of overall sales and customer acquisitions. Traditional industries have also started to benefit from this trend and have begun to move towards partnering with online stores to increase their revenues. This growth is coming in due to some exciting partnerships taking place, however a lot remains to be fixed as well if we are to hit $1 Billion in ecommerce revenue by 2020.

Black Friday

Let’s start by examining the biggest event of the year for the ecommerce — Black Friday. In November 2015, Daraz introduced Black Friday to Pakistan with great fanfare. In 2016, Black Friday was much bigger, both in term of sales revenue, customer acquisitions and the number of ecommerce sites who participated by offering extraordinary discounts.

Daraz & Kaymu’s revenue surpassed Rs 1 Billion during Black Friday, exceeded 60,000 orders and though other stores have yet to reveal numbers, HomeShopping, Symbios, Shophive all participated aggressively. New entrants such as MyGerry’s also used Black Friday as a launching pad for entry into the ecommerce arena.

Black Friday achieved a cornerstone in retail, to the extent that it permanently left its mark as the pinnacle event in Pakistan for both offline and online channels. The comparison is similar to that of Singles Day in China, and the Big Sales held by our Indian counterparts around Diwali.

Black Friday has become such a milestone for the ecommerce sector because it witnessed major economic partners aligning themselves together to create the necessary ecosystem needed to facilitate online shopping. JazzCash & EasyPay worked hand in hand as the main payment partners with Yayvo & Daraz respectively. Furthermore major banks offered additional discounts to their Credit and Debit card holders to help push prepayments. This in itself was a major move for the industry away from the Cash on Delivery payment method which accounts for more than 90% of sales during the rest of year.

Multinationals who own brands such as Dove, Ponds and many others also partnered with major ecommerce players to help bring their products to a wider audience. All in all Black Friday pushed the ecommerce industry into the mainstream and proved to Pakistan that it in fact offers a truly viable future for the country’s retail industry.

Overall Market Size of ecommerce in Pakistan

There are many estimates floating around as to how big the ecommerce market is in Pakistan. We must first divide up the ecommerce sector into various smaller divisions. This allows us to understand the dynamics of each sector in a more comprehensive manner in order to estimate sales volumes.

  • Marketplaces or Multi-Category Stores
  • Tier 1 Stores: These are your multi-retailer and multi-category online stores. The biggest ones of the pack are Daraz, Kaymu & Yayvo, with other e-tailers such as HomeShopping, Symbios, Shophive, Telemart also competing.
  • Tier 2 Stores: There are stores which have been present for some time or have recently received investments and are pushing hard to enter the Tier 1 category. Stores such as, GoTo, The Warehouse are all part of this group.
  • Tier 3 Stores: This would be a very large collection of e-stores that are trying to compete via a niche category or as a multi-category store with a very limited team and marketing budget.
  • Facebook Stores/Group: These comprise of another considerably large segment and sales volume, with examples such as Sheops taking top spot.
  • Brand Stores: This segment includes e-tailer’s such as Khaadi, Ego and Gul Ahmed who enjoy strong brand awareness but are primarily focused on sales through brick and mortar means. These stores generally have a high volume of sales and their basket size (AOV) is high. It’s a good testing ground for new products for brands and gives them the reach to capitalise on their brand identity without investing in retail locations across the country.
  • Food/Takeaway Model: Enjoys a considerably large market in Pakistan monopolised by FoodPanda and EatOye.
  • Travel, Ticketing & Holiday: Players such as Jovago sell hotel bookings and even PIA, Shaheen & AirBlue. Traditionally these airlines and other transportation service providers are not associated with ecommerce however they do conduct a sizeable amount of their sales online. Pakistan Railways alone made Rs 100 million through e-ticketing in 2 months.
  • Ride Sharing: These include Uber and Careem along with sites such as Travly giving local competition.
  • Classified: These are listing sites such as PakWheels,, Rozee and of course OLX.

To accurately calculate the current size of the ecommerce market we need to include all these sectors. When focusing on only the multi-category and brand stores, measuring sales becomes far easier as the market is still primarily based on COD.

With 3 major COD couriers and several second tier couriers measurement can be fairly accurate. However, measuring sales of Careem/Ubers and even sales of tickets via PIA is a much more challenging and difficult task. Most of these companies do not release their numbers in sales volume and when they do questions on whether those are GMV or NMV are not addressed.

Based on my knowledge and collection of data, I estimate in 2016 overall gross revenues stood well north of $120 million.

Customer Acquisition

Massive Campaigns such as Black Friday not only help in increasing the number of transactions through ecommerce stores, they also are a very valuable source of new customer acquisitions.

The biggest such event outside of Black Friday was GOSF — the Great Online Shopping Festival which was organised by Google and the Jang Media Group.

The event saw a dozen online stores participate in an event which led to a staggering 1 Million unique users visiting the GOSF site. Over 25,000 orders were placed in a span of 3 days with sales estimated at around Rs. 133 million.

As we move into 2017, more and more large customer acquisition events are planned as they act as large customer awareness programs which is crucial giving even the largest of ecommerce companies do not have the budgets necessary to sustain long TVC campaigns like they do in India.

Major Areas of Improvement

In an industry that’s still growing, there are always going to be numerous challenges. Some of these challenges can be identified easily while others are still harder to pinpoint. The major issues that the ecommerce industry faces have been outlined below:

An Unbanked Populace

We are living in a country where the majority of the population is unbanked. Those customers who have a bank account cannot even use their debit/credit cards online as they are by default restricted from being used for online shopping.

Unmapped Areas

Another challenge is posed by the lack of identifiable locations. Customers living outside of the major cities of the country, at many times, fail to have specific addresses that identify the actual place of delivery. This can make life extremely difficult for logistic companies and many orders experience long delays due to this issue. Customers get understandably annoyed and many choose to abandon their orders.

Fulfillment Failures

The biggest challenge facing our industry is that of fulfillment failures. Failed deliveries occur as a result of customer cancellations and even refusals to accept order by customer at their own doorsteps, but these are more or less commonplace occurrences in the ecommerce business.

Where Pakistan’s ecommerce industry takes a bigger hit than it would in other places is in terms of ecommerce stores not being able to fulfill their products 100% of the time due to unavailability. Even when customer cancellations and refusal at doorsteps are taken into account, the number of orders that are cancelled due to the vendor listing inaccurate stock levels or information, is far too high.

Regardless of the reasons regarding whether the vendor, the marketplace, the warehouse or the manufacturer is to blame, and regardless of whether the solutions is technological, manual or has to do with planning, this problem needs to be rectified quickly.

Since for many online customers ecommerce is still a relatively new retail channel. Delivery failures will only make customers more reluctant to place their orders online a second time. This loss of trust by customers will hurt our entire industry and not just the vendor who fails to meet his customer’s demand. This problem will lead to reduced repurchase rates and cause increasingly bad word of mouth for the whole sector.

If this industry wants to make a dent in the retail market this issue needs to be addressed as growth will not be achieved by simply hosting massive sales events every few months. We need to ensure that the customer who purchases a Rs 200 charging cable and expects it to be delivered in 2 days gets it in 2 days rather than waiting 5 days only find out that the order has been canceled.

When customers shop online they do so for the convenience that online shopping offers. If they find that instead of convenience they experience aggravation then the whole purpose of online shopping is defeated and its future in a country like ours will not flourish.

The Growing Market Position

The online retail market is growing immensely on an annual basis. Yayvo has in the first 5 months of the financial year exceeded its revenues of the previous full year. Other large ecommerce companies post growth of as much as 300% per year and these growth numbers are apparent across the rest of the industry as well.

With growth accelerating across all sectors and estimated to reach $1 Billion in revenue in 2020, ensuring positive customer experiences is the minimum requirement. In fact ecommerce should promise its customers an above average shopping experience that surpasses all their expectations, this is the only way ecommerce sales can start becoming a bigger chunk of retail sales.

To do this we have to realise the right levers that are necessary to enable great customer service. While a customer will directly interact with 1 Website, that website is reliant on multiple industries and players to ensure they deliver a seamless experience.

  • Vendors — without vendors the ecommerce industry would not have any products to display. Vendors are crucial to marketplaces in particular where any delay in receiving the product can ruin the customer experience.
  • Logistics: Once the product is procured having the right delivery partner is crucial. Factors such as service quality and cost are both equally important as well as providing live tracking data and support.
  • Payments: Whether the payments is handled by the logistics players through COD — or by Credit Card merchants how easy and accessible the payment method is crucial for both the customer and the ecommerce player. The ecommerce player needs to ensure he receives his payment on time otherwise can suffer greatly from lack of working capital.
  • Technology: The backbone of the ecommerce site, technology whether its just the web store, the seller centre, the warehouse management system or the customer support system. Without the right technology no ecommerce company can succeed. Whether the technology is custom developed or bought is irrelevant, however its requirement and proper usage is crucial to succeed.
  • Trust: Only when all of these elements are working properly will the customer end up getting a good experience and therefore start to build trust in the overall sector. This will result in higher repurchase rates and therefore retention which itself will then drive further acquisitions of new customers.


We have over the past 2 years seen massive strides in ecommerce. With the launch of 3G there was an immediate boom in the industry, now as 3 of the 4 mobile networks have 4G/LTE we might be in for another round of growth especially if we start getting cheaper 4G handsets.

Traditionally retail industries have also started to aggressively explore entry into ecommerce, either directly or through marketplaces. The mobile networks are innovating rapidly and entering into the FinTech space. The FinTech space is also seeing new entrants directly and the banks have started to consider digitisation. The logistics players are trying to innovate more with two of the incumbents getting funding last year.

Overall I think we are on the cusp of a very exciting phase in ecommerce within Pakistan. There are still significant challenges ahead, however we are also in the lucky position of not having to set this up from scratch.

The US ecommerce market currently sits at around 8–9% of total retail sales, while China is around 18–20%. Pakistan’s ecommerce isn’t even close to 0.1% of total retail sales as yet but considering the overall size of our market we should be able to achieve better results soon.

As Benedict Evans of A16Z stated “Everything bad that the internet did to media companies is going to happen to retailers, if it hasn’t already.” We are in a market that is growing and it is upto us to ensure we look after all customers who do come online to shop so that we create an online shopper for a lifetime.

Tech Week in Pakistan (Issue 28: 9th November 2015)

Tech Week in Pakistan

This weekly newsletter focuses on the most important new developments within Pakistan’s Technology Sector. To receive this newsletter on a weekly basis subscribe to our mailing list (no spam ever) or follow me on Twitter @adamdawood. Previous installments of the newsletter can be found here.

Classifieds Are Getting Interesting

It seems classifieds have a new avenue for expansion within Pakistan. OLX has been advertising quite heavily for the last few years, but in the past 2 months more players are now entering or re-entering the market to either innovate or retain market share.

OLX has been losing desktop visitors consistently for some time now. The reason for this is unclear but I would wager it is because traffic has shifted towards their app rather than having lost visitors overall. Given this probable shift the launch of these two new mobile focused classified sites seem to be a very interesting development.

OLX Desktop Traffic Data

In order to compete online with OLX, companies such as Rocket Internet and Naspers have launched mobile centric classified apps called Sparklist and LetGo respectively. In the offline classified space The Jang newspaper has started to advertise their classified section in BTL media.

Both Sparklist and LetGo are looking to use an innovative mobile platform to make buying and selling both quick and easy. From a consumer’s perspective both these apps are very simple to use. In a few clicks you can either buy or sell or correspond with your prospective traders and customers.

Sellers simply photograph the product they are selling, add a simple description, pick a category and suggest a price. Then buyers can search by location and/or category and begin the transaction or purchase related correspondence. Ads can be posted on the mobile app only. I tried to post an ad after turning off my GPS to see if it would allow me to place it without giving my location. Both the apps had seemed to have saved my location earlier on.

Both LetGo and Sparklist do not seem to have a defined revenue model just as yet. I have yet to see ads by either on any online channel as well however these are likely to follow soon as both would need to build a strong buyer and seller base in order to grow.

Jang Classifieds on the other hand has started to advertise on BTL channels across Karachi. I noticed them a few days ago while on the way back from the airport. This begs the question of how strong newspaper classifieds still are and perhaps they are now starting to realise the strong competition to one of their revenue sources from online channels. Newspaper classifieds though are still according to some the most effective means of advertisement for selling personal items.

Out of all the newspapers in Pakistan only Jang seems to have an online classifieds which, to me at least, seems incredibly bizarre. Dawn on the other hand though seems to have an online ad booking site with some very helpful tips on how to create and place your ad.

It’s a very easy and simple opportunity to create great synergy between their online and offline platform. It would also act as a method to start taking orders for ads in the offline newspaper. I remember placing a classified ad in Jang 18 months ago in Islamabad and the entire process was very manual and offline. Having an online ordering portal could actually help increase the overall numbers of ads in offline classifieds as well.

OLX | Sparklist | LetGo | Jang Classifieds |Dawn Classified | e27

Other News:

  • Pakistan To Become a $5 Billion eCommerce Market by 2020 | ProPakistani
  • CheezMall Launches in Pakistan | ProPakistani
  • TradeKey Debunks Bankruptcy Rumours | TechJuice
  • Meet AutoExpert, a streetsmart startup for vehicle care | TechJuice
  • Cleanry, a startup that claims to deliver 5 star laundry experience at your doorstep! | TechJuice
  • 9 Healthcare Startups from Pakistan | TechJuice

Disclosure Statement: I am the Managing Director of, a venture funded by Rocket Internet. All news pertaining to Kaymu, Rocket Internet or any of their investors and holdings are discussed here as and when released in the media.

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Creating a Roadmap for eCommerce in Pakistan

Pakistan has witnessed exponential growth in the eCommerce arena over the past few years and since the launch of 3G services last year the time finally feels right for mass acceptance.

The launch of the 3G and 4G services in Pakistan in July 2014 has led to the number of overall broadband users in the country to rise rapidly from 3 million to over 18 million people. In its first year of release 3/4G users numbers at more than 15 million, therefore upgrading our IT infrastructure has obviously led to a very important step in the right direction. As more and more people come online from all the varying social groups existing in our nation, all ecommerce companies will become increasingly more important. Numerous online retailers have experienced a massive increase in orders with Kaymu alone growing from 700 orders a day to 3,000 orders a day. This increase in demand will have to be accompanied with an increase in efficiency, protocol and service standards in order for the industry to meet its full potential. If we want to continue and grow at an even faster pace we need to address some of the major challenges we are facing in the industry today and work on a roadmap for the future.

Nadeem Hussain, the CEO of Tameer Bank, recently held an eCommerce roundtable in Pakistan for this very purpose. His aim was to discuss ways and means of expanding the eCommerce industry in the country. The following is a comprehensive view of the findings from the roundtable talks held with some of the major players in the field of eCommerce and its related concerns, as well as my own experience.

It’s my strong belief that improvement in the following 4 tenants will lead to an even faster growth in the the overall expansion of the eCommerce industry

  1. Customer Experience
  2. Logistics
  3. Payments
  4. Awareness


The major focus for all eCommerce companies has to be Customer Trust. The rapid growth this industry is experiencing at the minute is due to a large influx of new customers that are trying online shopping for the first time. It is imperative for the long-term growth rate of the industry, that each and every new customer has a great first experience so that they continue to build trust in the concept of online shopping.

Customer trust can only be built when they receive the right product, at the right time, at the right price and if they are properly compensated when they don’t. Given that most companies act as as marketplaces that do not necessarily carry all their available inventory on their site, controlling customer experience becomes increasingly more difficult. Running your business as a marketplace like Kaymu, Daraz, Homeshopping, Symbios or countless other local e-tailers means facing and overcoming challenges such as product availability, delivery speed, and product quality. These aspects are the key to retaining customers and commanding their loyalty.

The reason for these challenges is as follows:

  1. Unavailability of Stock: Many marketplaces face inventory challenges when stock is not available with the seller but is displayed on the website due to manual “sync” between the merchant and the eCommerce store. This leads to the buyer’s’ orders either being cancelled or experiencing long delays in being fulfilled. By the time the item comes back in stock the buyer has already lost faith in either the marketplace or online shopping. Having improved and updated inventory processes will be a key factor towards achieving sustained customer growth and satisfaction.
  2. Slow Deliveries: The cause of these range widely but the most common cases I have witnessed involve sellers who prioritize their own individual sales over and above sales through online marketplaces. This delays dispatches for their online sales and negatively affects the overall customer experience. The online arena has a far greater reach than what most sellers can even imagine and if their commitment to eCommerce remains strong they can very easily become the market leaders that customers will come to depend on. Each seller needs to act as an ambassador for the customers who purchase online so that together they can thrive and grow to new heights they would never be able to achieve alone.
  3. Price Volatility: Prices of items in online stores do not always reflect current market prices. In categories such as mobile phones, the volatility of market prices regularly leads to the cancellation of orders. In the worst of cases customers are asked to pay more than the agreed upon charge due to sporadic price changes. These experiences can be extremely disheartening for most if not all customers. Each and every member of the eCommerce industry needs to form a firm commitment to their customers assuring them the freedom of complete choice and information when placing their orders. These commitments then need to be upheld in order for the customer to feel satisfied after having placed an order. Price volatility will not allow the industry a smooth road ahead.

To allay most of these building strong and lasting partnerships between sellers and merchants is they key. Building partnerships will lead to all the major issues being solved. Technological solutions by the eCommerce stores will be adapted with less friction leading to the overall efficiency of the value chain improving. In addition to that when it comes to dealing with complaints from customers, together both seller and the online store can quickly resolve any issues leading to little to no customer dissatisfaction.

In terms of technical solutions, manufacturers and distributors themselves do not have strong systems in place that keep up to date inventory numbers. If these were available then online marketplaces could easily tap into their systems and sync their products in realtime to limit the number of non-buyer cancellations. Startups such as Shopistan are already building real time inventory engines such as these under their Omni Channel brand and at Kaymu we are doing real time sync directly from other eCommerce portals. There is incredible room for growth in these areas and once better systems come in to play sellers and buyers will both greatly benefit from an increase of eCommerce activity.


Pakistan is very fortunate to have very strong 3PL providers. Other than India, our courier agents are probably the best in the region in terms of their coverage and reliability.

The eCommerce industry in Pakistan heavily relies on the following courier firms to diligently deliver all its orders:

  1. TCS has the largest network of any of the private companies. It’s COD services are very reliable and they have started offering 1 hour pickup services and are through their own online shopping portal offer 1 hour guaranteed deliveries for certain products.
  2. LCS was the last entrant into the COD business but now has the second largest network and its competitive rates have quickly allowed it to become probably the largest COD provider in the country.
  3. Blue-Ex pioneered COD services in the region and still maintains a very reputable clientele. unfortunately their reach is not as widespread as the other private operators in the country.
  4. OCS was recently purchased by Muller and Phipps who have hired a very strong management team to begin operations with a major focus on eCommerce fulfilment. They are aiming to use technology to fill in a lot of the gaps in the logistics industry that other providers have not as yet addressed.
  5. Pakistan Post, the national postal service is not well known for its reliability. It is, however, currently looking to expand its reach towards its COD offering. They are providing a very cost effective solution which is being used by an increasing number of retailers selling low cost goods online.
  6. Stallion is a local startup that offers customized COD solutions to local eCommerce stores. It began from a local university and received funding from investors to grow operations.
  7. Forrun/Delivery ChaCha/Fatafat/I2Y are all local city solutions for quick pickup and delivery options. As these smaller players grow they will begin to provide ample competition to the local 3PL’s.

Despite the large range of logistic competitors offering varying services and price levels there still remains many improvements that can be made especially within the ecommerce industry. The major problems being faced and the main improvement needed right now are as follows:

  1. Fast payments to sellers/merchants: given that the majority of orders are booked for COD, fast payment protocols would greatly benefit merchants and is crucial for the growth of the industry. Currently the average payment time ranges from between 7–15 days and with additional delays, which are currently a common occurrence, the actual payment time goes up by at least another week if not longer. Bringing this number down to less that 7 days and ideally within 2 days from the delivery date is crucial for merchants who are primarily generally cash constrained.
  2. Speed & Price: 3PL’s need to offer multiple options for delivery at varying costs. COD needs to be made available for Next Day, 2-day, and Overland Delivery options. Currently shipping anything large and bulky is also very expensive and only a very limited number of overland/truck shipment options are available with COD. This makes selling heavy items such as Air Conditioners or 20kg packs of dog food to places such as Rahim Yar Khan very cost prohibitive.
  3. Predictability: all the major COD providers give tracking numbers and these are updated fairly regularly at least for deliveries in all major cities. The update cycles for second and third tier cities however needs to be increased immediately given that over 50% of all orders are shipped outside of Karachi, Lahore and Islamabad/Rawalpindi, the three main cities of the country. Furthermore customers want the flexibility to have deliveries made at a time that is convenient for them. 3PL’s need to start offering solutions such as deliveries within 1 hour time slots for the foundations of eCommerce to be strong enough to achieve its maximum potential.
  4. Integrations with Ecommerce Stores: Given that today we have major eCommerce stores still manually creating AWB’s for their shipments and doing manual reconciliation, running integrations between 3PL and Online Stores is crucial. Currently the major 3PL’s offer API’s to their systems, however with a massive influx of ecommerce stores with limited resources especially on the software development side, 3PL’s need to start giving stores greater flexibility by offering plugins to stores such as Magento, WooCommerce, OpenCart etc. The ability to auto create AWB’s, and get delivery statuses directly can greatly improve speed and reliability. This will enable stores to become more efficient in their processes and help increase their focus on customer satisfaction.
  5. Open Box Deliveries: With COD set to remain the prevalent payment method for the near future, Open box deliveries could present a solution to help increase the trust levels within the industry. Riders, in this manner, would open the parcel in front of the customer and ask them to ensure the basic quality of the ordered items after which the customer has the option to accept or reject the parcel. Admittedly this operation is a very complex one to run at scale.
  6. Fresh/Cold Solutions: As the eCommerce industry develops, the market will move faster and faster towards food and groceries. Currently the large 3PL’s are not built to cater for such on demand services. Food ordering is already a fair segment of the local eCommerce space, however grocery delivery is still yet to become mainstream. Being able to deliver fresh/cold items will be crucial in this regard and concerted efforts need to be made to open up avenues for these markets.


Pakistan is still at a very early stage in developing its payments infrastructure. In recent months however major activities have allowed this to become a very exciting time for Pakistan’s payment systems. Predominantly COD still accounts for the majority of online transactions and unless legislation, seller responsibility and customer trust do not go hand in hand in the future, this will continue to be the case.

The current payment methods available in Pakistan are as follows:

  1. Cash on Delivery: This covers 90%++ of all orders in Pakistan. It is the dominant method used due to the unavailability of other means of payment. Customers are also generally sceptical of online shopping and COD provides a good starting point for their first few purchases. It allows a degree of confidence to the customer that in these early stages on online sales is extremely important.
  2. Card on Delivery (Swipe on Delivery): Recently launched as a collaboration with Daraz and Monet, the delivery rider reaches the customers doorstep with the parcel in hand and a credit card machine with which the customers credit card is charged and the parcel then handed over to the customer. This method is nothing more than a stop-gap measure to get customers to pay using credit cards without much of the benefits.
  3. Card Online: The traditional method of paying online. Currently these options are present for local eCommerce stores by UBL, HBL, and MCB. However the greatest challenge remains that most debit and credit cards issued by all but one bank in Pakistan are locked from purchasing online. The only way a customer can purchase online is if he or she specifically calls their bank to unlock the facility for a period of 1 hour.
  4. Payment through Wallet: This, in my opinion, is the option with the most potential for the long term. It involves the customer having a mobile wallet with deposited funds, then at the time of checkout, they select the mobile wallet payment option. This connects with the customer’s phone and automatically prompts their M-Pin or Mobile PIN in real time. Upon entering their PIN, the transaction is completed. The greatest challenge facing this options is however the number of active users with M-Wallets.
  5. Payment through Bank Accounts: Certain banks for certain stores allow direct payments for orders any and all placed. This is not a widely used or integrated system and requires the customer to login to his bank’s online banking system and make the payment in a manner similar to paying a utility bill.
  6. OTC (Over The Counter) Payment: In terms of an integrated solution this is the only available option right now via EasyPay by EasyPaisa, which now lets customers pay for their online order at over 65k locations across Pakistan.

Payments however to really get started need to provide customers with a safety net. An independent and trustworthy escrow service which is plugged into all online payment gateways will greatly increase the chances of customer placing orders online and pre-paying. Finally given the wide prevalence of COD — to really convince buyers to prepay you need to provide monetary incentive.


Nothing will take off in the eCommerce industry in Pakistan unless buyers and sellers are informed and educated about their online buying and selling options and the scope that it provides them to enrich their lives as a result of its enormous reach and variety of available options. The major method for creating awareness and driving traffic towards eCommerce companies is by running ads online. Facebook, at this stage, is still the primary channel for such exposure, however over the last year there have been major changes have been witnessed. We have seen a greater influx of other marketing channels being utilised alongside facebook. Some of these have been listed below:

  • TV has been heavily relied upon by OLX and with, Jovago and Carmudi also launching independant ads. Even UMall and TCS Connect have been mentioned in ads by their parent companies.
  • Billboards have been heavily utilised by FoodPanda and EatOye and to a smaller extent by Tohfay,, Daraz, Lootlo, Dekhawa, and TCS Connect.
  • Radio was used by several companies as well with who ran a fairly large campaign on the ariwaves.

In addition to online only stores marketing more aggressively, we have seen a greater influx of large local brands creating online stores to complement their retail outlets as well. The online presence of these stores has led to a greater acceptance of online shopping given the brands are already known physically and command a reasonable customer base as it is.

As we begin to see a greater number of marketing channels being used, the push towards online sales becomes more apparent. As always branding is a crucial first step in creating trust and the foundations for a healthy online market.


It is important to keep in mind that most of the challenges facing the eCommerce industry in Pakistan today are not debilitating to its future in anyway. With due diligence and the proper systems in place our partners in this field can collectively rise over and above current expectations but they cannot achieve this working in isolation from one another. Each section of this industry needs to work hand in hand, from the eCommerce marketplaces, to the sellers, the payment gateways and the logistics providers. If Pakistan’s eCommerce community wishes to achieve its rightful place in the overall scheme of things, all of the components of this industry need to start working together like a well oiled machine towards their collective goals.

f the above mentioned challenges though can be solved in a much more fluid manner by attracting more capital to the industry. Therefore with this I add my last tenant to grow the overall eCommerce industry:


To really push the growth rate the industry we need to start attracting more investors. The overall dynamics of the country are sound and recent growth has been very strong. By investing more money throughout the value chain i.e in 3PL’s, Payments Companies, alongside the eCommerce companies we can grow the entire industry.

With a population of 200m and a growing broadband user base the fundamentals for the country to be a major hub for eCommerce transactions is very large. To attract investors we need to be more transparent and start publishing authoritative numbers on the growth of the industry. This will give any potential investors at every level from Seed to Private Equity insights into the industry and increase chances of investment.

The added investment will only act as fuel to power us into greater adoption and with the market entering its second stage of growth now is the perfect time for investors to gain strong returns with relatively small investment.