Tuesday, May 8, 2018

Chinese ECommerce Giant Alibaba Enters Pakistan Market

Alibaba Group (BABA.N) has bought the entire share capital of ecommerce platform Daraz, Rocket Internet said, according to Reuters. American ecommerce giant Amazon is already in Pakistan via its investment in another ecommerce platform Clicky.pk.

Daraz, founded in Pakistan in 2012, operates online marketplaces in Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal. The unit will continue to operate under the same brand following the sale to Alibaba, Rocket said.

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.

Media reports suggest global e-commerce behemoth Amazon.com could purchase substantial stake in Pakistan's e-commerce site  Clicky.pk.

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.

Today, Alibaba Group (BABA.N) announced the purchase of the entire share capital of ecommerce platform Daraz, according to Reuters.


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 increasing broadband 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 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.

Related Links:

Haq's Musings

Pakistan Retail Sales Growth

Advertising Revenue in Pakistan

Pakistan FMCG Market

The Other 99% of Pakistan Story

PSL Cricket League Revenue

E-Commerce in Pakistan

Fintech Revolution in Pakistan

Mobile Broadband Speed in Pakistan

26 comments:

Abid F. said...

I used Daraz to buy tickets to the Pakistan vs Zimbabwe match in Lahore a few years ago. I was very pleasantly surprised at how easy it was to order the tickets and they were delivered by a guy on a motorcycle and I paid him when he delivered the tickets. Since this was my first experience I was not comfortable giving them my credit card number so I opted for the payment on delivery option.

Shoeib Y. said...

$152 Billion retail market? Where did they come up with that number?

Riaz Haq said...

Retail market estimate is from Planet Retail Research.

$152 billion retail market in a $320 billion economy is not surprising

Retail sales in India are close to a trillion US$ now, nearly half of India’s gdp

Riaz Haq said...

Alibaba Group Holding Ltd. BABA, -0.28% announced that it has acquired Pakistan-based Daraz Group, a leading e-commerce company in Southeast Asia. The acquisition comes after a recent investment in Lazada, another Southeast Asian e-commerce company. Daraz has 30,000 sellers and 500 brands on its platform, according to the release. "With a combined netizen population of approximately 90 million (Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal), Daraz's current market represents a sizable growth opportunity for Alibaba," said Declan Kearney, Clavis Insight's APAC general manager. "Although the market is many years behind China (in terms of shopper sophistication & retailer e-capabilities), Alibaba's investment is certain to accelerate online retail growth over coming years." Walmart Inc. WMT, -3.32% announced Wednesday that it has taken a 77% stake in India's Flipkart e-commerce platform for $16 billion, demonstrating the growing retail competition in the region. Alibaba shares are up 13.5% for the year so far while the S&P 500 index SPX, +0.86% is up 0.5% for the period.

https://www.marketwatch.com/story/alibaba-acquires-pakistan-based-e-commerce-site-daraz-group-2018-05-09

Riaz Haq said...

Alibaba has expanded its e-commerce empire into South Asia after the Chinese internet giant acquired Daraz in an undisclosed deal.

Daraz was founded in 2012 by Rocket Internet and today it operates in Pakistan as well as Bangladesh, Myanmar, Sri Lanka and Nepal. Rocket said in a statement that Alibaba has acquired the entire Daraz business. The deal is the second time Alibaba has bought a Rocket company, the first being Lazada in Southeast Asia two years ago.

An Alibaba spokesperson confirmed the deal but the company hasn’t made an official announcement.

Rumors of a deal have been rife for the past couple of months, with Bloomberg reporting in March that acquisition talks were ongoing.

The deal is part of Alibaba’s second wave of international expansions which see it enter South Asia.

The company initially focused on India — where it has backed Paytm — and Southeast Asia with Lazada, but this year it has spread its wings into lower profile but hugely populous countries in South Asia. Pakistan, for example, has a population of over 190 million. The acquisition of Daraz follows a fintech investment from Alibaba affiliate Ant Financial, which runs Alipay and other Alibaba financial services.

Back in March, Ant paid $184.5 million for a 45 percent stake in Telenor Microfinance Bank, a fintech division from Norwegian operator Telenor, which operates Pakistan’s second largest telco. That one-two punch of e-commerce and fintech (particularly payments) is a common move from Alibaba-Ant, which has made similar deals in India and across Southeast Asia.

Beyond Pakistan, it looks like Alibaba is also eying nearby Bangladesh, which has a population of over 160 million and rising internet adoption.

According to reports last month, the Chinese firm is pushing to buy a 20 percent chunk of payment firm bKash, a move that would again push its reach deeper into South Asia.

https://techcrunch.com/2018/05/08/alibaba-buys-rocket-internets-daraz/

Anonymous said...

Why is this biggest news not covered in American Media the way they are covering Walmart buying Flipkart of India ? SIck of media bias.

-Ali

NBRX said...

Because there is a conspiracy against Pakistan

Riaz Haq said...

NBRX: "Because there is a conspiracy against Pakistan"

Western media coverage of Pakistan is mostly sensational and negative.

Western and Indian media have the history of covering the worst 1% of the Pakistan story 99% of the time.

But in this instance, the Alibaba move was covered by Reuters and Bloomberg.

Riaz Haq said...

Between the 18th and 19th centuries, the industrial revolution re-configured global economic and political power. As machines in Manchester began to spin the bulk of global textile production, within decades, India went from the world’s top textile exporter to a net importer. Between 1750 and 1900, India’s share of global industrial production slumped from 25% to 2%. It was not just because of western command over science and technology. It owed as much to political power and exploitative economic and trade policies. The impact of that shift – let us call it the historic ‘Manchester moment’ – still significantly determines where India stands vis-a-vis the developed world. India continues to regret missing out on the industrial revolution in time.

It is ironical then that we may right now similarly be losing out on another revolution. This contemporary ‘Manchester moment’ is about digital technologies and digital economy. As industrial revolution automated mechanical power, digital revolution is about automation of intelligence. Both represent fundamental shifts in human affairs. The digital revolution will as thoroughly transform our economic, social and political organisation as did industrial revolution.

This tragedy is unfolding right in front of our eyes, in a nation supposed to be in good political and economic control of itself. It also has sufficient basic competencies in digital technologies and conducting modern business. As it was in 18th-19th centuries, India’s failure is primarily political.

Missing the digital revolution

A decade or so ago, China trailed India in terms of IT or software technologies. How has China then suddenly become a digital super-power, posing a challenge even to the US? Digital technologies build over and subsume traditional IT and software, but are centrally about next-generation data-based systems.

It is simple. Just examine where in China (or US) all the cutting edge development of digital technologies – like artificial intelligence (AI), Interent-of-Things and blockchain – takes place. It is within super-large domestically-owned digital ecosystems like Baidu, Alibaba, Tencent and Didi. (In the US, these are Google, Amazon, Facebook, Apple etc). Unlike industrial technologies, digital ones are socially-iterative technologies that develop in real-world social and business settings, and not so much in laboratories. Innovating start-ups too get routinely bought and integrated into these ecosystems.

Over the last decade, China created ideal conditions for development of such large domestically-owned digital ecosystems, which catapulted China to global digital leadership. Both Chinese and US governments devote considerable public funds to partner with their private digital ecosystems for digital R&D.

And India? It first allowed Amazon to dump billions of dollars to close in on the domestic e-commerce market leader Flipkart. Not only were many other Indian e-commerce platforms suffocated in the process, domestic leaders like Flipkart had to off-load considerable equity abroad to obtain capital for matching Amazon’s cash burn. And now, most unthinkably, India is ready to sell its top e-commerce platform Flipkart to Walmart. Very soon, India’s two largest digital ecosystems will be foreign-controlled.

It is difficult to understand why India is inviting foreign corporations to own its digital ecosystems that are epicentres both of digital economy and development and control of digital technologies. It is difficult to think of a quicker path to total digital dependency.

Despite what most people think, digital platforms aren’t just ‘more efficient’ marketplaces. They are monopolistic intelligent agents that reorganise and control whole sectors, as they form backward and forward linkages – from manufacturing, inventory management and logistics, to payment and delivery.

https://thewire.in/economy/does-flipkarts-sale-represent-a-manchester-moment-for-indias-digital-economy

Riaz Haq said...

#Alibaba's entry in #Pakistan hailed as boost for #DigitalEconomy. Experts predict #Islamabad likely to lower high taxes after #Chinese e-retailer's investment. #ecommerce #fintech #Daraz #AliPay #Telenor #Telecom #payments

https://asia.nikkei.com/Business/Companies/Alibaba-s-entry-in-Pakistan-hailed-as-boost-for-digital-economy

KARACHI -- Alibaba Group Holding's recent purchase of a Pakistan-based online retailer has positioned the Chinese technology conglomerate to make inroads in e-commerce across South Asia, but the acquisition has raised expectations of robust growth in an industry that many experts say performs well below its potential.

Gaps such as the absence of a global online payments system can now be filled through Alibaba's Alipay service, said Shuja Rizvi, a Karachi based senior stock market analyst at Al-Hoqani Securities. "With the entry of a major player like Alibaba, Pakistan's policies will be molded to face global competition and our environment will hopefully improve," Rizvi said in an interview with the Nikkei Asian Review, citing one of the most commonly discussed benefits of Alibaba's arrival in the country.

Alibaba announced earlier this month a deal to buy Daraz Group, a Pakistani digital marketplace company, for an undisclosed amount. Since it was founded in 2012, Daraz has steadily expanded its services to Myanmar, Bangladesh, Sri Lanka and Nepal, say analysts who regularly track the e-commerce sector.

The acquisition comes as Pakistan prepares to receive more than $60 billion in Chinese investment under the China-Pakistan Economic Corridor -- a cornerstone of Chinese President Xi Jinping's Belt and Road Initiative. Alibaba's arrival in Pakistan also has been preceded by significant growth in cellular phone services and high-speed internet across the country in recent years, analysts say.

According to the Pakistan Telecommunication Authority, or PTA, the official regulator of the telecom sector, more than 73% of Pakistan's population, or roughly 149 million people, have cellular phone subscriptions. Especially important for the growth of digital businesses is the estimate of 56 million people, or more than 27% of the population, who subscribe to broadband services -- a key figure indicating the number of internet users, many of whom will be potential future online customers.

"Today, the number of internet users in Pakistan are more than the entire population of many countries around the world," a senior official with the Ministry of Information Technology and Telecommunication in Islamabad who requested anonymity because he was not allowed to speak to journalists, told Nikkei. "For investors like Alibaba, there is fertile ground for a strong future expansion."

Other PTA officials said that online retail businesses in Pakistan have much room to grow as they have an advantage over traditional retail outlets that have to invest heavily in commercial real estate to sell their products to consumers.

"In the most prized commercial markets of Pakistan -- in big cities like Karachi, Lahore or Islamabad -- rents have more than doubled for the top-end premises just in the last 10 years," said the Ministry of Information Technology official. "And the overhead costs -- especially rents -- continue to rise."

Barkan Saeed, chairman of the Pakistan Software Houses Association, the main representative body of the country's software industry, welcomed Alibaba's purchase of Daraz and entry into the country "as a major milestone" for Pakistan's e-commerce sector. Saeed said that while the government estimates the annual value of e-commerce transactions in Pakistan at approximately $600million, the actual figure could be five times that amount.

Riaz Haq said...

TECHNOLOGY
Internet Giants Amazon, Alibaba Heading For Consumer Battle In India

https://www.investors.com/news/technology/amazon-stock-alibaba-ecommerce/

Amazon.com (AMZN) and China internet giant Alibaba Group Holding (BABA) are heading for a grand battle in India as they pursue e-commerce growth outside their home markets, according to a report Tuesday from brokerage Morgan Stanley.

The U.S. e-commerce leader has a "larger long-term need for global expansion," said the Morgan Stanley note to clients, with India emerging as a new battleground.

"For now, we see Amazon ahead in India, Alibaba ahead in Southeast Asia, and both players planting seeds in Latin America and Australia," the note said

Walmart (WMT) recently beat out Amazon for Indian e-commerce heavyweight Flipkart. Walmart agreed to pay $16 billion for Flipkart, a firm founded by former Amazon employees.

Alibaba Paytm Stake
While Morgan Stanley says the U.S. e-commerce firm leads Alibaba in India, the Chinese internet giant has a strong presence. Alibaba supports Indian online shopping site Paytm Mall, a rival of Flipkart, with a 36% stake.

Alibaba also has a presence in India through investments in BigBasket, an online grocer, and logistics firm XpressBees, the note says.

In Latin America, both companies are focused on Brazil, it adds.

Amazon India Buildout
The U.S. e-commerce leader has built out 60 fulfillment and distribution centers in India. Amazon also is expanding local video content in India for its internet streaming service.

Morgan Stanley says Amazon and Alibaba will be battling over a $5 trillion market opportunity in India, Latin America, Southeast Asia and Australia.

Amazon edged up 0.3% to 1,615 on the stock market today. Its stock has gained 61% from a year ago and 35% in 2018.

Alibaba stock rose 0.8% to 200.93 on Tuesday. Shares are up 61% from a year ago and 8.5% in 2018.

Riaz Haq said...

#PTI's 14-Point for #Digital #Pakistan. #Elections2018 #ImranKhan https://www.techjuice.pk/pti-unveils-digital-policy-naya-pakistan/ PTI’s 14 Points for Digital Pakistan:
$2 billion set aside for National digital transformations & provision of different services to citizens through mobile.
Using technology to open government data to increase transparency
IT education of 50,000 students
Establishment of 120 new campuses to produce 100,000 technology graduates/year
Mathematics and Science teacher training and certification program
Five new major technology clusters (Special Economic Zones)
A focus will be on creating enabling environment for start-ups and entrepreneurs.
50,000 call center seats available on a turn-key basis
One window operation to register a new company
A global PR campaign involving expat community
Visa issuance on green passport for Businessmen and professionals
Simplification of processes for foreign ownership of companies
Public-Private Partnership on projects
Target will be set to increase the global ranking of Pakistan in ease of doing business

Riaz Haq said...

Pakistan To Have 100 Mln Smartphones In Next Two Years

https://www.urdupoint.com/en/technology/pakistan-to-have-100-mln-smartphones-in-next-388458.html

As per report of GSMA, by year 2020, a whopping 90 per cent of Pakistani population will have access to 3G networks while an impressive 80 per cent population will have access to 4G. Obviously, mobile broadband growth means flourishment of smartphone.

The mobile broadband users growth in pakistan is expected to touch 8 per cent mark in coming years as the country would have more than 100 million smartphones by 2020.

The third-generation (3G) and 4G mobile phone users stand at around 56 million and continue to grow, creating a huge demand for smartphones, which is the top selling category across all major e-commerce platforms.

--------------------------------------


The Mobile Economy 2018


https://www.gsma.com/mobileeconomy/wp-content/uploads/2018/02/The-Mobile-Economy-Global-2018.pdf

Having surpassed 5 billion people connected
to mobile services in 2017, the global mobile
industry will reach further milestones
over the next eight years. The number of
unique mobile subscribers will reach 5.9
billion by 2025, equivalent to 71% of the
world’s population. Growth will be driven by
developing countries, particularly India, China,
Pakistan, Indonesia and Bangladesh, as well
as Sub-Saharan Africa and Latin America.

-----------

While more than 3 billion people use mobile internet
globally (internet-connected consumers), their
digital engagement – measured by the GSMA
Global Mobile Engagement Index (GMEI) – varies
significantly between countries. On a scale of 0–10,
South Korea (6.8), Scandinavian countries (e.g.
Finland at 6.7, Sweden at 5.8), Australia (5.5) and
the US (5.3) have relatively high mobile engagement
scores (2017); many subscribers in these countries
use their phones on a regular basis to access not
only internet-based messaging and social media
but also entertainment content (such as movies,
music, games and sports), e-commerce and other
digitally delivered services and content (i.e. financial
services, health, education, government services).
Pakistan, India and Tanzania have the lowest scores
(at around 1.0).

------------

Telenor’s Easypaisa digitises payments for Nestlé dairy farmers in Pakistan
Pakistan is the third largest milk-producing nation in the world, behind the US and India, with dairy and
livestock accounting for around 12% of GDP. The local unit of multinational food business Nestlé works
with around 150,000 dairy farmers across the country. Every year, the company pays approximately
PKR22 billion ($208 million) for nearly 0.5 billion tons of milk through an extensive chain of more
than 2,500 milk collection centres. Most farmers receive their payments in cash from the supply agent
routed via the traditional banking channel.
Telenor’s Easypaisa mobile money service collaborated with Nestlé Pakistan to make disbursement of
milk collection payments swift, easy and transparent. Easypaisa provided Telenor SIMs and registered
Easypaisa mobile accounts for around 15,000 farmers across Pakistan for the transfer of funds into
their accounts on a weekly basis. Easypaisa processed payments totalling more than PKR1 billion to
dairy farmers annually.

Riaz Haq said...

#Technology firms Avanza Group & Premier Systems announce investment of $5 million in the #payment #gateway to connect individuals with merchants and banks via joint venture as Avanza Premier Payment Services (APPS) in #Pakistan #mobilepayments #ecommerce https://www.techjuice.pk/two-technology-firms-to-establish-online-payment-gateway-in-pakistan/

Two technology groups in Pakistan have collaborated to develop a local online payment gateway system to take a share in the growing e-commerce market of Pakistan.

Avanza Group and Premier Systems announced to invest over $5 million in the gateway which is aimed to connect individuals with merchants and banks. According to sources, the two companies will set up the joint venture as Avanza Premier Payment Services (APPS).
Mahmood Kapurwala, CEO of Avanza Group said, “the size of Pakistan’s e-commerce market is estimated to be $1 billion, which should be $30-$40 billion in a country with a population of 207 million.’ He also partnered with NCR, Avaya, Microsoft, and IBM. He added, “We are looking at this gap as an opportunity.”

APPS claims to be the first Financial Technology (fintech) in the country to obtain payment system provider (PSP) and payment system operator (PSO) licenses from the State Bank of Pakistan (SBP). According to McKinsey and Company, a worldwide management consulting firm, Fintech will add about 4 million jobs, 93 million bank accounts and $36 billion annually to the gross national product (GNP), and $7 billion to the government’s net revenue by 2025.

The newly-founded company plans to incentivize brick and mortar businesses with free online services, like building websites and digital marketing. It will only take a certain share in the profit that comes through online businesses. Adnan Ali, CEO, APPS said: “It will move Pakistan towards digitizing major institutions, such as merchants, schools, billing industries, mutual funds and other corporate entities by providing a digital gateway.”

Avanza Group CEO said, Increase in e-commerce acceptance will also help grow the overall retail market when people will have the choice to buy products present in other cities, He said, “If everything remains on track, earning a revenue of Rs400 million will not be a big deal.”

Riaz Haq said...

#Pakistan #digital #banking growth accelerates. Fiscal 2017-18 saw 3.4 million #ecommerce transactions worth Rs18.7 billion, representing year over year growth of 183.3% and 98.9%. #fintech https://www.globalvillagespace.com/pakistan-banking-sector-witnesses-growth-on-digital-front-and-agriculture/ via @GVS_News

The State Bank of Pakistan (SBP) in its ‘Payment Systems Review’ for the financial year 2017-2018 has provided a statistical snapshot of the payment systems in the country, showing growth in various traditional and modern payment systems.

During the financial year 2018, the country’s core payment systems infrastructure remained operationally resilient. All the channels of payment systems showed significant growth compared to the previous year. The large-value payment system i.e. Pakistan Real Time Interbank Settlement Mechanism (PRISM) processed 1.7 million transactions amounting Rs361 trillion.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country

These transactions showed significant growth of 54.5 percent and 29.2 percent in both volume and value of transactions compared to the previous financial year. In these transactions, the transactions with regards to third-party customers’ transfers have the highest share of 1.3 million transactions (i.e. 79 percent of the overall recorded transactions) whereas Government securities settlement transactions have the highest share of Rs256 trillion in a value of transactions.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country. Consumers carried out 3.4 million online transactions of worth Rs18.7 billion on these locally registered e-Commerce Merchants during the year FY18.

These transactions showed a significant YoY growth of 183.3 percent and 98.9 percent compared to the previous year. In addition to the above, domestically issued Debit, Credit and Pre-paid cards processed 6.8 million transactions of Rs. 39.7 billion on local and International e-Commerce merchants. In these e-Commerce transactions, Credit Cards has the highest share both in volume and value of transactions.

While no specific information has been provided on the number of users of these cards, the number of transactions processed through these cards has increased by 37.3 percent with total transactions, as on June 2018, having been reported at 34.4 million, at a value of Rs201.5 billion during the fiscal year 2018.

Agriculture loans in 2017/18 were 38.1 percent higher than the previous year’s disbursements of Rs704.5 billion, the State Bank of Pakistan (SBP)

Having grown at a pace of 21.8 percent and 23.4 percent in the volume and value of transactions respectively, during the year under review, debit cards processed a total of 441.1 million transactions worth Rs5.1 trillion, far greater than the size and value of transactions conducted using credit cards.

However, the bulk of this usage has been on transactions concerning ATM withdrawals whereas the share of transactions with respect to Point of Sale usage has been merely 8.6 percent in volume and 2.9 percent in the value of transactions.

Credit cards, on the other hand, has been the predominant medium for Point of Sale usage, with the 87.2 percent of the total volume of credit card transactions being made on Point of Sale payments and 10.2 percent in e-Commerce transactions.

Meanwhile, Banks disbursed agriculture credit of Rs972.6 billion during the last fiscal year of 2017/18, falling short of Rs1 trillion target set by the Agriculture Credit Advisory Committee (ACAC), the central bank said on Thursday.

Riaz Haq said...

‘Alipay to start operations in #Pakistan by end of 2018’.
#Alipay seeking approval from State Bank of Pakistan to pave the way for international payment gateways to enter in Pakistan. #payments #Alibaba #ecommerce https://tribune.com.pk/story/1780902/2-alipay-start-operations-pakistan-end-2018/

Alipay, the China-based third party mobile and online payments platform, will start operations in Pakistan by the end of this year, according to Irfan Wahab Khan, the Telenor chief executive officer.

Khan is also a board member of the Telenor Microfinance Bank in which Ant Financial, the parent company of Alipay and the financial services affiliate of Alibaba, acquired a 45% stake at an investment of $184.5 million in March 2018.

Currently, Ant Financial is in the process of taking approval from relevant authorities such as the State Bank of Pakistan (SBP) and Competition Commission of Pakistan (CCP) to commence financial services in the country.

As Pakistan embraces digital technology after the spectrum auction that saw the arrival of 3G/4G services in the country, a payments solution was the need of the hour. While mobile phone infrastructure and service penetrate 72% of the population, according to the latest data available with the Pakistan Telecommunication Authority (PTA), future growth will rely on digital payments becoming more accessible.

Khan agreed that the opportunity exists.

“The opportunity exists in data, digital payments and e-commerce,” Khan told The Express Tribune.

Pakistan has 58 million broadband subscribers including 56 million 3G/4G subscribers. Its e-commerce market is estimated at $1 billion, and gaining momentum.

Recently, Alibaba, the Chinese e-commerce giant, acquired Daraz.pk from venture capital company Rocket Internet, and is tipped to be expanding its footprint in the country.

Its financial muscle and experience will help it against competition that includes the likes of PayPak of 1link, Fonepay, and Avanza Premier Payment Services (APPS) that have also entered the digital payments space with investments to the tune of millions of dollars.

Telenor – with its network and infrastructure – is also looking at the next growth segment as mobile broadband penetration slows down in the next five years.

Additionally, as users opt for over-the-top applications that bypass the traditional calls-receiving and calls-making processes, cellular mobile operators (CMOs) are now eyeing growth in the digital payments segment.

“We are putting a site an hour on 4G and will complete 80% of them by the end of this year,” said Khan, who took over as CEO Telenor Pakistan on August 1, 2016.

Mobile payment firms struggle to dethrone cash in Southeast Asia

Telenor is currently placed second as the CMO with the highest number of subscribers. It has 43 million subscribers after Jazz, which is the market leader with 55 million.

Telenor also has a 23% market share in the Next Generation Mobile Services (NGMS) market, which puts in third place after Jazz (34%) and Zong (29%).

On the other hand, Telenor also invested in an agriculture sector-related app, ‘Khushhal Zameendar’, which provides location-specific weather forecast and agronomic advisory to small-scale farmers.

“It’s about incentive. Customers are sensible to adopt new technology when it offers incentives to them,” Khan said.

Published in The Express Tribune, August 15th, 2018.

Riaz Haq said...

With growing #ecommerce market, another e-tail platform kicks off in #Pakistan. Ezbuy is looking to tap the market, offering #Chinese goods as well as fruits grown in Pakistan. Moreover, its access to #Alibaba’s delivery system and #technology https://tribune.com.pk/story/1793165/2-increasing-pie-another-e-commerce-platform-kicks-off-pakistan/

Pakistan’s expanding e-commerce market has prompted yet another launch with Ezbuy becoming the latest addition in the online market space.

While experts suggests the size of the e-commerce market is hovering around the $1-billion mark, co-founder and CEO of Ezbuy, Kamran Shaukat, has taken a rather conservative approach. However, he still says Pakistan remains a goldmine when it comes to the e-commerce segment with growth steadily increasing.

“Pakistan is a goldmine when it comes to the e-commerce space,” Shaukat told The Express Tribune. “We are a $170 billion retail market of which 0.2% is e-commerce and this (share) is doubling each year.”
With payments gateways and on-demand services registering well with a bulging population, Pakistan remains on course for increasing growth in the online market segment.

Ezbuy is looking to tap the market, offering Chinese goods as well as fruits grown in Pakistan. Moreover, its access to Alibaba’s delivery system and technology will enable it to reach a wider consumer base, believes the company.“Ezbuy will start with China products, which account for almost 70% of e-commerce produced globally and then expand to sourcing from the US and Korea.”

Online platforms fail to attract large number of shoppers

Sharing plans for the structure, Shaukat informed that currently Ezbuy features cross-border and local products on the main page and a separate section called ‘Haute Shop’ for Pakistani fashion and lifestyle related products. He also revealed plans of expanding into a platform for more sellers to showcase their products.

Ezbuy is present in the Southeast Asian region, including markets of China, Singapore, Malaysia, Korea and Thailand.

Responding to a question on the competition that the venture would face, Ezbuy co-founder and Chief Strategy Officer Vincent Xue Bin said, “Ezbuy is a ship in the big ocean (Pakistan),” adding that his goal in the short-run is to build a strong customer relationship.

Seeing growth potential, retailers invest more in e-commerce

He said Ezbuy, just like any other retail shop, is not concerned with competition and prepared to face the challenges.

“We believe that it (Pakistan) is an underserved market in terms of lifestyle. I think we will have a strong contribution in building a better business in Pakistan,” Shaukat commented.

He said one of the differences between Singapore and Pakistan is that in the former market you can open up a business in an hour and here it takes “a good six weeks”.

The officials said the government could facilitate the process of opening a business, encouraging economic activity in the country.

On the topic of Chinese goods flooding Pakistani markets, Shaukat said currently, no country in the world can match China.

Riaz Haq said...

#Pakistan #Post introduces ‘same-day #delivery’ service for 25 cities. Pakistan Post is going towards #ecommerce, rebranding, mobile money orders and enhanced #logistics facilities through its network of 13,000 post offices across the country. #package http://www.samaa.tv/news/2018/11/pakistan-post-introduces-same-day-delivery-service-for-25-cities/

In an attempt to revamp the Pakistan Post, the government has launched ‘same-day delivery’ service for 25 cities.

Pakistan Post is going towards e-commerce, rebranding, mobile money orders and enhanced logistics facilities through its network of 13,000 post offices across the country, Minister of State for Postal Services Murad Saeed said Tuesday.

According to Radio Pakistan, Murad Saeed said that the Pakistan post has a market of around Rs80 billion.

This will help the department not only overcome its current losses, but also make it an earning institution, the minister said.

Earlier, Saeed launched the Electronic Money Order service for the quick transfer of up to Rs50,000.

Initially, the Electronic Money Order service is being started at 93 General Post Offices across Pakistan and it will be extended to other post offices later on.

Riaz Haq said...

Technology Can Address Problems Plaguing Pakistan Economy By Henny Sender, Financial Times

#Technology can address problems plaguing #Pakistan #economy. #Investments by #China’s #Alibaba and promise of local start-ups highlight potential for innovation. #startups #ecommerce #fintech #exports #trade https://www.ft.com/content/6f2633d4-e7f9-11e8-8a85-04b8afea6ea3 via @financialtimes

In May Alibaba bought Daraz, the biggest local e-commerce platform in Pakistan, from Germany’s Rocket Internet for about $200m. By joining the platform, smaller manufacturers can reach new customers in China. Already the site has 6m registered buyers and thousands of sellers. Two months earlier, Alibaba’s Ant Financial paid $185m for a 45 per cent stake in Telenor Microfinance Bank — a deal that promises to improve financial inclusion and support small businesses in Pakistan......Shahid Mustafa, Telenor’s chief executive, says: “In five years we will be the largest tech company in Pakistan.”...... Already Telenor, which says it has 75,000 agents and 176 branches across the country, has recruited thousands of software engineers. At an incubator on the outskirts of Karachi, young companies are addressing even more daunting problems.......Muhammad Khurram founded Aqua Agro, which specialises in smart irrigation. Mr Khurram estimates that farmers who use his smart devices need half as much water, yet they increase yields of crops such as lemons by 30 per cent. He is also using crowdfunding to raise money.
At the same time, another member of the same incubator, Fatima Anisha, has devised a technique to treat organic waste and turn it into fertiliser which improves yields without using harmful chemicals......While the efforts of the country’s start-ups are in many cases modest, they offer a vision of how the country — often with help from bigger Chinese technology groups — could start to find solutions.

Riaz Haq said...

82% of urban Pakistanis made online purchase in 2018, up 6% from 2017

https://profit.pakistantoday.com.pk/2018/11/20/82-of-pakistani-urban-consumers-made-a-online-purchase-in-2018-nielsen/

A report released by Nielsen “2018 Connected Commerce” has revealed 82% of consumers having access to the internet in urban areas have made an online purchase, up by 6% from 2017.

According to Nielsen, the growth of e-commerce in the last few years because of the rise in internet and smartphone penetration, especially in the country’s urban areas has contributed to the online sale of particular categories.

Fashion accounted for the largest slice of online transactions of 40%, followed by travel 31% and IT 29% respectively.

The report outlines consumers’ online purchasing habits and it disclosed categories which posted significant growth in e-commerce activity included restaurant deliveries 24%, 22% in beauty and personal care products, books and music 28% respectively.

The report determined that consumers are more conducive to making online purchases when offered a couple of purchasing options and quality assurances.

Furthermore, the report highlighted approximately 55% of the consumers stated that a money back guarantee for products not matching what was ordered would encourage them to buy online.

Also, 49% of consumers shared that free delivery for purchases above a minimum spend would contribute positively impact their buying decision.

Managing Director Nielsen Pakistan, Quratulain Ibrahim said, “Travel, fashion and IT are typical categories for first-time online shoppers, but as their familiarization, comfort and trust levels increase, their category range expands.

They start looking into areas like beauty, personal care and baby products, and then move even wider afield to restaurant deliveries or meal-kit delivery service categories.”

“This is evident in the significant jump we have seen in online purchasing within food delivery in recent years, especially in urban areas and city centres,” she added.

Global online sales in 2017 totalled $2.3 trillion or 10.2% of total retail sales and is expected to reach 17.5% by 2021.

“Online retail development correlates strongly with constantly improving internet access, especially in mobile-first communities.

With connectivity and digital development exploding in Asia, it is no surprise that the fastest growing e-commerce markets are located there,” said Nielsen.

The global online sales of fast-moving consumer goods (FMCG) products are growing four times faster than offline sales, and Pakistan, despite facing infrastructural impediments, is expected to follow the same route but at a varied pace, according to “Nielsen Future Opportunities in FMCG E-commerce” report.

As per the aforementioned report, it surveyed the current growth drivers of FMCG e-commerce in 34 markets and projected that the global online sales will touch as high as $400 billion by 2022.

Nielsen said, “Pakistan being a developing country with the largest youth population (which is more tech-savvy compared to older generations) is also expected to adopt the emerging e-commerce trends.”

“Some of the regions in Pakistan, especially rural areas have been fairly isolated and may explain why 24% of consumers strongly agree that internet connectivity is a barrier to online shopping while 37% somewhat agree,” it added.

According to the State Bank of Pakistan’s “Annual Performance Review 2017-18” report released last month, the volume of transactions in FY18 processed via retail e-Banking channels i.e. real-time online banking (RTOB), ATMs, POS, mobile phone banking, internet banking etc touched 756.5 million valued at Rs47.4 trillion.

The number of local e-commerce merchants registered with banks reached 1,094 and consumers carried out 3.4 million online e-commerce transactions valued at Rs 18.7 billion.



Riaz Haq said...

#Pakistan’s #digital revolution is happening faster than you think. Growth is being accelerated by other major investments in #power and #connectivity #infrastructure, technology and digital infrastructure. #technology #CPEC https://www.weforum.org/agenda/2018/11/pakistan-s-digital-revolution-is-happening-faster-than-you-think/ via @wef

The digital power of China’s Belt & Road Initiative (BRI) is slowly unfolding and shaping into a whole new area of opportunity.

When the BRI took global centre stage in 2013, most conversations revolved around traditional infrastructure: building roads, railways, power sources and linking borders. However, the digital awakening that BRI brings, and the associated development of human capital and innovation, is much more powerful.

The global map is being altered at a much faster rate than anticipated due to the disruption created by digital infrastructure, artificial intelligence, the Internet of Things, and blockchain. Further digital and technological disruption is now set to mend fractures in society – leading to improved living conditions and enhanced economic empowerment.

This disruption has given new life to e-commerce and the start-up scene in BRI countries. In light of the Global Competitiveness Index 4.0, it is extremely important that economies grow in all areas, overcoming challenges and making investment in human capital and innovation. Resilience and agility are key.

Looking at the South Asian region, some of the traditional deterrents to growth have been inadequate transport facilities, patchy power supplies and lack of financial inclusion. As we have seen in the past, industrial revolutions take their time to reach developing countries but the Fourth Industrial Revolution has been quick to reach all corners of the world.

Billions of dollars of investment are bridging the infrastructure and power supply gap while improving technology – the goal is to look past the problems that have hindered the road to progress in countries along the BRI.

The flagship project of the BRI, the China-Pakistan Economic Corridor (CPEC), which is a major collaboration between China and Pakistan, has been rapidly progressing and the impact of the project can be seen in the lives of Pakistani people, as reflected in an improving human development index.

Pakistan, which is emerging from many years of the war on terror, is now on a decent path to progress, with economic growth of 5.8% and improved investor confidence. At the World Economic Forum in 2017, Ebay’s chief executive, Devin Wenig, highlighted Pakistan as one of the fastest growing e-commerce markets in the world. In 2018, Alibaba bought Pakistan’s largest e-commerce platform, Daraz.pk.

..... Ant Financial Services, China’s biggest online payment service provider, recently bought a 45% stake in Telenor Microfinance Bank, in a deal that valued the Pakistani bank at $410 million.

Irfan Wahab, chief executive of Telenor Pakistan, called the deal a “game changer”; while Eric Jing, chief executive of Ant Financial, said it would provide “inclusive financial services in a transparent, safe, low-cost and efficient way to a largely unbanked and underbanked population in Pakistan”.

This kind of investment will benefit from the significant demographic dividend in Pakistan, targeting the largely unbanked young population, and providing not only financial inclusion but also a base on which to build digital businesses.

What the country needs now is to improve its position on the innovation and financial inclusion indices, currently at 89 and 75 respectively, on the World Economic Forum’s Competitiveness Index 2018.

-----------

The rapid completion of CPEC projects and the use of digital technology in the process is disrupting the economy and the lives of people at the same time. The question is whether Pakistan’s leadership will choose to embrace these technologies and take advantage of the biggest project on the road to progress. The future is full of opportunities and promise.

Riaz Haq said...

#Alibaba's #Alipay's entry to tap great potential of #Pakistan #ecommerce market. US$184 million investment to expedite mass adoption of digital #payments in Pakistan. #Internet penetration rising with estimated 60 million subscribers of 3G and 4G. https://on.china.cn/2EO9fAc

Alipay, a subsidiary of Hangzhou-based Ant Financial, has been cleared by the Competition Commission of Pakistan (CCP) to acquire a 45 percent stake in Pakistan's Telenor Microfinance Bank.

The investment of over US$184 million will expedite widespread adoption of digital payments in Pakistan. With internet penetration continuously on the rise, there are an estimated 60 million subscribers of 3G and 4G in the country that can become potential users of the service.

Several mobile payment services are presently operating in Pakistan. Primarily, these have been offered by telecom operators with a large number of cellular subscribers. However, limited international application has kept the penetration rate of the payment portals relatively low. Entry of Alipay, the world's largest mobile payment platform, will intensify competition higher, improve the quality of service and reinvigorate the entire landscape of the industry.

Pakistan's growing young population makes it suitable for embracing cashless payments on a large scale. People under the age of 30 form 64 percent of the population who are always the most likely to take up any new technology. On top of that, high cellular phone use will be a facilitative factor, since the mobile-first strategy for internet-based businesses is very valid in Pakistan.

Commencement of Alipay's operations in Pakistan will also provide a major push to e-commerce. eBay CEO Devin Wenig recently identified emerging economies like Pakistan as the fastest growing e-commerce hubs of the world. The trend is spreading like wildfire across the country with new online shops emerging constantly. A reliable e-payment gateway with worldwide collaborators is all that Pakistanis need to streamline their online transactions.

Alibaba had already acquired Pakistan's leading e-commerce platform Daraz. Utilizing the reach of Alibaba, Pakistani sellers will now be able to connect with global buyer.

The digital payment boom will be most beneficial for small and medium-sized enterprises that form the backbone of the national economy. Many of these businesses face difficulties in financial transactions due to being located in rural areas. Alipay might prefer to focus on them as the Pakistani government wants to reduce their business costs and difficulties.

Across the border in China, a new policy is on the cards to increase e-commerce purchases from overseas. Around 63 additional categories are being added to a product list of what can be imported duty-free through online platforms. Moreover, 22 cities, such as Beijing, Nanjing and Shenyang, are also being included in e-commerce pilot zones.

With several food items in the revised e-commerce import list, there is much potential for Pakistani farm produce. Fruits like mango and the mandarin hybrid kinnow can gain extended reach in the Chinese food market and the recent push to increase meat and poultry production could further boost Pakistan's exports.

The targeted online shoppers in China are increasingly focusing on foreign brands. Large businesses and premium brands from Pakistan can reach out to these buyers through Tmall Global – another Alibaba operated e-commerce platform allowing Chinese consumers to purchase products from abroad. Pakistan's small to medium businesses might not have the logistic prerequisites for this platform, but international-standard large companies certainly can.

Ant Financial is coming to Pakistan at a time when trade between Pakistan and China is touching new heights through the flagship project of Belt and Road Initiative (BRI) known as China Pakistan Economic Corridor (CPEC).

Riaz Haq said...

#Pakistan prepares for #5G public #trial in 2019. Draft framework for 5G enables use of radio spectrum on trial basis for noncommercial purposes to carry out trials for innovative use of radio frequency spectrum, apparatus/equipment and academic purposes https://dailytimes.com.pk/337738/pakistan-prepares-for-5g-public-trials-in-2019/

The Pakistan Telecommunication Authority (PTA) has unveiled its plans for the Fifth Generation (5G) Wireless Networks public trials, demonstrate systems and/or services in Pakistan.

In this connection, the regulator Wednesday has issued draft framework for test and development of future technologies particularly for 5G wireless networks in Pakistan 2018.



According to the PTA, the rapid growth in mobile data traffic and consumer demand for enhanced mobile broadband experience have led to an increasing emphasis on the upcoming fifth generation of mobile technology (5G).

“Seen as a comprehensive wireless-access solution with the capacity to address the demands and requirements of mobile communication beyond IMT-2020, it is projected that this technology will operate in a highly heterogeneous environment and provide ubiquitous connectivity for a wide range of devices, new applications and use cases”.

IMT-2020 is a term developed by the International Telecommunication Union (ITU)’s Radio communication Sector in 2012 to develop the vision of “IMT for 2020 and beyond.” The ITU has set a timeline that calls for the standard to be finished in 2020.

Pakistani telecom regulator said the scope of IMT-2020 is much broader than previous generations of mobile broadband communication systems. The ITU’s work in developing the specifications for IMT-2020 in close collaboration with the whole gamut of 5G stakeholders is now well underway along with the associated spectrum management and spectrum identification aspects. IMT-2020 will be a cornerstone for all of the activities related to attaining the goals in the 2030 Agenda for Sustainable Development.

The draft framework for 5G enables the use of radio spectrum on trial basis for noncommercial purposes to carry out trials for innovative use of radio frequency spectrum, apparatus/equipment and academic purposes including but not limited to scientific research, radio concepts and new systems demonstrations, added PTA.



The PTA said Government of Pakistan (GoP) policy directive based framework invites all stakeholders for participation in subject trials.

The framework has been issued only for temporary Test and Development licenses/authorizations which shall include criteria for the provision of authorization, conditions, duration, and other terms and conditions.

The Frequency Allocation Board (FAB) shall assign the spectrum to be used for subject trials which shall become effective from the date of Authorization issued by PTA.

It is important to mention here that the PTA said mere assignment of spectrum by FAB would not give right to the applicant for use of the same until Authorization is obtained from PTA.

The Test & Development Authorization allows an applicant to use spectrum on non-exclusive, non-commercial basis temporarily for the testing purposes.

There is no regulatory fee associated with subject non-commercial trial permission or the spectrum usage for said purpose. Also, users/consumers will not be charged for any services offered during the trial. The trial shall last for the period of three (03) to Six (06) months or as stated in the Authorization issued by PTA Spectrum for the trial will be available only at the designated test sites subject to localized restrictions (if any) due to National security issues.

Riaz Haq said...

#India’s #ecommerce crackdown upends big foreign players.
#Amazon, #Flipkart have till end of Jan to comply with new restrictions, that sharply restrict the use of their hefty balance sheets to boost sales on their websites. #FDI https://www.ft.com/content/6dd8188a-14c2-11e9-a581-4ff78404524e via @financialtimes

Saifuddin Bhanpurawala is one of dozens of shopkeepers on a dusty Mumbai back street that bustles with customers buying everything from tobacco to perfume.

But Mr Bhanpurawala’s mobile phone shop is going through hard times, selling as few as two handsets in a bad week. He says the reason is obvious: the huge discounts available online at Amazon and Walmart-owned Flipkart, the two biggest players in India’s fast-growing ecommerce sector.

“If we sell something at Rs5,000 [$70], they might sell it at Rs2,500 — we don’t understand how it’s possible,” said Mr Bhanpurawala, 28. He argued that the Indian government’s tolerance of such practices has demonstrated its lack of concern for small businesses: “The rich are getting richer and the poor are getting poorer.”

With a general election just four months away, prime minister Narendra Modi is moving to address such complaints. Amazon and Flipkart have been given until the end of this month to comply with new restrictions, announced in late December, that sharply restrict the use of their hefty balance sheets to boost sales on their virtual marketplaces. 

But while the move is intended to strengthen the government’s credentials among India’s millions of small retailers, it has sparked alarm for two of the country’s biggest outside investors. Walmart’s $16bn buyout of Flipkart last year was the biggest foreign direct investment in Indian history, while Amazon has committed $5bn in capital to its Indian operation.

“A sudden change in rules is not helpful,” said Mukesh Aghi, president of the US-India Strategic Partnership Forum, which works to build economic ties between the countries. “It sends a message to groups that the environment is not transparent.”

‘Behave like a marketplace’
When India opened its economy to foreign capital in the 1990s, it was careful to maintain protection for small retailers. Foreign investment was allowed in single-brand but not multi-brand retail — allowing clothing labels, for example, to open stores but keeping out the foreign supermarket chains that were feared by many shopkeepers.

As ecommerce took off, New Delhi updated these rules for the internet age. Foreign-backed companies would be allowed to run virtual “marketplaces” — platforms enabling independent sellers to connect with customers. But they were barred from selling goods themselves, stopping them from functioning as online supermarkets.

The vague wording of the rules, however, meant that Amazon and Flipkart — backed with billions in capital from foreign investors led by US fund Tiger Global — quickly found ways to use their balance sheets to turbo-charge growth, outraging peers in the industry.

“We were flabbergasted all the while at the blatant violations of the FDI policy,” said Sanjay Sethi, chief executive of ShopClues, one of the largest rivals to the dominant duo. “We started doubting ourselves — are we not interpreting these rules correctly?”

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https://www.ft.com/content/6dd8188a-14c2-11e9-a581-4ff78404524e

Flipkart pursued a different tack. Instead of forming directly controlled sellers, it supplied many of them through a huge wholesale distributor, named Flipkart India. The distributor’s revenue has far outstripped that of the online marketplace entity, while incurring heavy losses.

Riaz Haq said...

#India’s #ecommerce crackdown upends big foreign players.
#Amazon, #Flipkart have till end of Jan to comply with new restrictions, that sharply restrict the use of their hefty balance sheets to boost sales on their websites. #FDI https://www.ft.com/content/6dd8188a-14c2-11e9-a581-4ff78404524e via @financialtimes

Saifuddin Bhanpurawala is one of dozens of shopkeepers on a dusty Mumbai back street that bustles with customers buying everything from tobacco to perfume.

But Mr Bhanpurawala’s mobile phone shop is going through hard times, selling as few as two handsets in a bad week. He says the reason is obvious: the huge discounts available online at Amazon and Walmart-owned Flipkart, the two biggest players in India’s fast-growing ecommerce sector.

“If we sell something at Rs5,000 [$70], they might sell it at Rs2,500 — we don’t understand how it’s possible,” said Mr Bhanpurawala, 28. He argued that the Indian government’s tolerance of such practices has demonstrated its lack of concern for small businesses: “The rich are getting richer and the poor are getting poorer.”

With a general election just four months away, prime minister Narendra Modi is moving to address such complaints. Amazon and Flipkart have been given until the end of this month to comply with new restrictions, announced in late December, that sharply restrict the use of their hefty balance sheets to boost sales on their virtual marketplaces.

But while the move is intended to strengthen the government’s credentials among India’s millions of small retailers, it has sparked alarm for two of the country’s biggest outside investors. Walmart’s $16bn buyout of Flipkart last year was the biggest foreign direct investment in Indian history, while Amazon has committed $5bn in capital to its Indian operation.

“A sudden change in rules is not helpful,” said Mukesh Aghi, president of the US-India Strategic Partnership Forum, which works to build economic ties between the countries. “It sends a message to groups that the environment is not transparent.”

‘Behave like a marketplace’
When India opened its economy to foreign capital in the 1990s, it was careful to maintain protection for small retailers. Foreign investment was allowed in single-brand but not multi-brand retail — allowing clothing labels, for example, to open stores but keeping out the foreign supermarket chains that were feared by many shopkeepers.

As ecommerce took off, New Delhi updated these rules for the internet age. Foreign-backed companies would be allowed to run virtual “marketplaces” — platforms enabling independent sellers to connect with customers. But they were barred from selling goods themselves, stopping them from functioning as online supermarkets.

The vague wording of the rules, however, meant that Amazon and Flipkart — backed with billions in capital from foreign investors led by US fund Tiger Global — quickly found ways to use their balance sheets to turbo-charge growth, outraging peers in the industry.

“We were flabbergasted all the while at the blatant violations of the FDI policy,” said Sanjay Sethi, chief executive of ShopClues, one of the largest rivals to the dominant duo. “We started doubting ourselves — are we not interpreting these rules correctly?”

Flipkart pursued a different tack. Instead of forming directly controlled sellers, it supplied many of them through a huge wholesale distributor, named Flipkart India. The distributor’s revenue has far outstripped that of the online marketplace entity, while incurring heavy losses.

In the last financial year, Flipkart India made a net loss of $293m on sales of $3bn. That dwarfed the revenue of Flipkart Internet, the marketplace business, which booked sales of $398m, mostly on commissions charged to sellers.

From 2016, Amazon also dramatically increased the scale of its wholesale operation. In the last financial year, that business had revenue of $1.7bn, up from $458,000 two years before.


Riaz Haq said...

How technology is driving financial inclusion around the world

https://www.worldfinance.com/banking/how-financial-technology-is-driving-financial-inclusion-around-the-world

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The vast majority of unbanked adults live in developing economies. Compared with developed nations, banks in these regions tend to have far fewer branches. For instance, in Pakistan there were fewer than 11 commercial bank branches per 100,000 adults in 2017, compared with 31 in the US, according to the World Bank.

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This financial flexibility helps families meet unexpected economic setbacks and allows entrepreneurs to invest in their businesses and create jobs, Wald added. “Most importantly, digital financial inclusion allows economies to grow stronger and more inclusive.” For this reason, countries like Pakistan have come up with financial inclusion strategies in recent years. Pakistan’s government adopted a National Financial Inclusion Strategy (NFIS) in 2015 that aims for 50 percent of adults to have bank accounts by 2020 – including 25 percent of women.

Out of Pakistan’s population of around 210 million, only 21 percent of adults had bank accounts in 2017, according to the World Bank. But with high mobile penetration rates, this could soon change: research by Financial Inclusion Insights (Fii) found that 84 percent of men and 71 percent of women in the country have access to a mobile phone.

--------------------

201m
Population of Pakistan
21%
of adults in Pakistan had a bank account in 2017
34%
of men in Pakistan had a bank account in 2017
7%
of women in Pakistan had a bank account in 2017


--------

Both Smith and Wald cited India as something of a success story for financial inclusion. Its cash-based economy quickly digitalised over recent years, and the rate of bank accounts opening has been “absolutely extraordinary”, Smith said.

In neighbouring Pakistan, however, many locals are still wary of financial institutions. In a 2015 survey by Gallup Pakistan, 65 percent of respondents said they would rather deal with someone they knew than a bank.

Rehan Akhtar is the chief digital officer of Karandaaz, a non-profit that promotes financial inclusion and access to finance for micro, small and medium-sized enterprises (SMEs) in Pakistan. He told World Finance that convincing Pakistanis to adopt digital financial services over cash would require new policies, including digitalising all government transactions and enabling an environment for e-commerce transactions.

NFIS has prompted a number of new initiatives, including mobile bank account schemes, biometric identity verification and the promotion of fintech services. These policies have already strengthened the country’s microfinance sector.
In Pakistan, Akhtar said SMEs account for over 90 percent of the country’s 3.2 million businesses and 30 percent of GDP. “As a consequence, growth of SMEs can have a direct impact on achieving the targets of poverty alleviation and sustainable growth for Pakistan’s economy.”------------------

Investors are increasingly realising the opportunity unbanked populations offer. For instance, Chinese payment provider Ant Financial bought a 45 percent stake in Pakistan’s Telenor Microfinance Bank (TMB) for $184.5m in 2018. Ant Financial aims to develop mobile payments and digital financial services at TMB, which owns Easypaisa.

Stephen Rasmussen, who leads CGAP’s work on sustainable digital financial-services ecosystems, argued in a blog post that Ant Financial’s interest in Pakistan could be a game-changer by “spurring other businesses to become more ambitious about increasing mobile wallet uptake and use” and “[establishing] an investment benchmark in the market that could encourage additional investment into other fintech businesses”.