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Pakistan: The land with the cheapest internet

Pakistan, is classified as a third-world developing country. However it is a land full of contradictions. Pakistan has some of the cheapest internet rates in the world. However even with the cheapest rates in the world, internet penetration rates are one of the lowest in the world.  A quick search reveals that the in 2015 the penetration rate was at 20 percent (the numbers for 2016 have yet to come in). With dismal stats like these one has to wonder what is the potential for digital marketing in such a market, if any?

E-commerce Potential in Pakistan

First off, the potential is there in this market and let us see the numbers to back it up. In 2013 the Internet penetration rate was just a mere 10%! In two years this figure has doubled which is very impressive. Like world over, this increase in percentage can be attributed to the growing penetration of smart-phones, along with local telcos push of mobile data services. A more concrete proof of the local potential is the presence of Rocket Internet and their locally developed Daraz.pk. Daraz is an e-commerce website selling pretty much everything, from laptops to shirts. In 2015 Daraz announced that they would be bringing Pakistan its first Black Friday Sale and true to their word they did pull off a mega sale like none other before. They made history by having the country’s first mega online sale. On the day itself Daraz had 1.5 million visits and orders went by by 55 times!  The demand was so above expectations that Daraz in the initial few moments thought their website was under an attack!

Within the first five minutes of the Black Friday sale, Daraz.pk had sold off all of its iPhone 6s handsets and also within the first 5 minutes they made shoes sales equivalent to 3 months of their normal year shoe sales!

Understanding the market in Pakistan

The consumers in Pakistan have been slow to adapt to e-commerce but are slowly coming on board. However the trust deficit remains, with most people choosing to opt for Cash on Delivery (CoD) when it comes to making purchases. However the consumers are maturing with most looking for quality at a reasonable price and convenience.

But here we will have to add another interesting fact. While internet penetration rates are highest in the big urban cities, most of the e-commerce demand is from smaller cities, towns or rural areas. This also holds true in India. Why is that so? Urban cities consumers are spoilt for choice when it comes to shopping avenues. Thus many people in smaller towns and cities are turning to e-commerce to gain access to products they otherwise would not have had. Therefore there is good potential for geographic price discrimination too (the ethical debate of using the internet for such a strategy is a separate topic).

Also banks in an effort to push their credit cards and online services in a cash dominated society are teaming up with many partners, many being online businesses. This means good discounts for customers and it is helping fuel the growth for e-commerce.

Last but not the least, the potential is such that Pakistan has in 2016 seen the entry of NetFlix, Uber and iFlix (soon to be launched). Major players are moving in and positioning themselves for the there is an uptick in e-commerce adoption and it is only going to go up from here.

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