GETPAKISTAN.COM
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PAGE Report
June 14 - 20, 2004
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getPakistan.com, Inc. was incorporated in the State of Texas on March 15, 2000. Company's current offering, to the immigrant Pakistani community in USA, include prepaid calling cards, gifts to Pakistan, money transfer and airline tickets. getPakistan.com, Inc. has a CAGR of over 200% in revenue since the launch of the company. It is the largest e-commerce company in its space. getPakistan.com, Inc. intends to enter the Pakistan market by the end of 2004. Company's main focus will be to provide services through its Internet distribution capability. Company's web site at http://www.getPakistan.com has over 65000 unique visitors, over 103,000 page views and over 500,000 hits per month. Company's 2003 revenue was to the tune of Rs. 28.13 million.

PAGE: What do you think are the reasons for the initiation of e-commerce in Pakistan?

ABDUL KUNDI: There is not one reason for this lack of e-commerce development in Pakistan. First and foremost the government regulations were instituted in late 2002 almost 8 years after e-commerce was initiated in other countries. Then there is low penetration of credit and debit cards. Currently there are 500,000 credit and debit cards which is 0.35% of the population as compared to around 65 million in US. Then the cost of Internet access has been higher as compared to other countries in the region. Besides these factors the attitude of people towards Internet has been that of suspicion and mistrust. People do not feel comfortable giving their credit and other personal information on the web. All these factors combined have hindered the initiation of e-commerce in Pakistan.

PAGE: What is the value proposition offered by an e-retailer?

ABDUL KUNDI: At the start of e-commerce price was considered as the biggest advantage. An e-retailor had over their brick and mortar competitors. E-retailors were supposed to share the saving achieved through lower overheads with their customers in terms of better prices. These e-retailers also had a tax advantage. E-retailers were given sales tax exemption until end of 2003. But as the market grew larger and it was realized that besides lower price there are other distinct advantages offered by these e-retailor, for instance time saving, convenience, wide variety of products to choose from. E-retailors also refined their business models, improved their logistics, invested money in a better customer experience and secured their web sites against hacking. These developments attracted more customers and internet became another distribution channel for retailers. According to a recent survey people spend USD 375 billion dollars in online shopping in USA.

PAGE: What are the most successful business models in e-commerce?

 

 

ABDUL KUNDI: Over the years as people understood the medium better some industries has adopted Internet as a distribution medium over others. For instance travel has become the largest sector in terms of revenue. Almost all US airlines and cruise companies have adopted Internet to distribute their services. The second largest category is selling books. Auction of new and used products has also grown substantially. Content and subscription services are growing fast like YahooPersonal, match.com, wallstreet online edition etc.

PAGE: What products and services are suitable for Pakistan market in e-commerce?

ABDUL KUNDI: I think instead of reinventing the wheel we should try to copy the business models successful in the developed countries. I think travel reservation is one area that has potential, online food ordering is another, purchase of movie tickets could also be done, then there is the market for Internet, cell phone and prepaid calling cards.

Tangible goods will still be difficult to sell over Internet in Pakistan. The cost of logistic and customer attitude is the biggest impediment in selling tangible goods.

PAGE: Even after the introduction of Internet merchant accounts there has not been much acitivity in e-commerce?

ABDUL KUNDI: Even in the developed markets Internet merchants pay a higher fee per transaction. But the costs in Pakistan are 100% more in Pakistan. A typical Internet merchant in USA pays 2.5% in transaction cost plus a small per transaction fee.

Whereas these fees are in the range of 4.5% to 5%. Plus funds are retained for about 15 days. This withholding period increases the cost of capital and reduces turnover. Also a merchant is required to prove the validity of a transactions if a customer claims the card has been mis-used. It is difficult for a small merchant to install systems that provides sufficient to defend the charge backs. Typically a company reserves 7 to 8% for charge backs but in Pakistan it has to be in the range 15 to 20% which also raises the cost of transaction for the merchant. All these transactions added together requires a higher threshold for a sale price which then result in exclusion of many products to be sold on Internet. This is evident from the fact that an average transaction size on Internet is Rs. 1000 in Pakistan.

 

 

PAGE: Do you think the current regulatory environment in terms of electronic signature and cyber crime is sufficient?

ABDUL KUNDI: I am not fully familiar about the regulations in Pakistan. What I have read in the newspapers and discussions with people it seems like a good starting point.

PAGE: What is your opinion on b-2-b e-commerce in Pakistan?

ABDUL KUNDI: I think b-2-b has a higher potential for success in Pakistan than consumer market in the current environment. For instance exporters and shipping companies can improve efficiency in logistics, banks and auto dealers can also use it for fast approval of loans for car finance, banks can also institute trade documents like LCs through Internet. The volumes and efficiency can justify the investment required to implement these e-commerce systems.

PAGE: What are your plans for Pakistan?

ABDUL KUNDI: In its essence we are a distribution company. We use Internet as a distribution medium for proprietary and third party consumer services. Our focus for Pakistan is to provide services that help our customers manage their life style effectively in a high paced environment. Most of these will be proprietary services. Our first service for Pakistan market is schedule for launch by end of July or early August.