Pakistan is reportedly one of the fastest growing economies in the world and has now become one of the hottest destinations for the mobile industry and global retail and e-tail giants. The catchup potential is so immense that it urges us to take a look and try to understand how Pakistan has managed to break the usual technological evolution of the West and is set to become one of the most digitally integrated economies in the world.
There is plenty of evidence that Pakistan will be the next digital hotspot over the next couple of years. Economic growth is booming with no end in sight, as Pakistan is expected to grow another 5.5% into unprecedented heights all while Pakistan’s millennials are growing up rapidly and cannot wait to get their hands on smartphones.
The m-Commerce Boom and its Impact on Retail in Pakistan
All of this is reason enough to focus today on the exciting evolution of the mobile industry in Pakistan, the current smartphone revolution, and the profile of the 21st century mobile savvy consumer in Pakistan by presenting some insights from the vast experience and knowledge that Daraz.pk has acquired about the Pakistani market over the last three years.
Exponential growth in smartphone penetration
Pakistan is expected to become one of the most mobile-savvy countries in the world, with a mind blowing 125 million mobile subscribers in 2015, which will have an immense impact on the transformation of how companies will do business in Pakistan and how they interact with their customers.
However, mobile penetration is not all there is to the digital revolution that is currently taking place. With keen interest, we are especially following the smartphone penetration. While three years ago, 93% of all phone shipments were feature phones, today, smartphone penetration has reached 31% of all phones in the market. These numbers ranks Pakistan in a study released by GfK, a German market research institute, as number 6th on the list of top smartphone markets for growth by value before the US, UK, and Canada. This trend is highly related to the introduction of 3G/4G technologies into Pakistan. Today, a larger share of Pakistanis have a smartphone than India, where only 20-25% of the population has a smartphone, and the smartphone emergence is expected to continue. According to Pakistan Startup Report, the figure can potentially go up to 110 million people in the next 4 years.
The rise of the affordable smartphone fueling the mobile industry
A few short years ago, it was the advent of the Apple phones that set the stage for dynamic growth in the smartphone industry and, eventually, the entire digital landscape. While Apple phones remain the crème de la crème of smartphones, premium technology and high demand from the millennials has prompted mobile companies to find new ways of growth and outreach. Three major factors have influenced the upward trajectory of smartphone penetration apart from the introduction of 3G/4G technologies.
First, more players have entered the market with more affordable price points to cater to the rise in demand thus enabling more people to own a smartphone and discover its perks. To make a case in point, reportedly, Daraz.pk observed an over 50% price drop in smartphones in just two years’ time – the average retail price of a premium smartphone has tumbled down from PKR 61,000 to nearly PKR 30,000, and the average number of smartphone sales has shot up by over 780% between January 2015 and January 2016.
The second reason is an effect of the first cause – more competition means different modes of market entry and sale. More and more manufacturers and retailers are choosing the online first approach in order to reach more people and less brick and mortar store associated costs in turn allows them to offer products at incredibly low prices.
Infinix and InnJoo both understood the advantages and chose to enter the Pakistani market in a different way. They formed an alliance with Daraz.pk for distribution of their premium smartphones in Pakistan, making the phones available at affordable price-points. Sales of the smartphone skyrocketed, making this model a raging success. Other brands have chosen to make their collection first available online through exclusive pre-launches or with special online discounts on Daraz.pk in order to tap into the demand. Regardless of the online approach, one consequence is certain – more variety, better quality at lower prices for the online customer.
Millennials – the new target group for smartphone brands
There is a large and growing demographic of millennials who were born to the internet, they are tech-savvy, tech-conscious and on a tight budget. It is with them where the market lies and Daraz and the smartphone retailers are fully aware of that.
In Pakistan, 77% of the population is below 30 years of age. According to a survey conducted by Grappetite, this population segment is also the most tech-savvy segment of the population – 80% spend a minimum of two hours online, daily.
This segment of the population bears huge potential – for all facets of the online landscape. Big social networks take it upon themselves to cater and educate this part of the population. Facebook, for example, is increasingly interested in offering free browsing to customers when on their mobile website or app. It has now gone the next step by making signing up possible with merely a phone number instead of necessity of an email address and introducing Facebook Lite application – an easy on data version of its Facebook app.
Going forward by going mobile – consumer shift from laptop to mobile
According to a recent survey conducted by Google, 76% of its users in Asia access Google on a mobile device. Similarly, 63% of the users on Daraz.pk access the contemporary offerings via mobile – this number was at 30% just about a year ago and has shot up considerably. That has significant implications for websites – more than being only user friendly on desktop, mobile and app sites become the focus of attention.
How user-friendly a website is on a mobile device is also now the largest attributor to where it stands in Google Search Rankings – a mobile-friendly website is more likely to appear above other websites in the search results and has a higher chance of attracting visitors and making revenue.
The key online players in the social and e-commerce field, Facebook and Daraz.pk respectively, have keenly observed the pattern of millennials online and acted upon the collated information. Nowadays most these millennials are price sensitive and have a high tendency to skip the traditional introduction to internet through desktop by going straight to mobile. Thus, the platforms have optimized their mobile versions to convey all necessary information to the user with fast loading speed and ideal for small screens.
The Next Big Thing: The App
Who now thinks that companies should put all their efforts into their mobile websites in order to have the perfect strategy for the future, might not have the clearest of all pictures. Comparing data from the use of our Daraz.pk application, since its inception in the beginning of 2015 and its rapid contribution to the overall business growth ever since, we are certain that apps will be the next key strategic win for companies in Pakistan. Given the current trend, in hardly any time, apps will be ruling the roost, leaving web far behind.
An application is a software developed specifically for the use on smartphones or tablets and have recently become the favourite access to content on a smartphone.
The uptake of the app is immense. While Daraz already recorded an increasing number of downloads during the first 6 months of its app existence until the end of June 2015, the second half of 2015 topped all expectations with a 258% growth rate. While downloads are soaring, almost 9 out 10 downloads are on the Android operating system while the remaining 10% are on Apple’s iOS operating system which does not come much as a surprise as the vast majority of smartphones in the Pakistan market run on Android.
The trend of app downloads in Pakistan
Pakistanis remain social network enthusiasts and it is no surprise that the most popular apps remain social networking apps such as Facebook and Whatsapp. However, the shopping category is gaining significance and Daraz App is already pushing strong to become the state of the art shopping app. In less than a year, it has advanced to being the second most downloaded free shopping app in Pakistan on Google Play Store and releases new updates of its app on a regular basis.
After carefully observing consumer behavior, it has been established that consumers are more inclined towards navigating on the app as opposed to the website’s mobile version. The amount of time spent on the app is twice as high the time spent on the mobile site; whereas, conversions are approximately three times more likely.
App winning over the web
It is not a mere conjecture that in the near future people will primarily access the internet via apps. Especially the following factors seem to weigh in as a Daraz customer survey indicated:
- Apps provide an easier and facilitated access to content: by clicking once, you get access to your desired content, instead of having to open the web browser and manually typing the URL of the site or even search for it.
- They have the ability to provide facilitated access to the website by generating push notifications on smartphones and promoting the user to access the platform. These are personal notifications sent by the app to the customers to maintain a good relationship and notify him of the latest news or offers. Daraz.pk uses them to notify users about exclusive deals and discounts or brand pre-launches.
- Most importantly, apps consume less data: Daraz.pk app studies reveal that mobile users using the app compared to the mobile version of the website consumes 5 times lesser data for similar actions.
Judging from our analysis of the Daraz application usage, Pakistanis seem to be much more comfortable and inclined to navigate on the app compared to Daraz’s mobile version. The amount of time spent on the app is twice as high on the app compared to the mobile site, while the conversion rate is almost 3 times higher on the app as well. Supporting the app’s “stickie-ness” argument is the fact that almost every app user visits the Daraz app about two and a half times more than the regular mobile website use.
To conclude, the app user is a technology and fashion addict that forms part of the Pakistani youth who redefines the retail market, as we know it. Brick and mortar stores may eventually lose their relevance and a mall on your palm will come out as the winner with a vast selection of brands and interesting price points for the majority of Pakistan.
Daraz.pk is known for offering the best prices for the world’s hottest phone brands. To celebrate the smartphone boom in the country, the leading online shopping website has announced Mobile Week, starting June 20. Daraz Mobile Week is expected to break the internet, with an incredible mobile phone price slash. It will be a week of crazy deals, exclusive phone launches and daily flash sales from top mobile phone brands on the Daraz website and mobile app. With this sale, the country will see a further hike in smartphone penetration.