Innovative Pakistani entrepreneurs are harnessing the buying power of consumers along with the power of the internet to bring web-based group buying to the country.
An early mover in this sector, Islamabad-based, Romeesa Private Limited launched Groupin.pk, earlier this year. Since its inception in the capital city, the company is quickly moving into other cities. "We launched in Lahore last month and will be fully operational in Karachi within a few days" a company official told BR Research.
The company approaches retailers and service providers such as spas, restaurants, and gyms and secures discounts from them for a predetermined number of clients. These discounts range between 50-90 percent, according to the companys website. The company then markets these deals via the website to registered users for a limited time, typically 24 hours.
If the requisite number of buyers commits to purchasing the offer, the deal is executed and clients are charged for the purchase. If the required number of buyers is not reached within the prescribed time frame, the deal is annulled and no one is charged for it.
This business model has been a roaring success in the United States, where Chicago-based GroupOn.com launched similar operations back in 2008. The growth of that company has attracted the likes of Google into the field, while GroupOn has recently announced plans for a $750 million-IPO that could rise to as much as $20 billion, by the time the dust settles.
Relatively low penetration of the internet in the country and the lack of an online payment gateway have so far been major stumbling blocks for such ventures in Pakistan.
"The main hurdle to the development of such websites is that there is no online payment gateway in the country, yet" explained Web Editor of ProPakistani.pk, Aamir Attaa. Consumers cannot go online to local websites and use convenient payment options such as credit cards or the equivalent of PayPal.
"Pakistan Telecommunications Authority is yet to fulfil its commitment on this front. Abu Dhabi Groups Raseen Telecom had also announced, back in 2009 that it would initiate such a service within weeks, but that did not materialise either" said the editor of the forum that follows online trends in the country.
In the absence of an online payment mechanism, Groupin.pk has been working on "cash-on-delivery"; but this mode is susceptible to leakages as some clients may back out of purchases, explained Attaa.
Despite the challenges, early movers are eyeing the power of direct selling through the internet. Even as Romeesa is busy developing its entry into Karachi, competitors are appearing on the horizon. A Karachi-based venture named "47th Avenue" is also in the works with a similar business model, an informed source, close to the project told BR Research.
The new entrant whose name is inspired by the countrys year of independence, 1947; is hoping to give Groupin a run for its money with a trendy, graphics laden website designed to hook the attention of browsing audiences.
Faced with spiralling inflation, consumers are sure to latch on to discount offers facilitated through such ventures, especially as increased competition in the industry forces players to sweeten the deal further for buyers.
The only stakeholder moving at snail pace in this lightning-fast sector (if it is moving at all); is the government and its regulatory arm, the PTA. The onus of expediting the introduction of a reliable, easy-to-use internet payment gateway lies with the PTA and it would serve national interest to achieve this goal as soon as possible.
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