'Verified membership on Alibaba.com to grow business prospects of Pakistani SMEs & exporters,' CEO, PSGI

The business-to-business online marketplaces are helping the corporations of all sizes to generate sales that run into trillions of dollars globally as per various estimates. While both small and large enterprises in the developed markets have gotten ingrained into this cyber ecosystem of specialised online product listings and serious buyer inquiries, their counterparts in the developing markets are also now increasingly taking it to the online B2B portals.
B2B Online Marketplace's scope in Pakistan
Though Pakistani businesses have their presence on some level on various B2B online portals, they seem passive and reactive in their online interactions, and it appears that many among them haven't yet tried to figure out how to extract benefits from this phenomenon. That may change, as Pearl Shine Group Int'l (PSGI), a diversified local company, recently entered into a "Verified Membership Partnership" with Alibaba.com, which is the world's leading online B2B marketplace. Headquartered in Wah, a military city 30 km north-west of Islamabad, PSGI is relatively new in this area, and already has business interests in areas such as IT services, trading, constructions and foods.
BR Research sat down last week with Irfan Haider Awan, the founder & CEO of PSGI, to discuss this partnership's objectives and his company's future action plan vis-à-vis online B2B marketplace in Pakistan. "Online B2B marketplace multiplies a seller's prospects and opportunities. Even a small seller, located in any small city or town, is able to reach interested buyers in all parts of the globe. It's an easy and faster way to find new customers outside of one's geographical confines," Irfan started off.
He feels that the usage of B2B portals in Pakistan is in its nascent stage, as small businesses, which form a bulk of the enterprises in Pakistan, prefer to keep low profile online. "We entered into this line of business after we saw significant potential in the online B2B marketplace for Pakistani SMEs. Our workings showed that Pakistani sellers were looking for an online portal that not only offered a big buyer market, but also better service delivery, back-end support, and unique web interface. We partnered with Alibaba.com, which offers all these attributes and is a globally established online marketplace."
"Alibaba.com has nearly 24 million registered users from over 240 countries, and it currently offers 46 industry categories, and over 5,800 product categories. It's a buyer-centric portal, as 90 percent of the registered users are buyers. This offers such a huge opportunity for the Pakistani market which is seller-centric vis-à-vis online marketplace," Irfan maintained, while summing up PSGI's reasons for this alliance.
Current trade trends on Alibaba.com
He observed that Pakistan's existing trading trends on Alibaba.com have been promising. The data shared by Irfan shows that as of March-end this year, Alibaba.com had more than 622,000 registered Pakistani users. These Pakistani businesses account for about two percent of all registered users on the portal. The Pakistani verticals that have generated the most number of global buyer queries include, in order, apparels (jackets, T-shirts, martial arts wear, etc), agriculture (rice, animal feed, corn, etc), textile items (towel, fabric, yarn, etc), leather products, sports goods, and healthcare, surgical & medical supplies.
Foreign buyer queries for Pakistani products on Alibaba.com mostly originate from the United States, United Kingdom, China, India, Australia, UAE, Canada, France and Spain.
Verified Membership Programme
Alibaba.com already provides verified membership service in 33 countries, including the US, UK, India, Malaysia Thailand, Turkey and many European countries. The basis of PSGI's partnership with Alibaba.com is that both of them will work together to verify the bulk of registered but unverified Pakistani users on the portal.
"As Alibaba.com's official Membership Verification partner in Pakistan, we have recently initiated our Verified Membership Programme for local businesses. Companies that are already registered on Alibaba.com will be verified by PSGI on a number of criteria, including proof of business registration with the authorities, proof of business operations, NTN certificate, correspondence details, etc. These are Alibaba.com's uniform criteria across all the markets. The documents obtained from the interested members will be verified from the government departments as well as publicly available database," Irfan Haider elaborated on the programme.
He indicated that the verification process would like this: the registered, free users on the portal will get official emails from Alibaba.com, prompting them to seek verified membership while highlighting its benefits. An interested user will fill out the electronic verification form and send it back to Alibaba.com, which will then request its local partner, PSGI, to verify that user's details. PSGI would then get in touch with the user, seek all the required documents, go through the standard verification procedures, and communicate with Alibaba.com about the outcome of this exercise.
When asked why a simple member would want to become a verified member after all, Irfan opined that buyers, especially in the West, prefer working with suppliers that are verified. "Confidence, interest and trust are associated with the verified memberships. For sellers, being a verified member means their businesses get priority over non-verified suppliers of the same product. This happens because Alibaba.com's search engine optimisation ensures that verified members get more exposure, increased visibility and hence greater number of buyer queries on the portal", he highlighted.
Alibaba.com has over 0.6 million unverified, registered members in Pakistan, which Irfan sees as a great opportunity. Sounding ambitious, he said that "Our target is to convert at least 10 percent of these users into verified members by the end of 2013. Reaching out to 60,000 businesses is a huge task, but we hope we will be able to generate interest among local businesses and sign them up for verified memberships."
When urged to share his strategy to convert free users into verified members, he revealed that PSGI was planning to arrange seminars in different cities across Pakistan, targeting young entrepreneurs, SMEs and existing Alibaba.com users. "We are also looking for support from the chambers of commerce and trade associations. Outreach to registered exporters is the plan's key plank. We are mulling over liaising with universities as well, to create awareness about online marketplace among tertiary students. While we have our focus on traditional exporting sectors, we are going to target all the sectors," he dilated further.
There is a method to this activity
Irfan underscores the need for businesses to be proactive if they want to benefit from an online B2B portal like Alibaba.com. "Only registering the company and listing its products will not cut it. Those businesses that are focused only on the online B2B portals are well aware that there are strategies for attracting buyer interest and queries. Listing products' information, generating sales leads, responding to buyer queries, negotiating trade terms - all these steps are essential to closing the deal and require dedicated time, and some times, an additional human resource.
"Alibaba.com's role is to match the needs of buyers and sellers, and after that, negotiations on product specifications, shipment terms and payment methods are between the two parties. Business opportunity is there, and transaction maturity depends on factors that are in the hands of the sellers and buyers. After becoming a verified member, paying attention and focus to this online portal can yield substantial results for Pakistani exporters and traders," he insisted.
Irfan disclosed that a plan has been in the works at PSGI wherein interested verified members would go through training workshops on how best to employ Alibaba.com services to attract buyers and close deals successfully. In this regard, he mentioned one of Alibaba.com's e-commerce services, TradeManager. "Through this instant messenger tool, suppliers and buyers can chat online, share product photos files instantaneously, and potentially close their deals in real-time. Simultaneous translation feature lifts the communication barriers."
Focus on SMEs
Irfan Haider repeatedly emphasised his particular focus on integrating Pakistani SMEs into the online marketplace. He sounded confident that if SMEs learnt to use this platform the right way, it would increase their topline. He seemed convinced that the member verification drive would lead to growth in small businesses, and expressed hope that it might also help current & would-be entrepreneurs, who could deploy this medium to market their products, achieve scale, and become profitable.
"There are already many success stories from cities like Sialkot and Karachi, where small businesses have greatly benefited from Alibaba.com. Pakistani businesses in the SME sector produce some of the best products, but they lack the outreach and access to international markets. A trader, who becomes a verified member on Alibaba.com, can land substantial orders from abroad if he or she knows the product and the industry well, and is relying on originality and ingenuity", he concluded.
Going forward
Catching the attention of SMEs towards online marketplace maybe easy, but some serious hard work is cut out when it comes to pulling them towards signing up for verified memberships and actually using the online portal. Then, there are more challenges. Unlike consumer online marketplaces like eBay and Amazon, B2B marketplaces like Alibaba.com do not take guarantees of any business transactions between buyers and sellers. This is compounded in the absence of user reviews and feedbacks on such B2B portals, which ends up erecting geographical barriers for suppliers as foreign buyers become wary of being on their own the first time.
Nonetheless, Irfan Haider seemed hopeful of progress as PSGI starts executing its plan from December, engaging with the stakeholders mentioned above. Yet, there is no way to gauge activity of the business users on the portal, so there will be no hard facts or statistics as to the volume transacted or deals closed by Pakistani businesses via Alibaba.com. However, Irfan resolved to bring out the success stories in due course of time.