One wonders whether Chairman Mao would approve of a materialism that is thriving alright in China. Last week, our friends in the north reportedly parted with over $25 billion on Singles Day (11.11), the Sino-equivalent of US Black Friday shopping event. The leader Alibaba, which is reportedly in talks to enter Pakistani market, has turned a day that started out as a celebration of lonely hearts into the biggest shopping day in human history. Now good luck delivering those billion orders!
Over in Pakistan, too, the retail economy, which is booming on the ground, is finding a spacious home online as well. (For more on the dynamics of Pakistan’s retail economy, please consult BR Research’s recent publication, Retail Review 2017, published October 31, 2017)
Currently hovering around one percent of total retail sales, online retailing is expected to progressively increase its share in the retail pie in the next few years (see the illustration). This time of the year, several factors – majorly the wedding festivities, the winter shopping, and the expats returning home – seem to drive shopping in Pakistan.
Leading e-retailers are trying to capitalize on that spending, but have done so using the imported concept of Black Friday sale. Nothing wrong with that, but it’s a bit odd how they’ve deployed it this year. In the US, Black Friday marks the shopping day after Thanksgiving, which takes place on the fourth Thursday of November. So, Friday, November the 27, is the ‘real’ Black Friday.
Here in Pakistan, leading players are not concerned with what date it is – they are observing their own Black Friday’s. For TCS Yayvo, the event starts this Friday, November 17. As for Daraz, which actually introduced the event in Pakistan couple of years ago, it is looking at a whole shopping week starting November 20.
It’s either these players have gotten an imported concept wrong or they are afraid to compete on the same date. Yayvo is holding another sale on November 27, called Digital Monday – another imported concept, after the US Cyber Monday shopping event. But they got the date right on this one. BR Research reached out to both TCS and Daraz to understand their planning and expectations regarding the Black Friday sale, but did not receive a response even two days later. It’s this column’s view that shopping events tailored around the local holiday calendar and cultural festivities may resonate better.
Anyway, fundamentals look good for e-commerce in Pakistan. On the demand side, close to 50 million folks are using cheap mobile broadband connectivity on affordable smartphones – that’s all you need (except for money and taste, of course) to log in and find a good deal online. Rural geography is a big void, so perhaps brick-and-click model can drive online spending there. Consumer protection needs better focus from a government that’s too slow to introduce regulatory framework for the online economy.
On the supply side, online stores – and there are many, many such stores in Pakistan – are trying to capture people’s interest through better user interface, competitive deals, and on-time delivery. It’s not clear how successful they have been. But, they do find willing partners among brands, merchandisers, bankers, insurers and logistics firms. So, an ecosystem is developing. Events like Black Friday can be helpful to get this supply network to test and improve their online and offline capabilities.
Consumerism is a complex issue to give a verdict on. On one hand, it needs to be encouraged for the sake of economic expansion and job creation, especially in an economy like Pakistan that is wedded to consumption. But the dark side of consumerism is how it degrades the environment and how keeping up with the Joneses distracts households from making rational economic decisions. Looked that way, the splurge doesn’t look sustainable.