“As an FMCG organisation we cannot live in the past”

MARYLOU ANDREW: Why is ecommerce important to Unilever?

AMIR PARACHA: Globally there has been a clear shift from a brick and mortar store to a click store and consumers are now shopping anywhere and anytime for anything. They want variety and they are also looking for discounts. Although Amazon has not come to Pakistan yet, there are certain online shopping services in Pakistan and your product is actually much more visible online. So clearly this global trend is hitting Pakistan quite fast. We have to move with the moving consumer; as an FMCG organisation we cannot live in the past.

MLA: But fast moving consumer goods aren’t really widely available online in Pakistan.

AP: If you look at the products we have listed on the Daraz portal [complete range of Dove, Pond’s and Toni & Guy], with the exception of Dove, these brands are not widely available in stores either. For example you will not be able to find a Pond’s pot worth Rs 1,500 in every store in Karachi because it is too expensive. So we have tried to list high investment products with limited distribution. Secondly, when we go beyond Karachi, Lahore and Islamabad (KLI), there are many areas where we do not stock our more expensive products because retailers will not keep them. Interestingly, when you look at Daraz, 50% of their sales come from outside KLI because those people do not have access to the Hyperstars of the world but they do have the money. People often think that money only sits in urban areas, which is a myth. So this online portal gives them access to these products. Thirdly, we have also listed Toni & Guy which is a high street, high fashion product and quite expensive. Now, in order to buy such a product you want to first do some online research and read other people’s reviews. With online you can do all the local and international research you want and then make a purchase. As for Dove, it has failed to attract the kind of attention that Pond’s and Toni & Guy have done online. However, one of the reasons we listed Dove is because it is not available in sachet format unlike all other shampoos. Also a bottle of Dove costs a minimum of Rs 200.

MLA: Was Daraz an obvious choice because of the association with Rocket Internet or did you look at other ecommerce portals as well?

AP: Any partnership has to make financial sense and there has to be a good ROI yield for both parties. We use a distributor model because it is the cheapest model; at the moment online is not the cheapest model but it will be in the future. Daraz are still looking for a critical mass. So it was not an obvious choice and it took some time to strike the right deal. Similarly, we are working with other vendors to strike the right deal.

MLA: Where do you go from here in terms of what is next after personal care?

AP: We are working with a couple of other ecommerce partners [online stores] to have other grocery items listed because consumers are increasingly interested in having grocery items delivered at home. For example, Imtiaz does not have a website but people place their orders over the phone and they are delivered to their homes. Similarly, Aaram Shop, which has been quite successful in India has recently been launched in Pakistan and the idea is that they will pick up all your grocery items from the nearby kiryana store and deliver them to your home. So we feel that people will try to avoid going to kiryana stores and will place their order online. Also, another benefit of online shopping is that it is very easy to find good deals whereas in a shop you have to be in the right aisle to see the deals.

MLA: Your press release mentioned that Unilever wants to make online a core channel.

AP: Half a percent of Unilever’s global turnover comes from ecommerce and by 2017 we want two percent of our sales to come from ecommerce. We have a big ecommerce team sitting in London and in other countries and we are working with different ecommerce companies to drive it as much as possible. As a strategy, Unilever does not open its own ecommerce websites because we do not want to be seen as a competitor to a retail store. We are a manufacturer and that is what we will continue to do. We are doing a lot of work in this respect and it will not take very long to make it a core channel.

MLA: How much of your sales would you like to see coming from online in the future?

AP: Currently we are targeting one percent from online. Unilever is a Rs 70 billion company so one percent is Rs 700 million. The total online shopping industry today is Rs 600 million. The online shopping industry has tripled over the last three years but still the numbers are very small. Six hundred million is nothing and of this, the major chunk is coming from beauty products and fashion apparel.

MLA: What other online initiatives do you have in the pipeline?

AP: Our first online initiative was launched three months ago in the shape of an employee-only online virtual shop. There is a 100-inch screen in our office where employees can shop for our products in a virtual environment and those products are then delivered to their homes. The idea is to inculcate the habit of online shopping. This Daraz initiative is the second one and we’re talking to other ecommerce retailers as well; we are also in talks with other vendors and we are planning to open virtual shops in malls where people can perhaps scan a QR code to do their shopping. When we announced our partnership with Daraz, we did a print ad in DAWN with a huge QR code which when scanned could be used to get discounts on Daraz. We will try and replicate this in the retail environment.

MLA: Do you think large companies are a bit late in the game given that smaller shops have been experimenting with online shopping for a while now?

AP: I wouldn’t say we are late. We have multiple other channels to make our products available, which smaller companies don’t have. We have 350 distributors in Pakistan and we go to 300,000 outlets directly. Our products are available practically everywhere; for us online shopping is just another route to market.

MLA: But it is an important one now.

AP: Yes it is and we need to get in. But it is all about timing. Had we launched this three years ago we would not have had this response and we would have stopped after the initial investment. I think the time is now ripe to get into it. It is also about the right offering, because three years ago we didn’t have Pond’s or Toni & Guy on offer. Similarly, a lot of sales of our Pureit gadget are online and we didn’t have this gadget earlier. So it has to be a combination of the right time and the time offering.

MLA: What are the challenges of entering the online shopping space in Pakistan?

AP: The backend logistics and processes are a huge concern; there are lots of online portals coming up in Pakistan, but they are still trying to tighten their backend logistics. You can have a nice website but if the product is not delivered on time the consumer will be turned off. So whichever vendor we opt for, we have to first test the backend logistics. Companies such as ours have to help to organise this sector. We also want some more international players to step in because they have gone through the process and mastered the backend issues. Of course for eBay and Amazon the volume here is simply not big enough so it will take some time but those developments will really help to catapult the market and they will provide next level services.

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