"Online shopping has not become popular in Pakistan because it is not giving value”
MARYLOU ANDREW: TCS Connect was launched in May; can you give us a sense of what the past six months have been like for the site?
JAMIL AHMED: There are very few companies in this market that are operating on our model. Most of the e-commerce sites are selling Chinese replicas or As seen on TV goods. We are currently Pakistan’s third or fourth largest e-commerce company in terms of sales in just six months. The largest company, Symbiosis, sells Chinese replicas and their sales are worth nine million rupees a month. The major difference between these sellers and TCS is that their average order size is worth Rs 3,000-4,000 whereas ours is worth Rs 22,000. We are selling everything at dealer price, all goods are original and they come with a 90-day insurance against all kinds of damage. We have noticed that deals and discounts play a huge role on our site. Whenever we offer a deal, the traffic increases to 10,000 plus people.
MLA: On average, how much traffic does TCS Connect get per day?
JA: We get 2,000 unique users per day and on weekends it goes up to 7,000 users. The average time spent on the site is 4.5 minutes. But when you use key words like ‘discounts’ and ‘deals’, the traffic shoots up.
MLA: What are people buying?
JA: We work on the Amazon model, so we started with offering mobile phones which is still the best selling category; then we brought in books, movies, home appliances and perfumes. Perfumes are the second biggest seller and this is because we have a drop-shipping model. We partner with a large vendor – in this case it is Scentsation – and we offer prices that are 10-15% less than the stores. We pass on our margin to our customers because this is what the model is about; it’s about reducing our margins so that we can offer a better price.
MLA: If you are reducing margins to such an extent, how do you manage your revenue?
JA: Our revenues come from two or three sources. But first let me explain why we decided to get into online retailing. In 2001-02, we rewrote the company’s mission statement and said we would strengthen our main express product and any future diversification would complement our main product. So we take revenues from the TCS charges that every customer must pay, and we keep a five percent margin. Even if we get a 15-20% margin, we will only keep five percent. We can afford to do this because our organisational structure is very lean.
MLA: Is the lack of convenient payment options a hindrance to online shopping?
JA: In my opinion the reason why online shopping has not become popular in Pakistan is because it does not give value. We offer 15 different payment options on TCS Connect. The problem is that when people shop online, they are never sure that they will get what they see on the website. Additionally, shopping in Pakistan is not really a big hassle; even when there is a crisis the shopping centres are full. So when shopping is not a hassle and there is no value to online shopping, people will be slow to adapt. If and when they see value they will adopt it. What is value? Choice, price and good after-sales service. Fortunately, we had an advantage because TCS is considered to be the most reliable courier company in Pakistan. To illustrate this point, let me say that while most e-commerce business in India and Pakistan is done via cash on delivery (COD), we do our business on an advance cash basis. We provide the COD option for only a very few items of under Rs 5,000 in value.
We have been doing business worth six to seven million rupees every month and it is increasing every month. So the hindrance to online shopping does not arise from lack of payment options, literacy or computer access; it is simply that the value proposition is not strong enough.
Six months after the launch of TCS Connect, Jamil Ahmed, VP BPR & Special Projects, TCS, talks to
Marylou Andrew about the company’s plans to add value to the online experience and how future initiatives will revolutionise the face of e-commerce in Pakistan.
MLA: Which customer segments is TCS Connect targeting?
JA: We want to target three different markets: metros, rich non-metros and expat Pakistanis. We have already worked on the metros and we have started working on the non-metros. We want to target consumers with three product lines: the first is conventional products, such as mobiles, cameras, electronics, etc.; the second line is products from the UAE, from stores like Ikea, Marks & Spencer, Zara, etc., all of which will be available through our site by the end of the year. The third line we are working on is Pakistani cottage industry products, so that we can give these small manufacturers access to new markets. Our vision is to offer all the options available between Chiniot and Ikea and at the right price.
MLA: How do you define rich non-metros and why are you targeting them?
JA: We are talking about the cotton belt – Bahawalpur, Multan, Rahim Yar Khan, etc., where people have a lot of money. Then there is the Jhelum belt which receives pounds from abroad, similarly there is Mirpur and Azad Kashmir and then the Attock and Mardan areas. They all have money but no access to the market. However, they do have access to information and they will know, for example, when a new iPhone is out but they can’t buy it in their area.
MLA: How do you plan to make TCS Connect accessible to people who don’t have access to a PC? Will you launch a mobile-enabled site?
JA: Not exactly, because we are approaching the mobile differently. This is because out of the 120 million SIMs in Pakistan, only 15 million are GPRS-enabled and GPRS services are not always top-notch. We took our cue from Homeplus in South Korea, which created virtual grocery stores with panaflexes on subway station walls with grocery items, and then allowed people to scan QR codes with their smartphones and do their shopping. We localised the solution to make use of the most popular mobile service: SMS. Currently we have 592 TCS Express Centres all over Pakistan; we are going to brand the walls with skins which carry various product pictures. Each product has the price and product code written underneath – keep in mind that the price is 15% lower than the market. The customer goes to the store, chooses the product, types the code in an SMS and sends it off to 9900; he will receive a confirmation code, pay his money at the Express Centre and get the product at home the next day. So whether you live in Mian Channu, Mardan or Azad Kashmir, shopping will be this easy. We will also target Daewoo terminals and large malls and these shops will operate 24 hours a day. This changes the concept of online almost entirely.
MLA: How will you ensure that people actually use the service?
JA: We are incentivising our Express Centre staff. We will give them a one percent commission on the sale price of every product sold. We know that the staff will play a crucial and powerful role in the success of this service as our retail centres get 30,000 people walking in every single day. Secondly, this will also improve their quality of life which is very important to us.
MLA: How do you plan to add value to the online shopping experience in the future?
JA: We are working on various value additions.
If someone wants to buy a fridge on TCS Connect, we want to be able to ask them about the size of their room and then recommend accordingly. Or if you are going to have a baby, you should type that in and we will show you a host of products that you will need for the baby. We are also working on gift ideas so people will not have to waste a lot of time looking for something. We are working on ‘lease a wardrobe’ – for example, someone has been promoted and wants a new wardrobe, we will give them the options from various retailers and they will be able to purchase these items on a lease. The same goes for people who are relocating to a new city. This will add real value to the online shopping experience.
MLA: How can TCS help develop e-commerce in Pakistan?
JA: TCS provides a COD service to about 34 e-commerce companies. We do the deliveries and collect cash for them approximately worth Rs 45 million per month. We are working on offering them the same payment and logistics solutions that we are using. This is the only way for this industry to grow.
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