There are two broader types of ecommerce stores. One is the specialized niches like Markhor. They make their own products and sell them via their online store. These have only one type of customer i.e. people buying their shoes. The other type is market places where you don’t make anything of your own but rather sell stuff made by someone else. Daraz, Home Shopping etc fall under this category. There are plenty of these in Pakistan. None of them is a clear winner. Black Friday aside you don’t get to hear any growth stories too.
For the sake of today’s article, I will be talking about these second type of stores when I say ecommerce. To make myself further clear, I won’t be talking about logistics and other operational challenges because those problems are solvable, either via money or a strong growth curve. So why ecommerce hasn’t become a billion dollar market as yet? On the surface, the idea looks great. It’s convenient to shop from your couch than to drive to the supermarket, prices are often reasonable and despite some occasional hiccups deliveries do go well.
Inferior Customer Experience
There are a few reasons that come to mind. Number one is the lack of great customer experience. For any new marketplace business to succeed the technology must enhance the user experience. And unfortunately, that’s not happening right now. Web stores are often messy, not well designed, look dubious and a plethora of choices for almost everything is confusing at best. Especially for someone who is visiting the store for the first time. And I haven’t observed any concentrated effort to make a visitor feel like home. This last point is critical because a customer has not made any extra effort as yet to get to you. He might be surfing something else at the very same time. Lack of payment method adds to the bad experience—more on that later.
At the heart of this is the fundamental urge of trying to be Amazon from get go. Amazon was only a book store for a very, very long time. They made sure that they are the go to place for books before moving into something else. You have to nail down one thing well before moving to the next.
No economic pull
Both suppliers and buyers are not getting any incremental business value from these stores. I recently had to buy ear phones and wasted half an hour trying to figure out where to get one. At the end, I could not convince myself to buy online. Because 1) I gained no trust that any online store will be any different from the accessory shop that’s a five-minute walk from my home. 2) If I order online I will have to wait for 2-3 days to get them. 3) There is hardly any price difference.
Since I can’t trust either of them so it’s better for me to visit the shop and check the ear phones before making the purchase rather than to buy first and end up not liking the thing. This is a typical cycle that repeats itself every time I need to buy something. I can understand it’s hard to provide any economic benefit when you are young. That’s where nailing the experience part could be handy.
Reread the first problem I described above while trying to purchase ear phones. I can get it from a shop that’s at five minutes walk from my home. This is an unfortunate challenge for e-commerce players operating in cities like Lahore. You can find almost every thing by walking out of your home for five minutes. And most probably you will have plenty of options to choose from. What’s more convenient than that?
Any market that’s not fragmented is a bad choice for a marketplace business. There is a reason Amazon started with books and not grocery items despite the fact that Seattle might not be a concentrated market for groceries as Lahore.
No upfront payment method
Cash on delivery works but it changes the relationship between you and your customer.
When I buy something from Amazon, I pay in advance. And as human when I have already paid for something I will generally be looking forward to that. This positive attitude can make a lot of difference in I conceive the actual product to be. Also, since I have paid already I will try to find good things in the product to make my decision right. Apart, inspecting products before I had to pay for them changes the dynamic a bit too. Checking products in a well-decorated store is different than checking them on your couch with possible kids screaming at your back and the looming uncomfortable decision of giving your money away.
There is a possible solution for this. And that’s by significantly improving the user experience at last mile. But this might require getting into the logistics yourself and making sure your customer is happy and satisfied before you leave the door. This actually works. We, at Markhor, tried during our Kickstarter campaign when we were unable to deliver shoes on time. We still do that if something bad happens. But we do not accept cash for the same experience reasons.
I do believe that this is more than $1B industry. But ecommerce players will have to change their approach if we want to be there rather quickly. Or maybe Jack Ma can do something about it.