BR Research team met Ahmed couple of weeks ago in Lahore where Kaymu.pk's organisational structure, competition and its future plans came under discussion.
Below are some edited excerpts from that sit-down:
BR Research: Kindly tell us what Rocket Internet is all about!
Ahmed Khan: Rocket Internet GmbH is owned by Germany's Samwer brothers. It is one of the largest e-commerce incubators in the world, present in around 50 countries. It was launched in Pakistan two years ago and is now working on eight e-commerce ventures. Its first venture in Pakistan was the fashion portal, daraz.com.pk, followed by foodpanda.com and kaymu.pk and so on.
Rocket Internet is headquartered in Berlin, Europe's Silicon Valley. Rocket is operating through a network of 25 international Rocket offices, covering all relevant developed and emerging markets.
BRR: Can you tell us about the history or the idea behind Kaymu?
AK: We initially started with the model of amazon.com. But then we came to know that model was very complicated in small markets as there was a need for eco-system to support it in terms of logistics, warehousing, etc.
The marketplace model, that we are working with right now, suits Pakistan. The idea is buyer meets seller, where anyone can come get in touch with us to list any product they want and buyers can browse and choose any product they want to acquire. We at Kaymu develop the marketplace and assist in logistics.
Previously known as Azmalo.pk, Kaymu.pk provides its customers with better features, such as the shopping cart, wish list, delivery tracking, discount coupons, quicker response times as well as greater efficiencies within the system. Kaymu.pk has crossed the benchmark of 850 orders per day. So, with the success of Kaymu.pk, other Rocket ventures will spring out in the country.
BRR: What other countries does Kaymu operate in?
AK: Kaymu's model is such that we launch our ventures in emerging markets; such as Nigeria, Myanmar, Sri Lanka, Pakistan and many others. Currently, we are present in around 17 countries in Asia and are now launching in some 12 more countries, including Eastern European countries.
The success of Kaymu.pk in Pakistan is reflected in the fact that Kaymu's operations in Asian and Eastern European countries is spearheaded out of Pakistan; that is the head office of these countries is Kaymu's office in Lahore, Pakistan.
BRR: eBay has entered in India, but why is eBay not in Pakistan?
AK: Lack of a secure online payment method is one of the major reasons global big players like eBay and Amazon are reluctant to enter Pakistani market. eBay and PayPal view Pakistan as a cash-based economy, a market of roughly 1.5 million credit cards (according to the State Bank of Pakistan). eBay requires an established ecosystem and huge investment when entering into a new market. They don't invest in logistics either. So, in a very small market like Pakistan, we have taken advantage of this niche and gone for the Cash on Delivery (CoD) model.
This payment model has been successful for Pakistani consumers as there is still some trust deficit when it comes to online payments. To some extent this is down to the relatively low internet penetration in the country, but these figures are growing exponentially and will benefit the entire e-commerce industry of the country.
BRR: What steps would you like the SBP and local financial institutions to take to introduce Electronic Payment Gateways (EPGs) in Pakistan so that online marketplaces like Kaymu can provide a quick and cost-effective payment option?
AK: In order to eliminate the traditional payment options like CoD, the relevant authorities should leverage existing IT capabilities of the core banking systems and build integrated payment solutions where cash can be conveniently transferred to bank accounts. Shops like Easypaisa's booths would be ideal for such systems. Banks could also develop MIS on unique e-Authorisation ID for all e-payment fund transfers, which would make the overall processes more efficient.
BRR: The CoD model is prevalent in India and the Middle East. How prevalent is this in Pakistan? Can you give an estimate of this market's size in Pakistan?
AK: Pakistan, being a developing country, is inherently apprehensive and wary where advance payment for goods is concerned. Keeping this in view, majority of the online retail shops follow the CoD model so that the customers feel at ease about their transactions. Keeping account of only Kaymu.pk, which is found entirely on this model, about 600 orders are completed daily (these are not orders given per day) and about 10,000 on a monthly basis.
BRR: How many product categories do you have on the Kaymu marketplace?
AK: Working with a no-inventory model, Kaymu.pk aims at providing smooth and easy transactions for both the buyer and seller, and ensuring that all transactions taking place are safe and easy. We have around 25,000 to 30,000 products ranging from cosmetics, clothes, electronics, sports goods, accessories and much more.
It's important to understand that Kaymu.pk is a transaction-based model, not an ad space like some of the classified platforms operational in Pakistan. We check authenticity of our suppliers, have them sign a contract and decide how they want to handle the logistics. On the other hand, all our buyers need to be registered online. There is no guest shopper service, which decreases fake orders.
BRR: How will the introduction of 3G/4G services impact your business?
AK: These are exciting times for Pakistan's e-commerce industry as the launch of 3G/4G services will revolutionise the whole Information Technology (IT) sector. Everyone nowadays is becoming tech-savvy. The implication of 3G/4G technology will benefit our business tremendously. It will take our online shop to all mobile users and will increase our outreach. Moreover, there will be no problem of loadshedding while shopping online so it will increase our customer base.
All our other ventures will also benefit from the launch of 3G services, especially Easy Taxi as customers will be able to track their ordered taxi more efficiently on their smartphone devices.
BRR: You are not marketing aggressively like your counterpart OLX, why is that so?
AK: OLX has a very different strategy for Pakistan. They came with millions of rupees to take the classified space. Their bread and butter depend on circulation and when you want your circulation fast, you need a lot of money for marketing. We didn't have marketing budget initially. The marketing budget has just been approved, and we will have ads to go on TV soon.
BRR: Are you present in only major cities in Pakistan? What is your logistics system?
AK: Our head office is in Lahore but we are operational all over the country. We sign up suppliers and do deliveries all over Pakistan, even in Waziristan. We engage third party delivery services to reach every corner of the country, and we have had orders from Quetta and even Waziristan, and we have delivered in these regions. So, wherever TCS, Leopard and Pakistan Post deliver, we deliver.
BRR: Are you working to tap the option of mobile wallets in the branchless banking sector?
AK: All mobile operators in Pakistan have entered the branchless banking platform and this has helped in increasing trust in this service. Branchless banking is one of the features that will help us in growing the customer base of Kaymu.pk. Our team is actively working on this in order to provide more options of payments to the customers and enable quick payments for products.
BRR: What segments do you intend to grow more?
AK: We invest in two things: people and marketing/promoting our services. So, whatever money we get, we invest it in more competent people (sales, marketing, customer service staff, business development specialist and others); and then we aggressively market and promote our services.
From the very first day we aimed at pulling in energetic, young individuals aiming to work hard and help this start-up grow; and it has been a combined effort of everyone involved with Kaymu.pk that we have been able to grow at an exponential rate. The average age bracket of our employees is between 25 and 28; and we aim to continue attracting such young, talented and creative human capital of Pakistan.
BRR: Please tell us a bit about Rocket's other online portals in Pakistan?
AK: Lamudi.pk is a real estate listing portal and all our listings are current. It's a classified ad space and we are not involved in transactions.
Easy Taxi (easytaxi.com/pk) is yet again a marketplace. Customer can download the Easy Taxi app to order the taxi; they can also go online to our website or call on Easy Taxi's number to order their taxi. We have given the mobile app to our drivers as well. The taxi driver can reach your location in a matter of 15/20 minutes and you can track your ordered taxi in real time through the Easy Taxi app. We have done complete background check of our drivers to ensure the safety of our customers.
We also have Carmudi.pk, which is just like Pakwheels.com, but our focus is purely on classified space that caters to real buyers and real sellers. We are going to launch 'Clickbus' soon, in which customers will be able to reserve bus tickets of intercity bus services like Daewoo and Faisal movers beforehand.
Foodpanda is another popular venture of Rocket Internet, which has been quite successful in Pakistan.
BRR: How do you view the competitive landscape in Pakistan?
AK: With a great deal of foreign funding coming in, no big local investors ever bothered funding e-commerce. Ours is transaction-based revenue model and if you look at the revenue generated for three months of Kaymu, it is more than even some of the more famous classified companies operating in the country.
Our online marketing is so well-developed that we are among Google's and Facebook's largest global accounts. We generate so much online marketing revenue for them because we use them immensely for all our ventures.
We believe in the overall growth of the e-commerce industry in the countries we operate in. There is so much potential in Pakistan's e-commerce industry, and tremendous room for growth, that if local players gain from Kaymu.pk's success, it will eventually benefit the entire e-commerce landscape and hence will ultimately boost our business as well.