The online grocery business is a multi-billion dollar industry worldwide. As more and more people are turning towards online grocery shopping, it is expected to get bigger.
Taking the cue from the success of online grocery shopping in the UK, zealous entrepreneurs in Pakistan has gamble into the parallel business in major cities of Pakistan.
According to a report, 29% of Brits are buying groceries online with the sales of around £9.8 billion in 2016. The online grocery stores sales are expected to grow further 73% to £15 billion by 2020.
Majority of the household spend almost half of their earnings on groceries, which automatically makes it an attractive venture for entrepreneurs to enter the online market.
Despite the significant investment poured into this business, the Pakistan online grocery market is considered relative infancy.
While the online market is still making a tiny fraction of total grocery purchases in Pakistan. We tried to find out in more detail, to explain whether Pakistan can copy’s UK success in future.
The rise of E-commerce Industry
To start with, Pakistan has witnessed strong growth in the e-commerce sector. With the rollout of 3G/4G, the boom in the internet users is the fastest in Pakistan among SAARC countries.
With the rise of online shopping trend in the region, Pakistan’s e-commerce industry is likely to hit $1 billion by 2020.
But the success of e-commerce for grocery is not going to be a coincidence for Pakistan nor consumers magically going to pop out.
Companies like howmuch.pk have to actively promote their services and have to put a lot of efforts to create awareness about the possibility of buying groceries online.
In the UK, there are several companies that have challenged the traditional supermarkets by using technology to improve the customer experience.
While their strength lies in collecting consumer data cleverly and loyal customer communication that is based on customers’ online buying behavior.
Geography & Population
The urban population of Pakistan is a significant factor- according to a recent census report 2017, Pakistan’s urban population stands 75.58 million, which is roughly 36.4% of the total population.
Talking about the middle and upper-class population of urban cities like Karachi, Lahore, Islamabad/Rawalpindi- the combination of the following factors make these cities attractive for online grocers.
The population density is high, people with long hours work, dependant housewives, traffic issues, and limited public transport.
These elements make Pakistan an ideal online grocery market, to shop from the comfort of their home and office.
Similarly in the UK, same factors including high population per square kilometer in cities and swift delivery of groceries has made the UK a world leader to penetrate in the online grocery market.
This model can help Pakistani entrepreneurs in rejuvenating their e-commerce businesses as it doesn’t require additional inventory cost for online sales.
Pakistan is a very much penetrable market for online grocery shopping, but what will make them shop for groceries online?
In Pakistan, since the market had not been developed for so long, many companies burned their fingers by entering quite early in the online grocery industry.
The second pitfall is that so many startups and companies trying to make apps to make the consumer buy grocery online.
But that’s not what’s preventing customers to shift to online groceries purchases, it’s the prices and quality of groceries.
If anyone can come up with the best possible solution, people in Pakistan will start switching to their sites.
Until then online grocers have to earn the trust of the local audience as making easy to use apps won’t make any critical difference.
If we have got passed these errors then Pakistan will finally take a deep step towards online grocery shopping in future.
The Bottom LinE
At some point in the past, we all had anticipated that certain product won’t be sold online but eventually, consumers’ buying pattern changes over the period of time.
The scenario for groceries is no different. If online grocery service providers start delivering what they promise then it’s inevitable and the need is there.
If technology can solve price, delivery time and quality issues then online grocery stores will certainly expand in Pakistan.