The Ups and Downs But Growing Path of E-Commerce In Iran

Shahrokh Keshavarz is the Founder & CEO of Golden Business Magazine and MECS+R Regional Representative in Iran. He has 15 years of experience in the media, retail and shopping centres industry. He started his career in retail and shopping centres in 2009. Shahrokh is an expert in developing action-oriented business plans and targeted marketing strategies that lead to market growth.

SHAHROKH KESHAVARZ

Founder & CEO Golden Business Magazine MECS+R Regional Representative - Iran

More than a decade ago, when the Iranian business environment was entirely based on physical and traditional supply and demand, an online retail store for electronic equipment, including the sale of photographic equipment and mobile phones, was born in Iran called Digikala. Ignoring the phenomenon of e-commerce and lack of awareness and trust in virtual sales means that the customer was not able to touch the product, as well as meet and talk face to face with the seller, were among the challenges of this great idea from 2005 to 2010. Gradually, with the expansion of cyberspace development in the world, the Iranian market also benefited from this approach. The interest in using this method of preparing products increased, and this was a source of encouragement for more activists in the field of e-commerce. From 2011 to 2022, a Dutch company with an investment of $100 million transformed Digikala, which was a promising path for e-commerce enthusiasts in Iran.

For this reason, the number of online stores in Iran increased rapidly and this trend continued, which is why retail brands

have also found a great desire to cooperate with these virtual stores. Gradually, other stores such as Banimod, Okala, and others were established. Unfortunately, the Covid-19 crisis broke out and all equations collapsed. Physical sales channels were completely blocked, and all retailers, with a strange and unimaginable growth, turned to online sales.

In this two-year crisis, the share of virtual stores in e-commerce increased unprecedentedly in the world including Iran. Thus, brands also thought of creating their own online stores. Because of this, the growing trend of developing e-commerce markets doubled which was faster than before the Covid-19 crisis.

In the last two years until today, almost 90% of retailers have created e-commerce market capacity in their collections. Today, they have fully accepted e-commerce as a complement to the process of selling their products. In terms of social media platforms, Instagram is the most widely used social network in Iran which has the largest e-commerce market in the country in terms of the extent of users. It seems that in the next two years, the amount of e-commerce in Iran will gain a much larger share, and connecting to global markets after solving political problems and lifting international sanctions can provide the conditions for further development of this business model in Iran.

In Iran, we are still working on having the privilege of utilizing mobile payment services or purchases via Instagram platform or integrating international cards as payment options. The volatile economic conditions and lack of information and sufficient familiarity of the people are the current problems in the field of e-commerce. Apart from this, considering that Iran has a strong hardware and software infrastructure in the field of banking and on the other hand has a market of 85 million consumers, the prediction that this market can be equipped with all e-commerce tools is not far fetched. Given the convenience that this business model creates for customers, it seems that gaining the trust and satisfaction of consumers in this large market requires serious development of e-commerce in Iran. This will only be made possible if there will be a cooperation between programmers and developers of virtual solutions.

In the meantime, considering that Iran has customers from younger generations who are trying to maximize their share of this market by providing correct information and teaching how to use the benefits of e-commerce, brands of chain stores, shopping centres and online stores will continue to have massive growth. In addition, since the use of online or e-commerce is both simple and enjoyable for the younger generation, they will continue to use and explore this concept in the retail industry.