Profit E-Magazine Issue 58

welcome

THE POWER OF HUMILITY At the highest level of the corporate world, humility is not a virtue recognised as valuable by most. This is unsurprising given the level of testosterone in the male-dominated C-suites at most large companies. But it is a virtue nonetheless, and certainly one that has the ability to create value for shareholders, or at least prevent damage to their interests.

In this week’s cover story, we explore the case of Jazz, the mobile telecommunications giant formerly known as Mobilink. Even the name Jazz is in itself an act of humility. Rather than trying to reinforce their brand identity as Mobilink, the company simply changed their brand name (not their legal name) to Jazz, the name that their customers used when buying a prepaid card from a retail vendor. But in this issue, we explore another act of humility, one that stems from a very public failure by the company, but that we believe will nonetheless be good for them in the long run.

It was in the pages of this very magazine that we published Jazz CEO Aamir Ibrahim’s ambition to turn Veon, an app developed by Jazz, into the Pakistani version of WeChat, the super app owned by China’s TenCent.

It was publicly proclaimed as their grand vision of the future of the company. Two years later, it is abundantly clear that the strategy has failed. But what makes it interesting is the fact that the company is not burning

FROM THE MANAGING EDITOR

good money after bad, and continuing to invest in the project on an ego trip from the CEO, but instead acknowledging its failure and pivoting to a venture that is more promising, but has not attracted as much attention: JazzCash.

It is certainly possible to overdo pivoting in a business. At a certain point, a company needs to define a clear strategy and pursue it rather than continually shifting from one to the next. But it is also equally important to admit failure, cut your losses, and move on. And the ability to do that – having the humility to do that – is something that corporate boards should always look for in a CEO. It appears that the board at Jazz found it in Aamir Ibrahim. He may still stumble, but at least he is self-aware enough to recognize his shortcomings. And that may be the essential ingredient that leads him – and Jazz – to succeed.

Farooq Tirmizi Managing Editor

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Readers Say There is no ‘magic light switch’ that can turn the economy on or off. Economic development is based on certain prerequisites. Foremost among these is long term administrative and economic stability. Investors do not to risk their money in countries where political parties stage ‘dharnas’ and public unrest to undermine elected governments. What they find in Pakistan is continuing political instability and amateurs in power who have very little experience or understanding of how a country functions in present-day setting. Confrontation, meaningless lectures and sermons by people who have no track record is not a substitute for well-conceived and properly executed policies. What will help is unity, not division and people with experience who understand government, not well-meaning amateurs and ignorant political mavericks.

There is not much time before patience runs out and disillusionment sets in. The PTI led government will lose credibility destroying any hopes of a turn around with it. (Apropos: How to fix the Pakistani economy) K. Hussain Zia In my personal opinion the major question is not whether people have a set preference for a ‘women only’ ride hailing service, but the question is that those who are interested in such services, are they willing to pay a premium for it? If people are willing to pay a premium, ride hailing services can introduce ‘women safe (women friendly)’ drivers, those who are registered with the local police and have their background checked. This will make them have a certain competitive edge over others.

(Apropos: After Careem and Uber, will the next boost to Pakistan’s ride hailing market come from a women-only service?)

Anas

How to ContaCt

facebook.com/Profitpk twitter.com/Profitpk linkedin.com/showcase/13251020 profit.com.pk profit@pakistantoday.com

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Uber is losing its credibility in the race of making money. Uber has increased its charges as well as hidden charges on the account of fixed fares/rates. Not so long ago I would pay Rs200 as fare for my daily commute but now I only get a 50 per cent discount once in a blue moon bringing my fare back to the original Rs200 that I used to pay. Sometimes the same per km/minute rates exceeds as well, hence I avoid using Uber now. However the article does highlight the need for a ‘women friendly’ or even a ‘women only’ raide hail-

ing service, but the question remains will there be enough traction for them to maintain a sustainable business model? (Apropos: After Careem and Uber, will the next boost to Pakistan’s ride hailing market come from a women-only service?)

Sehr Dr Zaidi’s perception that the entire sugar industry should be scrapped as sugar cane consumes more water is not at all convincing. Sugar related agriculture and sugar industry are a vital part of our economy that provide employment to millions in the rural and urban work force. Unfortunately, the sugar industry is controlled by political ‘robber barons’ who have been erecting new sugar mills with the annual profits of their sugar industry empire, who control and manipulate the prices as well as mismanage the supply at their will. In comparison to that Pakistan’s sugar industry pays minimum wages as compared to the rest of the world.

Sugar mills produce their own steam and electricity at no cost by burning bagasse and they can manufacture a host of products from molasses, a by-product for local use and for export purposes. (Apropos: How to fix the Pakistani economy: Dr S Akbar Zaidi) M. Aslam Chaudhary A great read indeed on the current state of ecommerce affairs, challenges and solutions.

Lots of gaps to fill in this space before we can bridge the gap and increase the share of ecommerce within the Pakistani industry.

(Apropos: All you wanted to know about how to build your own Pakistani e-commerce business (but didn’t know who to ask) Azhaar Great work and great insights by the team Profit and the author! However, the inclusion of some experts who were involved in previous administrations and were part of creating the problem is strange in my opinion. Maybe some input from more neutral experts would have countered this. As far as fixing the economy goes, we as a nation should try to support our local start-ups. Look towards alums of incubators and accelerators, provide feedback and try to take the first step in creating jobs for others. Thank you Profit for providing quality content. (Apropos: How to fix the Pakistani economy) Anonymous

COMMENTS

President Arif Alvi

QUOTE

“Government is committed to facilitating businesses and private sector to ensure growth of manufacturing sector.”

“It is not a new budget, but an economic reform package aimed at laying a strong foundation for the country’s economy.”

Finance Minister Asad Umar

Rs20.5b

loan has been obtained by the Pakistan Tehreek-e-Insaf government for the completion of Peshawar Metro Bus project, said the French embassy. According to a press release, the credit facility agreement was signed between French Ambassador Marc Barety, French Agency for Development Country Director Jacky AMPROU and Economic Affairs Secretary Noor Ahmed. According to the embassy’s press statement, the project will provide safe, efficient and well integrated mass transit system improving energy efficiency and air quality through reduction of Greenhouse Gas emissions, the press release stated. It’s been nearly two years since the groundbreaking of the much orchestrated Peshawar Bus Rapid Transit (BRT) project that was to be completed within “six months”. On October 19, 2017, the then Khyber Pakhtunkhwa (KP) chief minister Pervez Khattak broke ground on the multi-billion-rupee project aimed at providing comfortable transportation to the residents of Peshawar. Launched with the Asian Development Bank’s assistance, ex-KP CM Khattak had announced that the 26-km-long project would be completed by April 2018, but it was later delayed to May 20. However, the Peshawar BRT has lied in limbo ever since its inauguration, as the PTI government, while auditing the affairs of Rs29.65bn Lahore and the Rs28.5bn Multan metro buses, has failed to finalise the total cost of its own project.

$1b

final instalment of the $3 billion financial bailout package given by Saudi Arabia has been deposited with the State Bank of Pakistan (SBP). In a texted response to Pakistan Today, State Bank of Pakistan spokesman Abid Qamar confirmed that the last instalment of $1 billion had been received from Saudi Arabia. This follows news that Pakistan received its first tranche of $1 billion from the United Arab Emirates of the pledged $3 billion, for which an agreement was signed earlier this week. Pakistan received its two previous tranches of $1 billion each in November and December respectively to bolster the country’s sliding foreign exchange reserves and provide a balance of payment support.

The liquid foreign reserves held by the central bank for the week ended January 18th declined by $265 million to $6.636 billion compared to $6.901 billion in the previous week owing to external debt servicing and other official payments. In January, the Saudi energy minister Khalid al-Falih said it is planning to establish a $10 billion oil refinery while speaking on a visit to Pakistan’s deepwater port of Gwadar.

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10pc

withholding tax has been exempted to the franchises of Pakistan Super League (PSL) by the government. According to documents available, the tax department would exempt the PSL franchises from the 10pc withholding tax. The Federal Board of revenue usually takes 10pc advance tax from the franchises every year. Presently, there are six franchises, namely Islamabad United, Karachi Kings, Lahore Qalandars, Multan Sultans, Peshawar Zalmi and Quetta Gladiators, in the PSL. “The advance tax from participating teams in national and international sports tournament organised by any sports board or entity established by the government is being abolished,” the document stated. However, FBR has proposed in the supplementary budget that this tax would be abolished from the next fiscal year and the franchises would have to pay the tax this year. A question was asked from State Minister for Revenue Hammad Azhar in a seminar, ‘Economic Reforms: Way forward’ that is it correct that the government has given exemption to franchises just because Ali Tareen won the rights of Multan Sultan.

On this, Hamad Azhar said that PSL was already incurring losses, adding this decision would facilitate and encourage the franchises as they were not making any profits.

“Satellite technology should be used for assessing crop size, water flow, better management of infrastructure projects” Minister for Planning and Development Makhdoom Khusro Bakhtiar

$1b

QUOTE

$4.5b

worth of oil financing facility will be provided by Islamic Development Bank (IDB) to Pakistan.

The IDB had activated the facility for Pakistan in July 2018 and, according to a finance ministry spokesperson, the financial institution would provide Pakistan $1.5 billion worth of oil on deferred payment each year. The spokesperson said that oil worth $100 million have already been received in the first phase of the assistance programme, with $270 million worth of supplies scheduled for the second phase. The finance ministry official also hinted at a similar deal with the IDB for the supply of Liquefied Natural Gas (LNG), stating that talks were underway to finalise an agreement in this regard.

50pc

or Rs200 billion worth of waiver is being given by the government on Gas Infrastructure Development Cess (GIDC) to fertilizer, CN and textile sector. Finance Minister Asad Umar addressing a press conference said the government would revise the law linked to GIDC, reports an English daily. He shared the cabinet had given the approval to give 50% waiver on GIDC, akin to the way the CNG sector had taken advantage of this facility previously. The direct beneficiaries of the government’s benevolence in this regard are going to be the fertilizer, CNG and textile sector which had accumulated over Rs400 billion from consumers under GIDC. The aforementioned sectors got stay orders from courts and hence didn’t pay the government. The cabinet gave the approval to forego 50% of arrears owed by the three sectors amounting to around Rs200 billion.Moreover, the cabinet has decided to decrease the rates of GIDC, said the finance minister. However, Mr Umar stated only those sectors would be able to avail the decreased rates who settle their disputed amounts.

first instalment out of a total of $3 billion financial bailout package extended by UAE has been received by the State Bank of Pakistan (SBP) on the 24th of January. Muck akin to the financial arrangement reached with Saudi Arabia, Pakistan will receive the remaining $2 billion in two separate instalments from the UAE. Pakistan and the United Arab Emirates signed a US$3 billion financial support package as pledged by Abu Dhabi, to boost the liquidity and foreign exchange reserves of the cash-starved country.According to the package, signed in a ceremony scheduled at Abu Dhabi, the UAE will deposit $3 billion in the State Bank of Pakistan to support the country’s financial and monetary policy. The amount will be paid to Pakistan in three instalments. The UAE had announced its intention to inject $3 billion cash into Pakistan via the Abu Dhabi Fund for Development (ADFD) in December last year, a month after Prime Minister Imran Khan undertook his second trip to the country since assuming office. According to details, the decision to formalize the deposit was made under the directives of the President His Highness Sheikh Khalifa bin Zayed Al Nahyan, and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. Mohammed Saif Al Suwaidi, Director General of ADFD, and Tariq Bajwa, Governor of the State Bank of Pakistan, signed the agreement at the ADFD headquarters in Abu Dhabi. Moazzam Ahmad Khan, Ambassador of Pakistan to the UAE, Khalifa Al Qubaisi, Deputy Director General of ADFD, and other senior representatives of the two parties attended the signing ceremony. Speaking on the occasion, Mohammed Saif Al Suwaidi said, “The directive to deposit $3 billion with the SBP aligns with the UAE leadership’s keenness to bolster Pakistan’s economy, help its government achieve financial stability and overcome economic challenges, and drive comprehensive development in the country. ADFD and the Pakistani government have enjoyed strong and long-standing ties dating back to 1981.

$20b

East Coast Rail Link (ECRL) project with contractor China Communications Construction Co Ltd (CCCC) is being cancelled by Malaysia.

Mohamed Azmin Ali said at a media event that the project’s cost was too great, while also giving an assurance that Malaysia would welcome investment from China on a case by case basis. “The cabinet has made this decision because the cost to develop the ECRL is too big and we don’t have (the) financial capacity,” said Azmin. The government was still determining how much to pay CCCC for the project cancellation fee, he said. The interest on the project alone amounted to half a billion ringgit ($120 million) a year. “We cannot afford to bear this, so this project needs to be terminated without affecting our good relationship with China.”

BRIEFING

The global e-commerce giant has ignored Pakistan, but many enterprising individuals and companies have found ways to use the platform to their advantage by getting around the legal hurdles

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By Shoaib Pervaiz and Eleazar Bhatti

n April last year, Raheel had already traveled to more countries than anyone else from his neighbourhood in Multan at just the age of 24. A college student with a knack for online marketing, he had amassed thousands of air miles and had more money in his bank account than his father. How did he do it? By selling hoodies and T-shirts on Amazon.

If you Google ‘How to become a seller on Amazon’, you will immediately be presented with a list

“SO THEY (AMAZON) ACTUALLY BECOME LIKE A 30% PARTNER WITH YOU ON YOUR PRODUCTS. FOR EXAMPLE, IF YOUR PRODUCT IS SELLING AT $30, $10 GOES TO AMAZON. IT ALSO ENSURES THAT YOUR PRODUCT BECOMES AMAZON PRIME ELIGIBLE, WHICH MEANS THAT IT IS NOW ELIGIBLE FOR AN EXPRESS (2 DAY) DELIVERY, AND THEY HANDLE THE STORAGE, AND IF THE CUSTOMER HAS AN ISSUE IN THE SERVICE OR FULFILLMENT, THEN AMAZON’S TEAM HANDLES THAT AS WELL. EVEN IF A CUSTOMER WANTS TO RETURN A PRODUCT, AMAZON WILL DO THAT ON THEIR END, AND MIGHT CHARGE THE SELLER”.

Mustafa Ali Baig, Lahore-based Amazon seller of steps: Start an Amazon Account; Choose Your Fulfillment Method; Find A Product; Order and Ship Your Product; Create Your Amazon Listing; Get Paid.

Anyone wondering whether Amazon operates in Pakistan (and does not know of any person doing so), would naturally Google if it really does. The all-knowing search engine, shows Daraz. pk as the very first option on the first page, listing an ‘Amazon Gift Card’ being sold online.

Introducing Amazon

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ccording to the list on its website, Amazon allows residents from a total of 103 countries to be able to register on Amazon as sellers. Residents from those 103 countries having a valid phone number and an ‘internationally chargeable credit card’ can register on Amazon as sellers and start selling their products to customers in different continents. People from countries such as Senegal, Bangladesh, Slovakia, Uganda. Mozambique and India are eligible to become sellers on Amazon.

Pakistan is not on that list.

Why? And how are people from Pakistan selling on Amazon when the company clearly does not list Pakistan

as an eligible country?

Profit got in touch with people who were selling products on Amazon from Pakistan, and asked them how they were able to do so, and what made them want to become Amazon sellers in the first place. That is how we met Saqib Azhar, CEO of Enablers, a company that he says was started to help out fellow Pakistanis and ‘enable’ and unleash the country’s economic potential.

Saqib has spent half of his life in the United Kingdom where he completed his education, worked in different companies and built several businesses, after which he decided to move back to his homeland. “I decided to help our people by conducting trainings, seminars, and workshops throughout Pakistan to create awareness in most of the major cities, and then to help people showcase their products and sell them on international platforms such as Amazon - which is our strength”, says Saqib.

“We’re not just trainers, we are also successful Amazon sellers as well. We’ve been selling on Amazon for the last several years basically. We tell people to make their own businesses as well, and don’t just focus on 9 to 5 and run the rat race,” says Saqib.Enablers provides

trainings and consultation to people in Pakistan and helps them develop their own business on Amazon. It also helps other businesses get the most out of other ecommerce platforms. “Amazon is such a big business that it actually makes 3 sales per second, and makes $3.5 billion per day worth of sales, so there is such a big potential out there for Pakistan, and we felt that the people here do not have much guidance and know-how on how to build business from Pakistan,” explains Saqib.

In the interview, Profit kept trying to steer the conversation towards the legalities, and how Pakistanis could ‘legally’ be selling products on Amazon but was always provided with vague responses related to the massive amounts of money one could earn through Amazon - and to the company’s seminars where they told people ‘everything’ regarding setting up their business.

“Everyone has to face legal barriers one way or another. In our seminars, we guide people on how they can legally set up their business in Pakistan and abroad (while living in Pakistan). We refer our customers to our approved list of partners who we have been doing business with, and have personally met, to help provide facilities to register companies abroad in the UK or US,” says Azhar, trying to explain how Pakistanis

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“THE TOP SELLER FOR BABY PRODUCTS IS MAKING $80,000 A MONTH. THE TOP SELLER SELLINGTHERMOMETERS MAKES $70,000.

I WOULD LIKE TO NAME SIALKOT WHICH HAS A BIG POTENTIAL IN SPORTS. ONE PERSON WHO IS SELLING SPORTS EQUIPMENT ON AMAZON IS MAKING $1.1 MILLION PER MONTH.” Saqib Azhar, CEO of Enablers can legally sell products on Amazon.

How big is Amazon?

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mazon is by all measures a modern-day e-commerce and logistics giant. By the end of 2018, Amazon’s delivery infrastructure included more than 180 warehouses, 28 sorting centers, 59 local package delivery stations, and 65 hubs for its twohour Prime Now (express) deliveries.

Founded by Jeff Bezos in 1994, what initially started out as an online bookstore is at present the most valuable public company in the world ahead of Apple and Alphabet (the parent company of Google). From an online bookstore that diversified to selling audio/video downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry, Amazon is now the largest e-commerce marketplace and cloud computing platform in the world based on revenue and market capitalization.

Amazon is considered to be one of the ‘Big Four’ of technology along with Google, Apple, and Facebook due to its market capitalization which crossed the trillion mark in September 2018, and also because of its disruptive innovation and hyper-competitive application process.

The company also owns a publishing arm, a film and Television studio, produces consumer electronics such as Kindle e-readers, and tablets, and is the world’s largest provider of cloud infrastructure services. It has separate retail websites for some countries and also offers international shipping of some of its products to some countries.

If that doesn’t make one wonder at the size and scale of the company, maybe this will: Amazon is also the largest internet company in the world by revenue, and the second largest employer in the United States.

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Amazon ignores Pakistan, but Pakistanis do not ignore Amazon

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mazon has separate websites for the main countries it operates in including the United States, the United Kingdom and Ireland, France, Canada, Germany, Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India, Mexico, Singapore, and Turkey.

Pakistan does not make that list.

Why wouldn’t the e-commerce behemoth allow Pakistan to sell on its platform? While Pakistan is not a small country in terms of population, we punch well below our weight when it comes to the size of our economy and the kind of opportunities we have historically allowed foreign investors. Add to that a set of restrictive regulations on banking channels, particularly with respect to moving money in and out of the country, and one can easily see why Amazon may not be quite so tempted to come to Pakistan.

Nonetheless, for those Pakistanis who are willing and able to overcome the initial hurdles of setting up an Amazon story, the rewards can be quite appealing. Take Mustafa and Maryam Ali Baig, a husband-and-wife duo based in Lahore who run their own company that also sells on Amazon.

Maryam has a familiar story. A good career in brand management spanning 14 years in companies such as Tetra Pak, Packages and Mayfair Sweets working 9-to-5 which only led her to believe she was wasting time, and did not achieve the work and life balance she always yearned for. “I was actually looking for a solution where I could have the flexibility of time, which I did not get working 9-to-5. Marketing and product development have always excited me, and I have

worked in this field for quite some time.

This led me to finding a solution where I could get flexibility not found in the corporate world, and also have substantial financial returns along with work-life balance.” The longing to work on her own business and attain some balance in life led Maryam to start looking at businesses, when she eventually found Amazon.

Setting up shop on Amazon

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aryam describes one of the programmes she is currently enrolled in (also recommended by Enablers). “Amazon has a program called the FBA (Fulfillment

by Amazon) in which you actually send your product to Amazon’s warehouses where they then take care of the packaging, storing, and logistics, and charge you a certain amount for it.”

The Fulfillment by Amazon (FBA) programme allows sellers to use the company’s warehouses, and avail facilities such as storage, packaging, labeling, and shipping. After a seller has sent the products to Amazon, the company takes care of the product, delivers it to customers who order the product, and even provides customer service facilities.

Sellers who are registered on the FBA programme can send products directly to Amazon’s warehouses, or have distributors send them directly. “If you want to send a product to Amazon from Pakistan or from let’s say China, then the initial cost of packaging and shipping the product is on you, including customs clearances etc. When your products reach Amazon’s warehouses, then it becomes their responsibility to handle, label, store, and deliver those products because that is a service for which you are paying them,” explains Maryam. “It makes sense because if you don’t have a big team. It is then easier to not worry

about the packaging and the delivery process,” says Maryam’s husband Mustafa, who then further explains how the partnership with Amazon works.

“So they (Amazon) actually become like a 30% partner with you on your products. For example, if your product is selling at $30, $10 goes to Amazon. It also ensures that your product becomes Amazon Prime eligible, which means that it is now eligible for an express (2 day) delivery, and they handle the storage, and if the customer has an issue in the service or fulfillment, then Amazon’s team handles that as well. Even if a customer wants to return a product, Amazon will do that on their end, and might charge the seller”.

Choosing the right product

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fter speaking to more than a few Amazon sellers, Profit found that choosing the type of product to be sold on Amazon is perhaps the biggest and the most important decision sellers can make.

One seller, Kaneel Javed Bhatti, explained that he had been selling ‘pet accessories’ such as dog towels for the last couple of years, and had received a much better response than when he sold printed T-shirts. Amir Shah, another seller explained his reason for selling kevlar jackets and said, “It’s important to sell something that cannot be bought from many other sellers, because the higher the number of sellers for a particular product, the lesser the probability of you receiving an order.”

Recounting people he had seen selling products on Amazon, Saqib Azhar said, “There is someone who is selling socks for diabetic patients. And these socks actually have a huge demand on Amazon right now. We recommend products which can last a long time such as kitchen utensils, office stationery, dusting clothes, 3D pens, toys, etc. In Pakistan we have all the products.

People just don’t know the process of selling them.”

How much to invest?

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frequent question which everyone who is thinking about investing in Amazon will face is the amount of initial capital required to successfully be able to enter this ecommerce market and achieve profits in a reasonable amount of time.

“We basically recommend in our trainings that slow and steady wins the race, said Saqib Azhar, recommending the required initial investment, and continued, “We recommend having at least $3,500 to $5,000 as a minimum investment. Obviously if you have more capital, then you can do this more swiftly, and earn faster. But we recommend as your first product to start slow and steady and make you way up from there.” Maryam had a different opinion and suggested that it mattered more on the product itself than on the investment. “It all depends on the product you are selling, because you can sell $5 products or $5,000 products,” she said.

It is essential to have a plan if one is seeking to invest in an e-commerce business. The initial capital should be enough to cover the costs of registration, regulatory costs such as licenses and agreements, and the first shipment of products sent to Amazon (including costs related to shipment, customs duties etc).

It should also cover the first two to three online marketing campaigns.

The marketing mix

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or any individual or group selling goods online, marketing is the what makes potential customers click on your ads, your website, your social media pages, and fill out forms on your landing pages. Through marketing, one can gauge the level of interest a potential customer has in your products and services. It also enables you to see how effective your current marketing campaigns have been, and how much you need to invest to attract more customers to your products.

“To be able to sell well on Amazon, you need to know the basics of search engine optimisation (SEO) so that you use the right keywords to attract the audience to your page. Your product’s page optimisation is extremely important,” says Maryam as she explains how she used marketing tactics to generate customers.

Unlike Google Analytics, Amazon does not sell its data. So nobody knows the level and numbers behind the traffic, or the keywords you have used. There are multiple companies who are using their own crawling software and algorithms to figure this out, but they are just making guesses at most.

Ask any person who has had experience in digital marketing, and you will immediately be told the basics of

inbound marketing. Through inbound marketing, an organisation can create enough data, generate enough awareness in the online space, and target the potential customer to land on the organisation’s pages, where they can eventually end up making transactions.

Instagram is heavily used to direct external traffic to your page. Products are listed on the social media platform, from where they are taken to a landing page, and then to your product.

“It is also important to make sure that the people you do attract, end up buying your product. For example, it is better that 10 customers came to your page and 7 bought your product, compared to 50 potential customers who came to your page, and 10 made purchases,” adds Maryam.

The legal question

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owever, that still leaves the question: how do you get around the legal hurdles of selling on Amazon. If you have a Pakistani bank account, a Pakistani address, and a Pakistani phone number, you cannot register your business on Amazon. So how do you get around that problem?

“We have a legal US bank account and address, which is why we have been able to do so (register with Amazon as sellers), and hence, we can sell our products in the US, Canada, and Mexico because of this program,” explains Mustafa.

For those who do not have US bank accounts and addresses at their disposal, however, they need not lose hope.

Kaneel Javed Bhatti, who has been selling on Amazon for a few years, says that there are still perfectly legal ways to go about doing business with Amazon from Pakistan. “This includes creating companies registered outside Pakistan, and online bank accounts which are perfectly legal for anyone to conduct business with anyone,” said Bhatti.

So how much can you make?

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s Saqib said, there is no limit to earning through Amazon. “The top seller for baby products is making $80,000 a month. The top seller selling thermometers makes $70,000. I would like to name Sialkot which has a big potential in sports. One person who is selling sports equipment on Amazon is making $1.1 million per month.” n

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By Syeda Masooma

erman philosopher Friedrich Neitzsche once said, “Many are stubborn in the pursuit of the path they have chosen, few in pursuit of the goal.” It may be early days yet, but it does seem that Jazz CEO Aamir Ibrahim may be among the latter few.

It is no secret that it is becoming harder and harder to grow a business the mobile telecommunication sector in Pakistan. Teledensity has already hit 74%, with more than 154 million active mobile subscribers in the country, so growing revenue by adding more users rapidly is becoming less and less of an option.

The industry’s revenues have been growing at a snail’s pace for the last few years, at least by the standards of Corporate Pakistan. Total revenue for the industry was Rs489 billion in the financial year ending June 30, 2018, the latest for which complete figures are available from the Pakistan Telecommunications Authority (PTA), up just 4.0% from the previous year, only marginally above inflation. And 2018 was an improvement over the previous year, when revenue for the industry grew at just 1.5% over the previous year.

And with a 36.7% market share, the largest, Jazz has the added challenge of being the biggest player in the industry and thus having the least room to grow by taking share away from its competitors. In other words, Aamir Ibrahim has probably the toughest job in Pakistani telecommunications: little room for upside, plenty of room for downside.

So how does an ambitious CEO grow his business that is already the biggest in its sector?

He can start, as Ibrahim did, by looking at what he can grow, even if it is a small segment of the market to start with.

TELECOMMUNICATIONS

“WE WANT PEOPLE TO BE BANKED. WE WANT TO ELIMINATE CASH AND WE WANT TO MOVE TOWARDS DIGITALIZED CASH. THAT ALSO ELIMINATES CORRUPTION. WE WANT TO DOCUMENT TRANSACTIONS. BECAUSE WHEN TRANSACTIONS ARE DOCUMENTED THERE IS A TRAIL AND YOU CAN ELIMINATE MONEY LAUNDERING. WE THINK THAT PAKISTAN IS RIPE FOR FINANCIAL INCLUSION AND THAT IS AN OPPORTUNITY THAT GETS ME EXCITED” Aamir Ibrahim, CEO Jazz

Veon: building the WeChat of Pakistan

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he two areas of Pakistan’s telecommunications market that have been growing at rapid rates are mobile internet, and mobile banking.

Of the 154 million mobile phone subscribers in Pakistan, just 54.1 million have access to mobile broadband internet, defined as 3G or 4G data subscriptions as of June 2018.

That number grew by 33.3% over the previous year. And actual data use is skyrocketing. Total mobile data usage rose to nearly 1.3 million terabytes in fiscal 2018, up 82.3% from 2017. That comes to approximately 1.9 gigabytes per user per month.

But while that business is growing rapidly, it is not directly translating in revenue growth for the mobile telecommunications companies, in large part because the increased internet usage is cannibalising from some of the voice and texting revenue for the mobile companies.

It is in part to combat that cannibalisation that Jazz – the company formerly known as Mobilink – launched Veon, a multipurpose app that it hoped would become Pakistan’s version of WeChat in October 2016.

At the time, Jazz’s management was deathly afraid of becoming just another utility company, focused on providing the low-value, high-cost telecommunication infrastructure that would undergird other companies building high-value, low-cost apps

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and other businesses that would create significant shareholder value for their owners. By not participating in competing for that app space itself, the Jazz management felt that they would effectively be leaving money on the table.

“We are not going to be in the do-nothing category,” Aamir Ibrahim had said to Profit in a 2017 interview.

“Traditional telcos have made money mainly from voice but didn’t do any innovation except SMS, but OTTs [over-the-top apps] did that and surpassed us in that space. It’s not about being bigger, it’s about being better.”

Veon was launched as an all-purpose app where users could do almost everything using mobile phone like news feeds and self-serving mobile top-ups and cellular bill payments.

It was a bold move by the company to step into a territory dominated by the likes of WhatsApp in messaging, and the banks and its main rival Telenor in the payments space.

The app would primarily make money the way any other app makes money: gain a high number of users who are attracted to the product, and then sell them services as well as gain revenue through selling ads on the platform.

Aamir knew the risks back then too. In his own words at the time, “The risk of not taking this risk [launching Veon] is much higher.”

Had Veon succeeded in becoming the WeChat of Pakistan, as was hoped by Aamir and his team, Pakistan’s telecom market would have undergone a quick and massive

transformation. Free texting and voice services, coupled with financial services and self-services platform provided by Veon would have eaten up the call and text revenues of all mobile SIM services including Jazz’s, which according to Aamir, “It is still better to cannibalize yourself

than have someone else cannibalize you.”

However, two years down the line Veon failed to live up to its expectations.

Why Veon failed

T

here is one very simple reason why Veon failed to become the super app of Pakistan: because Pakistan is not China.

In Silicon Valley, when companies are looking to raise money for a business in China, they have a tendency to describe it as the Chinese equivalent of an American company.

Baidu is the Chinese version of Google, Alibaba is the Chinese version of

“VOICE IS GOING DOWN AND DATA IS GOING UP. THE INDUSTRY IS GOING TOWARDS DATA AND SURVIVAL WILL NOT DEPEND ON CONNECTIVITY ALONE. THE INDUSTRY IS GOING INTO APPLICATIONS. INCLUSION OF FINTECH INTO THE TELECOMMUNICATION SPACE IS IMPERATIVE AND NECESSARY FOR THE PLAYERS IN THE INDUSTRY TO STAY RELEVANT” Parvez Iftikhar, the CEO of ICT Forum, an Islamabad-based think tank Amazon, Didi is the Chinese version of Uber, and WeChat is the Chinese version of Facebook.

Have you noticed how nobody talks about the Pakistani version of these apps? The Pakistani version of Google is Google. The Pakistani version of Facebook is Facebook. And yes, while Careem is a strong competitor to Uber in the Pakistani market, Uber itself is

present and growing its business in the country.

This, by the way, is not a phenomenon limited to Pakistan.

India does not have a rival to Facebook or Google either. The Indian version of Google is Google. Yes, Flipkart and Ola are strong competitors in their respective markets, but there is no Indian competitor to Facebook either.

If a service can exist as a completely global platform without the need for significant local customization, as internet search, social media, and messaging can, then the global incumbent is likely to dominate in the local market as well.

The only reason China is different is because China actively bans foreign competition and then allows local companies to build up rivals within the confines of a tightly government-controlled internet infrastructure. That requires a level of authoritarianism that Pakistan, thankfully, does not have, and as a result Pakistan’s internet environment is much freer than that of China.

What that means, however, is that if you try to create a “Pakistani version” of something that already has a dominant global user base that includes millions of Pakistanis, it will likely fail. What Jazz had hoped, however, was that while Pakistanis have a multiple apps that perform all of the functions of a super app, they might appreciate having it all in one convenient platform.

It was a valiant effort, but it ultimately failed.

The app had some initial success, with 2 million downloads, though 1 million of those were within the first three months of the app’s launch.

Aamir Ibrahim admits that the overall response they received was not up to the management’s expectations. The company realized that not only the initial platform of the Veon app was not strong enough, but they had also tried to do too much and add too many things in a single app.

Part of the struggle, of course, was the fact that the social and messaging element of the app was directly competing against WhatsApp and Facebook, both owned by the largest and most powerful social networking company in the world, and one that already had as its users virtually every Pakistani with a mobile internet

connection. Why switch to Veon when everyone you know is already on Facebook and WhatsApp? And then there were some operational challenges. For instance, one of the ways that Veon tried to attract more users to its platform was through a co-branded Black Friday sale with Daraz.pk, offering special discounts on the shopping platform to Veon users.

That, however, ran into issues after Daraz.pk went through an ownership change. “Daraz.pk decided not to work with us once they were bought by Alibaba,” said Aamir.

Those operational challenges got scathing reviews from industry players. “Veon’s marketing appears to be making every mistake in the playbook,” wrote Monis Rahman, founder and CEO of Naseeb Networks and Rozee. pk in a Facebook post. In another post, he added “Veon tried hard to reinvent itself as a new high-tech player, in hopes of making money from apps and service commissions instead of classic voice and data subscriptions. It now is cutting management jobs and simplifying its structure as part of a retreat to a more traditional telecom business model. Lots of lessons here.”

Needless to say, all of those challenges meant that Veon simply did not get enough traction to become what Jazz’s management had hoped it would become: the engine of the company’s future revenue growth.

To his credit, Aamir Ibrahim did not let his ego get in the way of dispassionately rational decision-making.

When the time came to decide whether or not to pull the plug on Veon, Aamir did not hesitate to admit defeat and cut his losses. It helped, of course, that the retrenchment of the Veon

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platform was a global phenomenon that Jazz’s parent company Vimpelcom implemented across its subsidiaries around the world.

But that still did not resolve the core question for Jazz: where will the next phase of the company’s growth come from?

The answer on that front was staring at the management in the face the whole time.

JazzCash: the unexpected success

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RAPID GROWTH

82.3%

The growth rate for data usage in Pakistan in 2018, to 1.3 million terrabytes

4.0%

The growth rate of telecom company revenues in Pakistan in 2018

s stated above, mobile internet usage is not the only growing category in the otherwise stagnating mobile telecommunications space. There is also mobile banking, specifically mobile payments.

According to data from the State Bank of Pakistan, both branchless banking and mobile payments are a rapidly growing space. The number of branchless banking accounts hit 38.5 million in the first quarter of 2018, up from just 15 million in June 2015. During that period, the total volume of transactions grew by an average of 13.6% per year to 532 million transactions.

The total value of transactions grew at a somewhat slower pace, at an average of 7.2% per year to Rs2,269 billion.

The real growth, however, has been in the number of mobile app transactions, which grew at an average of 34.8% between 2015 and 2018 to 15 million. The value of transactions grew by an even faster 37.8% per year during that period to reach Rs278 billion.

What that means is that Pakistanis are increasingly becoming more willing to spend money online. And that is where Jazz is poised to benefit through its branchless banking and mobile app-based payments platform, JazzCash.

What Veon failed to achieve, JazzCash seemed to surpass. JazzCash currently has close to 5 million customers. Aamir said: “We see a lot more traction along JazzCash. We see our customers excited about getting into financial inclusion. So we decided to enrich the messaging platform in JazzCash, instead of trying to bring it all together in Veon.”

It is that willingness to pivot from

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MASSIVE MARKET

Rs2,269 billion

The value of total transactions that took place through branchless banking in Pakistan in 2018

Rs278 billion

The value of payments made through mobile apps in Pakistan in 2018

a flailing platform to investing in a thriving one that is the kind of agility that is often missing in large companies. It is also what tends to keep companies from being able to continue growing their business after having reached a market-leading position.

As with Veon, JazzCash is also available on all mobile networks and not just Jazz subscribers. Approximately 30% of JazzCash customers are not Jazz subscribers. And in Aamir’s words, “Our next big endeavor is propagating this facility [JazzCash] to the masses.”

He said that it is an endeavor to include the unbanked and the under-banked to a financial institution.

“We have close to five million customers who use JazzCash on a monthly basis to send remittances, topping up their mobile, paying utility bills, etc. So they have started to use that. This is a big opportunity for Pakistan.”

Financial inclusion is certainly an opportunity for Pakistan. According to the central bank, only about 23% of adults in Pakistan have a bank account.

That massive unbanked population is reliant almost entirely on cash, which is not only inefficient and susceptible to theft, but also has the disadvantage of enabling crime and money laundering.

That is where Aamir wants to focus his attention next. “We want people to be banked. We want to eliminate cash and we want to move towards digitalized cash. That also eliminates corruption, and that’s consistent with the government policy and policy of the State Bank of Pakistan. We want to document the transactions. Because when transactions are documented there is a trail and you can eliminate money

laundering. We think that Pakistan is ripe for financial inclusion and that is an opportunity that gets me excited,” Aamir said.

He also has elaborate plans to penetrate JazzCash to the urban population, shifting from the traditional focus on rural and suburban areas. “Over the last few years both JazzCash and EasyPaisa have focused predominantly on the suburban and rural communities because domestic remittances were the biggest use case or bill payments were the biggest pain point.” However, now he believes that the urban population also needs to find a convenient method of making payments.

He said, “The urban population is probably also under-banked if they are still taking out their wallents to make cash payments. “We want JazzCash to be the number one option all over Pakistan, whether it is B2B, B2C, or involves government. Our plan is to make JazzCash the de facto payment option.”

To him perhaps one of the reasons that JazzCash still hasn’t gained a lot of customers in the urban areas is that “there are very few places where it is accepted. And that is our second target.

We need to onboard a number of merchants where JazzCash is easily accepted. If we expect people in IBA and LUMS to use JazzCash, it needs to work on McDonalds, Gloria Jeans, to pay the tuition fee to LUMS and so on. This is what we are working on now,” he said.

With data and financial services becoming the new cash cow as well as survival strategy for the telecom industry in Pakistan, Aamir’s plans for Jazz seem to be in the right place. And he has all the support from the state for his next big endeavor.

“SBP looks at us as a beacon of hope that can deliver on that national strategy,” he said, while lauding the support his company receives from both the State Bank and the PTA. That support and success comes at exactly the right time for the company, because the telecommunications industry may be about to go through another round of upheaval.

The spectrum auction, and what comes next

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he next generation of spectrum licenses for 3G and 4G are up for renewal in 2019. This means that telecom industry will have to go through a transitional period and players have to be cautious about their current expendi-

tures and focus areas.

“For one, there is a lot of uncertainty about the prices of these licenses, and even if they are lower, the telecom companies will still have to pay hundreds of millions of rupees,” said Parvez Iftikhar, the CEO of ICT Forum, an Islamabad-based think

The JazzCash management team celebrates with CEO Aamir Ibrahim upon achieving 5 million active users for their payments platform. tank, and a member of Prime Minister’s 17-member Task Force on IT & Telecom.

“Voice is going down and data is going up,” he said. “The industry is going towards data and survival will not depend on connectivity alone.

The industry is going into applications,” he said, adding that the current government is also serious about IT and there is already a noticeable trend of cash-on-delivery moving towards online payments. “Inclusion of fintech into the telecommunication space is imperative and necessary for the players in the industry to stay relevant.”

Over the past decade and a half, Pakistan’s telecommunication companies have set up an infrastructure that allows Pakistanis across the entire income spectrum to be connected to each other and the wider world, which in turn has created significant economic opportunity for both these companies as well as for the economy as a whole.

Among the benefits from the prevalence of widespread internet access: the ability of apps like Careem and Uber to launch their services in Pakistan, which would not have been possible without the presence of a nationwide 4G network that allows tens of millions of Pakistanis to access the internet at high speeds and low prices.

However, the government has historically looked upon the telecommunications sector as a cash cow,

yielding high tax revenues that at one point accounted for nearly one in ten of every rupee collected by the Federal Board of Revenue. At a time when the industry is struggling to find its footing, telecom insiders feel that the least the government can do is ease their regulatory burden.

“The government needs to do something to help such companies survive,” said Parvez Iftikhar. “They cannot control OTT apps but they can reduce the regulatory conditions [on telecom companies] because unless that happens, the competition between the free OTT apps and the local industry is not fair.”

Of course, there are things that the government cannot control, such as the fact that Pakistani telecom companies, until recently, did not share the infrastructure for their cellular towers and each company built up its own. But tower sharing, ultimately, is just a cost-cutting measure. It does not stifle revenue growth in the manner the government’s heavy-handed approach towards telecom regulation can and does.

That said, until the regulatory framework changes, if ever, for now Jazz needs to play with what it has.

And for now it had a choice to make to continue to invest in Veon, or to move away to a more lucrative platform like JazzCash to provide the same, or at least similar, financial services. It seems then that Aamir made the better choice. n

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TWO STARTUPS

WILLING TO BET THAT MORE PAKISTANIS WILL BUY THEIR

GROCERIES ONLINE Hum Mart and Mandi Express have both set up online stores that serve the Karachi market, but both are going about their business in a very different way

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By Junaid Hanif

hile e-commerce threatens to devour traditional retailing in most industries, the one sector that has thus far remained resistant to its pull, even in the most developed of e-commerce markets such as the United States, is grocery shopping. There have been some nascent online grocery shopping websites in developed economies, but they have been slow to gain traction.

So what chance would an online grocery shopping startup have in Pakistan, where people are only just now starting to get comfortable with the more mainstream forms of e-commerce? Two dreamers, both operating startups out of Karachi, are willing to find out. They are the founders of Hum Mart and Mandi Express, and both appear to believe that Pakistanis may soon be ready to shop for groceries online.

Hum Mart founder and CEO Malik Faisal Qayyum is a veteran of the traditional retail business and has worked at senior positions at Unilever and Telenor. He was a director of sales and then the head of business intelligence and analytics at Telenor.

Mandi Express co-founder and CEO Jehanzeb Chaudhri founded this venture along with Danyaal Balkhi.

Jahanzeb is a graduate in computer science and has specialized in data analytics. Mandi Express’ business model is rooted in the use of information and technology to guide the purchasing ex-

Grocery orders at Hum Mart being moved to delivey vehicles perience of their clients. Mandi Express was incubated at Karachi’s Nest I/O. However, despite the fact that both of these firms operate in the very nascent Pakistani online grocery industry and have geographical overlap in their core market (Karachi), they are not direct competitors. Hum Mart, as its name suggests, is a subsidiary of Hum Network Ltd (PSX: HUMNL) and intends to provide a perfect substitute to the shopping experience one might get at a supermarket. The main difference between Hum Mart and a brickand-mortar store is that users of Hum Mart would not have to go through

the hassle of driving, parking and carrying their purchase all the way back to their residence. Hum Mart would do this for them and that too at no additional cost (on standard delivery).

Mandi Express, on the other hand, is a startup of two young graduates.

And they are much more invested in tracking the produce throughout its value chain. Mandi Express is in constant contact with many different players such as farmers, arthis and mashakhors (various agricultural intermediaries) and works with them to provide fresh organic products to their customers.

“DATA IN ITSELF IS NOT THE MOST USEFUL THING. THE REAL TRICK IS YOUR ABILITY TO USE THE NUMBERS GATHERED AND CONVERT THEM INTO ACTIONABLE ANALYTICS. WE USE ACTIONABLE ANALYTICS TO GIVE CUSTOMIZED REPORTING TO OUR CORPORATE CUSTOMERS. AND THIS IS ONE OF THE THINGS WHICH HELPS US IN WINNING OVER THEIR BUSINESS AND GENERATE HIGHER REVENUE” Malik Faisal Qayyum, Hum Mart founder and CEO

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“SABZI MANDI IS THE BIGGEST MARKET IN ALL OF KARACHI. IT’S HUGE AND SERVES ALMOST EVERY HOUSEHOLD OF OUR CITY. FURTHERMORE IF YOU COMPARE US WITH WESTERN COUNTRIES, WE AS A NATION SPEND A LOT MORE OF OUR TIMES AND ENERGY COOKING FOOD AT HOMES AND RELY LESS ON READYMADE FAST-FOOD OPTIONS. WE VALUE OUR FRUITS AND VEGETABLES. AND THAT FACT ALONE IS AN IMPORTANT STARTING POINT FOR ANYONE CONSIDERING ENTERING THIS BUSINESS” Jehanzeb Chaudhri, Mandi Express co-founder and CEO

The power of data

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erhaps the biggest advantage internet has provided to customers is the free, 24/7 access to product information. We can look up real-time changes in prices and availability of the items we wish to purchase. Consumers can also compare the prices of products on different stores and read reviews about the product or the company they intend to purchase from.

Information is arguably even more useful if you look at it from the producer’s perspective. And if the information

collected is used with clear objectives, it can be a game-changer. Data can help make processes more efficient and track shopper patterns.

Both founders in this space have a background in data analytics for business operations, which informs both companies’ business strategy.

Hum Mart runs on an asset-heavy structure, focused on delivering high quality service to its customers. They have a huge warehouse in Korangi, a large fleet of Bolan pickups for carrying products in and orders out, and numerous employees that comprise many departments along with an in-

Sorting of fresh produce at Mandi Express

30

house call center. But such an extensive investment means that operational and financial costs could easily overburden the already very thin margins that groceries provide.

“Data in itself is not the most useful thing. The real trick is your ability to use the numbers gathered and convert them into actionable analytics. We use actionable analytics to give customized reporting to our corporate customers.

And this is one of the things which helps us in winning over their business and generate higher revenue,” said Faisal Qayyum.

Apart from the various ways data has helped Hum Mart cut down costs, it has also helped them to generate alternate sources of revenue and allowed them to get better returns out of their asset-heavy model. An example of this is how Hum Mart is not only able to provide best quality products at the door steps of their clients, they are also able to help bring in efficiency and reduce waste for their corporate clients.

It is a similar story at Mandi Express. “Every single process is tracked and all our systems are interlinked.

From the point our customer registers an order to the time their order is delivered and its feedback is gathered, every step is measured. KPIs [key performance indicators] are made out of the data and we try to reduce project times and improve efficiencies. This also helps us to identify if a problem ever occurs and ensure that its source is eliminated. Through data we are able to pinpoint where the issues are. Data is then also helpful in our attempts

to retain customers. And that is what separates the online industry from traditional vendors,” said Jehanzeb Chaudhri.

Size of the overall pie

G

rocery shopping is easily one of the most fragmented segments of the Pakistani retail market, and a highly competitive one at that. In addition to the more than 50,000 kiryana stores throughout the country, there are the well-financed larger grocery chains that are setting up operations in Pakistan, including subsidiaries of Germany’s Metro Cash N’ Carry and France’s Carrefour. Then there are other startups also in this space.

That level of competition would be daunting, and might persuade most entrepreneurs to stay away from this space. However, both the CEOs were not concerned in the slightest from the prevailing contestation for customers. Their research and understanding assured them that the market was big enough to cater to a large number of firms.

Faisal provided some numbers to back up story. According to his research, the total potential value of e-commerce retail in Pakistan is estimated to be at $1.5 billion. And the biggest category out of the entire e-commerce industry is grocery. The potential online grocery trade comes out to be $360 million, which is 1% of the entire grocery industry (both online and offline).

“The quantity of all grocery traded online currently adds up to $20 million, which means that only 6% of the market has been captured, all of the remaining 94% is up for grabs. Therefore, there is room for many more players” said Faisal.

Jehanzeb shared the same sentiment regarding the size of the online market and the opportunities present in the grocery economy. He further emphasized on the population of the city and the importance of home cooked food in our culture.

“Sabzi Mandi is the biggest market in all of Karachi. It’s huge and serves almost every household of our city.

Furthermore if you compare us with western countries, we as a nation spend a lot more of our times and energy cooking food at homes and rely less on readymade fast-food options. We value our fruits and vegetables. And that fact

Mandi Express’ Team alone is an important starting point for anyone considering entering this business.”

Aggregating grocery needs onto one online platform

A

n important element of our modern shopping experience is the ability to acquire all the items we need from one central venue. This need is what gave birth to the concept of huge shopping malls and giant-sized stores we see around us. For the online shops to divert and capture the market they will have to incorporate this ability into their model.

And the businesses we spoke to have been able to do this in various ways.

Mandi Express according to Jehanzeb looks at itself as an aggregator of the various supply nodes in the marketing chain of fresh grocery. “We don’t want to eliminate the middleman; we want to make them more efficient. We are interacting with the supply chain, learning with them and finding out their inefficiencies. Our model intends to get into partnerships with arthis and farmers.”

And from the consumers perspective Mandi Express is able to provide its clients with the otherwise hard to track down organic produce. “If a person is looking for a tropical or imported product such as orange bell pepper, it is very unlikely you get that from your sabziwala, and often people have to search for specific markets for such varieties. And then you will have to go to another place to get meat, and another for seafood. With us you get all of that in one go. We are the ones moving around to get fresh produce and deliver them to you at your doorstep.”

Hum Mart have recognized the lack of availability of produce as one of the “pain points of consumers on e-commerce sites”. To overcome this

pain point Hum Mart has an extensive range of products in their several categories which range from fresh fruits to personal care, household needs and many more. Their warehouse is huge and is always stocked to make sure that the needs of their clients are actively met.

Delivering to customer values

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n important distinction between online stores and their brick-and-mortar counterparts is the varying capacity of both to react and respond to the changing consumer demands. With the traditional grocery suppliers, their facilities are quite literally set in stone. Once a physical store is constructed, it is very difficult to relocate it, to reshape its boundaries or change the aisle structure to allow greater footprint or meet any reorientation in shopper needs.

However, this freedom for online stores in form and structure could be a blessing or also a burden, depending on how it is utilized.

Hum Mart is using the freedom of structure to shape their business around the wishes of their customers. ”We follow an iterative process where services that are not required by customers are prioritized by ones which they truly value. And to figure this out data is again our primary tool.”

Mandi Express takes the delivery of an important customer value to its very core. They essentially work to bridge the information gap that exists between consumers looking for fresh and cheap grocery and the suppliers who intend to benefit from the information inequality. “Mandi Express gives its customers access to the best quality products at their ideal prices, and therefore we bring transparency into the entire sabzi purchasing experience,” said Jehanzeb. n

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The stories of four entrepreneurs who are making a social impact through their commercially thriving endeavours

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By Muhammad Faran Bukhari

hen graduating from college, many students often face a choice: take the job that has a positive social impact, or the job that will pay well and have a bright financial future? For some entrepreneurs, it seems, the answer is both.

In years past, social entrepre-

SOCIAL ENTERPRISE

neurship used to mean a slightly more financially self-sustaining charity, or a business that occasionally did philanthropic ventures. As the industry has evolved, however, it is becoming increasingly clear than social entrepreneurs do not want to compromise on either part of their pursuit: they want to pursue both social responsibility and positive impact and they want to have a financially successful venture and personal financial success.

“What business should be is socially conscious profit making, instead of being driven by greed. The three basic pillars of financial returns, social impact and environmental scalability should be maintained in all businesses,� says Jawad Aslam, CEO at Ansar Management Company (AMC), a company working on low cost housing in Pakistan. Choosing between profit and purpose is a challenge that all businesses face and the ones which succeed

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“WHAT BUSINESS SHOULD BE IS SOCIALLY CONSCIOUS PROFIT MAKING, INSTEAD OF BEING DRIVEN BY GREED. THE THREE BASIC PILLARS OF FINANCIAL RETURNS, SOCIAL IMPACT AND ENVIRONMENTAL SCALABILITY SHOULD BE MAINTAINED IN ALL BUSINESSES” Jawad Aslam, CEO at Ansar Management Company

in striking a balance between the two often go on to make a considerable impact not just for themselves but the society as a whole. Profit recently sat down with a few ‘social entrepreneurs’ who are working for social causes while trying to pursue financial goals, and mapped out their journeys.

Affordable housing: Ansaar Management Company

I

n 2005, Jawad Aslam used to live in Baltimore, working on high end real estate in the United States. The following year, he and his wife decided to move to Pakistan. “We did not really have a plan, but once we got to Pakistan we met Tasneem Siddiqui, the chairman of Saiban, the only organisation in Pakistan at the time working on low-income housing, and since I had been doing real estate in the US, he invited me to help him launch a project in the peri-urban areas of Lahore funded

by Acumen Fund,” he says.

People who were earning between $100 to $200 month were the focus of this project. “What really motivated me was the idea of giving access to affordable houses to people who never dream of owning houses in their entire life, people who have been paying rent for the last 20 years at exorbitant rates.

And on top of that this model was economically viable,” he says.

In 2009, Jawad launched Ansaar Management Company (AMC), working on a similar model, with Acumen Fund taking a 30% stake in the company. AMC builds low-income housing societies providing affordable houses costing from Rs700,000 to Rs1.8 million depending on the location, size of the plot and the covered area.

The Rs1.8 million house is built on 800 square feet plots with a covered area of

34

around 650 square feet.

The venture is modestly profitable.

Jawad’s company currently earns an annualised return on investment (ROI) of around 6 to 10%, which he hopes to increase to 15% eventually. On the other hand, ROI for conventional real estate developers fall in the range of 100% to 200%. “We are charging 15 percent and a conventional developer typically targets 100%.”

How are these conventional developers able to make such exorbitant returns on their investment? Jawad says that it has something to do with the way the market is structured. “This is a market question and the market determines such outcomes. If you pay Rs2 million for your child’s education and I am the education provider and we are both willing to make that transaction, than that is not a problem.

If there is no one in the market that wants to pay Rs2 million for education, then that product will not evolve. The case for housing is similar. These guys are charging 100% profit because they have a market that is able to absorb that and customers who are willing to pay that much.”

Jawad, believes that his model is better, one which would make a greater impact, generate profit and allow for greater investment to come in the sector. “We need to figure out a way to get the market to understand that this is inflated pricing. I can make the same house in half the price and make the same quality of houses accessible to a larger number of people.”

Water access: Tayyaba.org

B

ilal Saqib is currently a postgraduate student at the London School of Economics (LSE), pursuing a degree in social in-

novation and entrepreneurship. He has lived a large part of his life in Pakistan and the United Kingdom. However, his inspiration to venture into social entrepreneurship came while he was visiting Burkina Faso. “I was in Ouagadougou, the capital of Burkina Faso, one of the poorest countries in the world, when I saw women over there using wheel shaped containers to carry water from long distances. I asked the women about it, and they said that it was probably the best thing that had happened to them in a long time,” he says.

In Pakistan, a large proportion of rural based women faced the similar daily ordeal of having to fetch daily use water from long distances. Their situation is worse, compared to women in Ouagadougou, as they use traditional clay pots, carrying them on their shoulders or head. In Burkina Faso, Hipporoller.org was working on providing water wheels and in India a similar organization, Wello Water, was doing the same work, but nothing was being done for women in Pakistan.

“I got a small team together and launched the wheel in Pakistan under my organisation Tayyaba.org. We predominantly operate in Tharparkar, Kohistan and another area in Balochistan and have impacted almost the lives of over 20,000 people in the past three years,” he says.

However, when it comes to having a sustainable business model for the organisation, Bilal says that the organisation runs on donations. “There is no business model. We operate on a 100% donation model, in terms of the money that goes in is the money that comes out in terms of a wheel. Nobody takes a salary.”

Going forward, however, he has a different model in mind, one which may help him generate a sustainable revenue stream. Each water wheel cost

“WE MIGHT ALSO WORK WITH THE GOVERNMENT AND SELL THE WATER WHEELS AND FILTERS TO IT. THEN WE CHARGE A SERVICE FEE TO THE GOVERNMENT, WHICH WILL THEN HELP US INVEST IN RESEARCH AND DEVELOPMENT AND HELPS US BETTER SCALE AND AMPLIFY THE WHOLE THING” Bilal Saqib, CEO at Tayyaba.org

around Rs2,500 including the cost incurred for transporting them to their end users, hence, charging money from the people who actually need and use the water wheel is out of question.

“The issue is that people who need this water wheel cannot afford it and the people who can afford it, do not need it,” he says.

Currently, Bilal is looking at big corporations that he thinks might be interested in investing into his venture.

“So to scale this we definitely have to have a different model. We can approach different companies that want to make an impact through their corporate social responsibility (CSR) activities and can get funding from them.

We can rebrand this wheel to a specific company and they can put it on their CSR report.” Recently, Bilal has been promised a small investment from Dassani, Coca Cola’s mineral water brand.

“Now companies in western economies are looking at impact investing instead of donations or CSR. Companies just don’t give donations, they want to see what sort of a social impact the business will have before investing in it,” he says.

The market for impact investing has grown rapidly in India over the past few years. According to a report published by McKinsey & Company, a consulting firm, the total value of impact investments in India has been $5.2 billion since 2010, out of which $4.2 billion has been added since 2015. Even though the number of investments have stayed between 60 to 80 per year, their size has increased from from $7.6 million per deal in 2010 to $17.6 million per deal in 2016.

“We might also work with the government and sell the water wheels and filters to it. Then we charge a service fee to the government, which will then help us invest in research and development and helps us better scale and amplify the whole thing,” says Bilal Saqib.

In the future Bilal plans to take Tayyaba.org forward as a think tank working on social issues. “The idea is to make Tayyaba.org a think tank, where we consult with and assist the government on social issues like water, food, women hygiene and microfinancing and other tier one problems.”

Higher education: Rahnumai

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ccording to Hafiz Awais Afzal, the founder of Rahnumai, a social start-up working on increasing higher education enrolment across Pakistan, more than 65% of the universities in the country do not have an online application portal, which means that students sometimes have to travel long distances to get access to a university application form.

Back in the day, when Awais was himself applying to universities for admission, he faced difficulties due to lack of information regarding application procedures and lack of accessibility as he lived in Okara, a relatively underdeveloped region in the country.

“I realised that lots of students miss opportunities due to lack of information and accessibility,” he says.

Hence, Awais, initiated Rahnumai, a social venture, based in his home city, primarily focusing on increasing higher education enrolment rates in the country. Currently, Rahnumai allows students to fill the applications online

“I REALISED THAT LOTS OF STUDENTS MISS OPPORTUNITIES DUE TO LACK OF INFORMATION AND ACCESSIBILITY. WE CHARGE RS500 SERVICE CHARGES PER APPLICATION. STUDENTS ARE ABLE TO SAVE ON THEIR TRAVEL COSTS WHICH IS DOUBLE IN THE CASE OF WOMEN AS THEY USUALLY TRAVEL WITH A GUARDIAN. ON AVERAGE WE HAVE DECREASED THE COST OF APPLICATIONS BY ALMOST 60 TO 70%” Hafiz Awais Afzal, CEO at Rahnumai

SOCIAL ENTERPRISE

“I FELT LIKE HAVING A NON-PROFIT WOULD HAVE A VERY LIMITED REACH BECAUSE THEY CAN ONLY REACH THE NUMBER OF PEOPLE THAT THEIR DONORS ALLOW THEM TO. BUT IF WE COULD FIGURE OUT A WAY TO MAKE THIS AFFORDABLE TO PEOPLE AND MAKE THE PRODUCTS AND SERVICES THAT WE OFFER COMPELLING ENOUGH THEN PEOPLE WOULD ADOPT THEM” Shazia Khan, co-founder, EcoEnergy on their portal and then forwards it to the universities where these candidates want to apply. The portal gives students information about universities, their fee structure, deadlines and availability of scholarships.

“We charge Rs500 service charges per application,” says Awais. This is Rahnumai’s primary revenue stream other than the fee charged for other services and corporate sponsorships.

The start-up also provides one-onone career counseling and conducts sessions in colleges to help the students navigate their portal and fill the application form.

“Students are able to save on their travel costs which is double in the case of women as they usually travel with a guardian. On average we have decreased the cost of applications by almost 60 to 70%,” he says.

So far, Rahnumai has reached almost 20,000 students and has processed around 1,500 university applications.

Awais claims that his venture is not only increasing higher education enrolment rates but is removing class differences and the gender gap by providing students equal educational opportunities and is increasing the diversity of the future workforce of the country by bringing new universities and subject options previously unknown to intermediate students into the limelight.

Renewable power: EcoEnergy

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hazia Khan is a Pakistani American environmental lawyer based in Washington DC, energy being her area of specialisation. She

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started her career with the World Bank working for the Africa energy sector, going on to work at the Global Environment Facility, where she realised that her home country Pakistan, where almost 71 million people live off the grid, could benefit greatly from solar energy due to the high solar radiations that the country receives.

In 2009, she launched EcoEnergy Finance, a non-profit entity, with the intention of making a commercially viable business model for making clean energy affordable to off grid population in Pakistan. EcoEnergy Finance operated as a non-profit for seven years, raising money for market research and product testing.

She along with her co-founder Jeremy Higgins built a small team and spent four years carrying out market research across 44,000 households trying to understand their purchasing power, consumer preferences and the behavioural shift that was required for the adoption of the new technology and another three years building and testing different products.

Once a business model was in place, a fully for-profit entity EcoEnergy Global was launched. The company currently offers energy solutions ranging from 20 watts to 500 watts. “Our products cost the same or less than what our customers are spend on their energy needs, we provide financing services and develop a credit score for them and offer them after sale services,” she says.

“I felt like having a non-profit would have a very limited reach because they can only reach the number of people that their donors allow them to. But if we could figure out a way to make this affordable to people and

make the products and services that we offer compelling enough then people would adopt them.”

EcoEnergy Global primarily operates in Sindh, providing solutions to anyone living off the grid but now hopes to compete for on grid customers as well and expand into Southern Punjab and Balochistan.

“It is a shame that the government has not done anything to provide access to electricity to these people, but that leaves a great opportunity for the private sector to step in. The new Prime Minister has also talked about widespread adoption distributed solar.

We will be happy to work with the government. But primarily our customers can pay for themselves and are not subsidised in any way by the government. So, we are confident that what we are providing is exciting and compelling and affordable for our customers regardless,” she says.

Shazia Khan believes that the for-profit model of her business is better than how most non-profit non-governmental organisations (NGOs) operate and serves as a motivating force for her business to do well. “I did not want to have a small NGO. An NGO can get away for a very long time without being successful and without anyone ever saying that it is unsuccessful, but a business is a failure if it does not fulfill the need of its customers.” n

SOCIAL ENTERPRISE

taking some leisure on the job rather than strictly cutting back hours.

The future of work will involve even more mixing of business with pleasure, as employees agitate not to avoid working entirely but to simply remove the most onerous aspects of it to better pursue some leisure through labor.

Work has become a lot safer

W HOW WORK HAS GOTTEN BETTER

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By Matthew Yglesias

n a famous essay written over 80 years ago, John Maynard Keynes took stock of the “Economic Possibilities for our Grandchildren” and concluded that with the advance of technology and prosperity, there would be little need for people to work in the future. The primary concern, instead, might be difficulty finding an adequate quantity of fulfilling leisure activities.

George Jetson’s futuristic job at the Sprocket factory was, similarly, depicted as involving two hours a day of work, with the employees so productive that there’s no need to put in much time. People do work fewer hours nowadays than before World War II. We also spend more years in school, and benefit from programs like Social Security and Medicare that ensure we’ll be able to retire.

But most working people still have something recognizable as a full-time job. And one important segment of the population — women — have moved in the opposite direction, increasing the time they spend in paid market labor.

Some see that as evidence that we are stuck on a dysfunctional treadmill of conspicuous consumption — endlessly yearning after bigger houses and

gadgets that people did fine without decades ago.

But a more likely answer is that the stark dichotomy between the drudgery of work and the pleasure of leisure is misleading.

People like time off, but they also like having a job. And work itself can be more or less pleasant. We’ve moved, over time, not simply into doing less work, but into doing work that contains less drudgery and more pleasure. We’re

ork can be unpleasant in many ways, but literally dying on the job is high on the list of really bad days at the office. The good news is that it’s become much less common. A 1995 paper by Thomas Kniesner and John Leeth showed that the long-term trend in the United States was toward workplaces becoming much less fatal: More recent data from the Bureau of Labor Statistics (not directly comparable because of methodology changes) shows that the overall number of workplace deaths has decreased since the early 1990s, even as the population has grown: This is one of the great quiet triumphs of recent American economic life. It speaks to the success of workplace safety measures, but also to an underrated upside of American work transitioning into the service sector.

But work in the shrinking manufacturing sector and other classic blue collar trades is deadlier than work in the growing retail, health, and education sectors.

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chat all while seated at our desks looking like we’re working. We email and text with friends, we maybe buy a thing or two from Amazon, and, of course, we check our Twitter and Facebook feeds.

And we’re not unique — office workers all across the world are using their computers to get work done more efficiently than ever before, and then also using their computers to distract themselves from work. This is obvious to any digital journalist who’s ever looked at web traffic statistics — people are consuming a lot of content during business hours, and very little during weekends, evenings, and holidays. In other words, while we sit at our desks churning out copy, other people are sitting at their desks reading it when they’re supposed to be working.

Work is closer to home

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eople have become, over time, markedly less likely to move to a different state to get a job.

This has prompted a certain amount of fretting from some pundits that people may have become too immobile and lacking in initiative for their own good.

A common counterpoint holds that financially struggling Americans may be too poor to move. But this is unlikely. Despite the struggles of the past few years, the typical American household in 2016 is significantly richer than it was in more-mobile 1976.

The truth is more likely the opposite — people have always had lots of good reasons not to move for work (it’s nice for your kids to see their grandparents) — and today’s economy makes it easier to get by without doing so. There are important exceptions (New York for finance, the Bay Area for high-tech, DC for politics), but by and large America’s regional economies are becoming less specialized.

People are doing the same kind of work — preparing and serving food, teaching kids, taking care of the sick, selling things in stores — in virtually every metropolitan area. So for most people, it’s not necessary to move to find work suitable to their skills. Growing reluctance to move — just like growing reluctance to do unpleasant work — is another example of people taking advantage of increased prosperity to enjoy a more pleasant working life than they did in Keynes’s day.

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Your computer is a mighty Work is a force that gives us meaning shirking machine

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oth the decline in workplace deaths and the decline in moving for a job are largely working-class phenomena. More privileged highly educated workers are more likely to relocate and have always been relatively safe from on-the-job injury. What we get instead are computers. The ubiquity of digital equipment in the modern office is so striking that it’s spawned a vast economics literature around what’s known as the Solow paradox. The computer revolution, legendary economist Bob Solow first observed in the late-1980s, is visible everywhere except the productivity statistics. Indeed, the digital era has been associated with a slowdown in the rate of measured productivity growth throughout the American economy.

Yet it’s clear that in many ways digital tools — email, web search, document sharing, etc. — really are making us more productive workers. The problem (or, rather, “problem”) is that they also make us better shirkers.

It’s surely not a coincidence that the hottest enterprise software startup on the market is a messaging service literally called Slack. And Slack is great.

It lets our team at Vox collaborate in ways that were unimaginable five or 15 years ago. But our Slack also features a room where people share baby pictures, a room where people share pet photos, a room for Hamilton fans, etc.

We use Slack to gossip and joke and

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t’s conventional wisdom, of course, that it’s better to have a job than to be unemployed. But crucially, that’s not just about the money.

A fascinating 2012 study by Clemens Hetschko, Andreas Knabe, and Ronnie Schöb looked at what happens to the subjective well-being of older long-term unemployed people when they become old enough to count as “retired” in the German social insurance system. This does not involve any shift in their material resources or their daily activities, but does make them happier.

What was missing from their lives as unemployed people, in other words, was not just money but the sense of identity and meaning that we derive from having a profession.

That’s why work is unlikely to greatly diminish in a more prosperous future. Instead of avoiding work, people will increase their leisure by trying to shave off the rough edges of the work experience. Expect workers and regulators to demand continued improvements in workplace safety. Expect more comfortable workspaces, more flexibility about hours and teleworking, more generous family leave, more and better snacks. Expect higher standards in the equipment we use — and a continued blurring of the line between office collaboration and mere socializing.

This story is part of The new economy, a series on what the 21st century holds for how we live, travel, and work.