by Mian Taimoor Ahmed
We have seen a rapid rise of e-commerce in Pakistan in the last few years with 100’s of e-commerce stores opening up in Pakistan and total market size expected to reach a $1 billion mark soon.
Ranging from the marketplace model to self-owned digital assets, all businesses are jumping on to this bandwagon in order to explore the untapped market potential and find a new channel for growth. Social Media has further propelled this phenomenon and acted as a catalyst to make users aware, helping them reach out to their target audience & embarking on a digital eco-system.
We have seen established brands, mid-sized businesses & homegrown products harp on this e-commerce trend and developing & expanding their online presence. Presence on the online platforms is not a matter of choice anymore, rather a necessity in this digitized age. With more than 50 million 3g & 4g users in Pakistan & 35mn Social Media users, the digitization trend is just beginning to pick pace in Pakistan.
When deciding how to become digitized, businesses are using an array of approaches to establish themselves as a digitally driven brand and faces multiple choices when doing so. Starting from a basic Social Media Presence through Facebook, Instagram or Snapchat to creating their online stores and establishing a digital profile for their brand that speaks and communicates as a digital entity.
Starting off with social media presence and engaging with their customers starts off as an easy task, until they are faced with Digital ROI calculation when they really need to find the optimal strategy and move ahead in a calculated manner.
Yet, a bigger and far-reaching decision lies when launching their online store and the modus operandi to pursue to get increasing returns and grow their brand and online presence, yet while taking digital as a new and fastest growing sales channel as well. All businesses are faced with major strategic decisions to take when deciding on what is the best approach to launch their online store.
Before moving on to the strategic decisions required to launch the online store, let’s have a look at the tasks required to launch, manage & scale your e-commerce store.
The tasks can be broadly divided into 3 major categories,
- Choice of Technology,
- How to Manage Marketing &
- How to Manage Operations.
These tasks also vary from the type of control a business wants and the specialty that they have or want in each respective category.
The major tasks under these categories can be summarized as follows;
- The Development, Management & Innovation of the Platform (online store),
- The Management of the E-commerce Operations, Inventory, Product management, Pricing etc.,
- The Digital Marketing & Social Media Management to Support the Online Store,
- Performance Marketing & Growth Hacking to Grow the Sales, which includes introducing new Features that will help grow sales, and,
- Order Fulfillment & Last Mile Delivery.
Therefore, a business will choose the optimal output mix for the above mentioned tasks in order to align them with their business objectives, based on the understanding of their own business maturity, the skills & capability of the team and the aims & objectives for future growth. Each task is a specialty of its own and requires requisite skills & experience in order to perform them optimally. Each task requires a proper structure for the launch, smooth management, seam-less execution & growth of the online store.
Now coming to the strategic decisions required for the launch of the online store, majorly focusing on the Technological category of tasks for the E-Commerce store. There are 3 strategic level decisions that need to be taken for deciding the best way forward in the Choice of Technology.
Strategic Decisions to Consider
The 3 strategic decisions can be summarized as follows;
- Whether to go for an open source platform & develop the platform themselves or,
- Choose a readily available Software as a Service (SaaS) to launch their online store or,
- Choose a Commerce as a Service (CaaS) model.
Opting for the Open Source Platforms requires heavy reliance on software development and incurring its expected costs, which as per some sources is 5 to 6 times greater than the Total Cost of Ownership (TCO) of SaaS or CaaS. This option is most suited for an IT focused company which can dedicate resources & cost for development, apart from the commercialization and growth (marketing/logistics) costs. This model is heavily favored by IT teams as it keeps the control with them, provides complete flexibility to develop anything that they wish. Though, this comes at the risk of slow innovation and high focus on development, thus not benefiting from shared knowledge, and moving away from the core tasks of enhancing the digital presence and growing the online store (i.e. maximizing ROI).
Choosing a Software as a Service (SaaS) is the most favored option globally to launch an online store, as it speeds up the launch or Go to Market for the brand, and Commercial team can focus on growing the business and find the fastest route to get a positive ROI, before going back to the board and making more investments. SaaS allows API integrations and adaptation of latest technologies towards growing your online store with features like Referrals, Discounts, Loyalty, CRM integrations etc. Though this option is highly disliked & snubbed upon by IT teams as it takes onus of responsibility away from them, and instead of adapting SaaS and growing it, they get vary of justifying their own specialty in the digital eco-system and thus a discord in deciding the optimal way forward exists.
It is in the SaaS model where a business has the option of adapting a SaaS and manage the e-commerce operations in-house, until they need external support for growth of sales or to outsource their complete e-commerce operations in favor of a completely managed e-commerce service. SaaS model offers the most flexibility between the in-house & outsourcing tasks option, where brands can easily opt in & out of tasks, as and when needed. There are a lot of International and local SaaS vendors offering their e-commerce platform and businesses can benefit greatly by engaging them on-board. This option is best suited for any business looking to test the market, grow their digital presence and start normalizing it in their regular business operations.
Choosing the 3rd option of choosing Commerce as a Service (CaaS) is the newest term on the block, where focus is on specialization and it is a merger of IT with Commercial. This allows using SaaS or similar to SaaS platforms and integrating it with your IT structures to ensure that the essence of technology stays with the IT team achieving the business objectives, but the commercial team gets the Speed to market using the preferred SaaS and thus both teams achieve their aims. This provides flexibility to specialize in the tasks where business wants to specialize like User Interface (UI) for the website, yet using SaaS User Experience (UX) and integrated APIs to provide personalisation to the customer.
CaaS provides the option to manage all your sales channels at one place, whether it be your own digital asset or a marketplace or some 3rd party digital channel that you want to use to sell your products. Thus, providing complete flexibility of adapting self-developed vs. off the shelf features to provide the best user experience. Though, being a new model on the digital horizon, this requires both IT & Commercial (Sales/Marketing) teams to be fully equipped, aware and cognizant of the way each of their strengths will come to play in a synchronized manner to make this model effective, and how to make this model most efficacious to provide healthy returns to their business.
In deciding the best option from amongst the technological strategic decisions, choosing SaaS (option ii) seems to be the ultimate winner in the current context of the digital industry in Pakistan. With IT teams not fully equipped & capable to understand and handle the e-commerce modus operandi, either to develop the full expertise in-house, or to merge with the commercial team for an effective CaaS model, SaaS model seems the best bet through which they can learn and move towards either of the two models in the years to come.
SaaS is the Ultimate Winner in the Current Context of the Digital Industry in Pakistan
SaaS at the same time will provide the necessary prowess to the Marketing & Sales team to test the market, develop the digital sales channel, and create the digital entity of the brand. This will also enable them to speed up their launch, start selling online, create a customer base and conduct A/B testing to grow the brand. This shall provide valuable experience to the Marketing & Sales team as well, apart from the IT team, thus enabling the organization to garner the learning towards growth in the years to come.
Thus, all of you out there considering, developing or running an e-commerce store, adopt a SaaS based e-commerce model and start selling today by keeping your own focus on the product!