The Internet industry in Pakistan is at an extremely exciting point, and the outlook for local entrepreneurs and venture capitalists is strong in the mid to long run.

As the sixth largest country in the world in terms of population, Pakistan has an ever-expanding web base which currently stands at 22 million users, with 8 million now on Facebook.

With such a wide array of currently undeveloped markets to compete in, the need for online stores will only increase over the course of time. When one further considers the high cost of establishing a traditional brick-and-mortar store, one realizes the advantages to which online entrepreneurs are privy.

The Internet industry dynamics have also changed quite dramatically, with 2012 being a possible turning point for rapid growth. As a result of heavy investment from three major players — the largest courier company in Pakistan, a major retail outlet and one of the largest venture builders globally — a string of competitors have started to emerge.

Early Days

Building Internet businesses has traditionally not come easily to Pakistan. Our first e-commerce venture began in 2001 with the establishment of Abid Beli's Beliscity.pk. Although initially started as an information website for mobiles and computers, it soon turned into an e-commerce store as a result of its growing popularity.

You might then expect this venture to have turned out a success story, with Beliscity ending up being the equivalent to Amazon in Pakistan. Unfortunately this was not the case. Owing to many complications and troubles, not only was Beliscity forced to changed its name to Gulf Dealz, but it also fell into obscurity competing with countless other players in the online retail arena.

Arguably Pakistan’s greatest Internet success story is Rozee.pk. Founded in 2007 by Monis Rahman as an add-on to his main business, Rozee has grown to become Pakistan’s premier portal for jobs. This journey was also not an easy one at all. When Monis was trying to raise funds through foreign investors in the second half of 2007, Pakistan was in the news almost daily with images of the bombing due to Benazir Bhutto’s arrival and her subsequent assassination.

3 Hot E-Commerce Startups to Watch in Pakistan

Those, however, were just the early days and the environment seems much more conducive to starting e-commerce ventures now. Last year will go on record as a landmark year for Internet businesses in Pakistan as three very different and important companies launched their own e-commerce portals:

TCS Connect is the online portal of TCS Couriers, Pakistan’s most reliable and wide-reaching logistics company. In May 2012, TCS launched its online shopping portal, TCS Connect, which has products like computers, mobile phones, home and kitchen appliances and even automobile accessories.

Labels eStore is the online store for Pakistan’s largest high-end fashion outlets. With its product lines covering the biggest fashion designers in Pakistan, it targets high-end consumers in the local market and the Pakistani diaspora across the world.

Daraz.pk represents the fashion vertical of the global venture developers, Rocket Internet. The company did not enter into our local online market arena at the behest of Pakistani entrepreneurs who sought funding, but rather as a ‘top-down’ decision by Oliver Samwer to capture the developing Pakistani market in the long-term.

The establishment and subsequent success of these and other businesses have led to a greater focus on e-commerce sites. They may be other clothing brands expanding their businesses online, logistics companies either starting online stores themselves or providing tools and consultancy for brick-and-mortar retail owners to start a digital side to their existing businesses, or young entrepreneurs themselves wanting to get into this nascent business.

Whatever the case, online stores are here to stay in Pakistan and will only attain a larger customer base going forward.

The success of Rocket Internet’s Daraz has also made other venture capital firms take notice and start making initial contact with local players in the industry to fund entrepreneurs.

Future Outlook, Untapped Space

With this hive of activity, the future for Pakistan’s e-commerce and Internet industry has a positive outlook. Local entrepreneurs should seize this opportunity to capitalize on the open market space. The diagram below illustrates the vast amount of untouched market space, ready and waiting to be capitalized:



Disclosure: Adam Dawood is the founding partner of DYL Ventures, a Pakistan-centric venture capital and consultancy firm. One of the first employees of Daraz.pk and its product manager, Adam has now returned to the family business, DYL Motorcycles, and is looking to the future in both the motorcycle and e-commerce industry. You can find him on Twitter as @adamdawood. Please see our ethics statement for further information

Image via iStockphoto, danishkhan


































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Past performance is no guarantee of future results, as the old business truism says. But you also may have heard that you can’t know where you’re going without knowing where you have been.

To get a sense of which industries small businesses are growing in, the analysts at Raleigh, N.C.-headquartered private-company financial-information company Sageworks ran some numbers for Entrepreneur.com. Here’s a look at the industries where U.S. companies with $10 million or less in annual sales have shown the highest and lowest percentage change from Jan. 1 to Dec 31, 2012. As a benchmark, the average growth rate across all U.S. small businesses in the time period was 8 percent, says Libby Bierman, an analyst at Sageworks.


Fastest-Growth Industries for U.S. Small Businesses in 2012

• Residential building construction: 14.77 percent
• Building custom software and servers for businesses: 14.29 percent
• Machinery, equipment, and supplies merchant wholesalers: 13.75 percent
• Management, scientific, and technical consulting services: 12.31 percent
• Architectural, engineering, and related services: 11.40 percent
• Foundation, structure, and building exterior contractors: 11.37 percent
• Building finishing contractors who make additions, alterations, maintenance and repairs: 11.32 percent
• General freight trucking: 10.41 percent
• Services to buildings and dwellings, including pest exterminators, janitorial services, and landscaping: 10.11 percent
• Other specialty trade contractors, including site preparation activities and other specialized trades: 10.04 percent

Slowest-Growth Industries for U.S. Small Businesses in 2012

• Skilled nursing care facilities: -3.29 percent
• Printing and related support activities: 1.86 percent
• Automotive repair and maintenance: 2.81 percent
• Offices of physicians: 3.00 percent
• Highway, street, and bridge construction: 4.24 percent
• Insurance agencies, brokerages, and other insurance-related activities: 4.32 percent
• Lessors of real estate: 5.07 percent
• Other miscellaneous manufacturing including jewelry and silverware, sporting and athletic goods, dolls, toys, and games, office supplies other than paper, and signs: 5.55 percent
• Offices of health practitioners other than physicians and dentists, including chiropractors, optometrists, mental health practitioners, speech and occupational therapists: 5.98 percent
• Other amusement and recreation services including bowling centers, golf courses, and recreational centers: 6.03 percent

The good news for entrepreneurs is that much of the fastest growth is in service businesses, which can be started without a lot of money to buy equipment and inventory, says Bierman. Software development, management consulting and architecture firms have been frontrunners have been for a few years now, says Bierman.

Not all of the businesses on the fastest-growing list are service based. In particular, the residential housing market has just started to recover, and that is supporting businesses related to the construction industry, including foundation and exterior construction and specialty contractors. A lot of construction projects were abandoned during the recession and so part of the bounce in construction is businesses and individuals picking back up old half-finished projects.

Business services and construction are looking strong in the coming years. “They provide services that are, maybe not critical, but very much needed by other businesses and people who are trying to even grow their homes,” Bierman says. “I don’t see these industries going anywhere. Maybe their growth rate won’t be as high as it has been, but I don’t think it will be a decline anytime soon.”

A list of the fastest-growing industries for all businesses would include manufacturing, says Bierman, but most successful manufacturers have more than $10 million in annual revenue. “Manufacturing as a whole has been something that has pretty positive news lately,” she says. “If those manufacturers are having pull, the middlemen, or the wholesalers that are transacting those sales, will continue to see growth, too.”

During the depths of the recession, many industries were contracting. Now, almost all industries are growing, albeit some at more sluggish rates. The slower-growth companies are not seeing impressive growth rates because they are entrenched in technology that is becoming obsolete, such as printing. But some of those industries are seeing slower growth simply because they have relatively inelastic demand. For example, an economic recession does not change the fact that sick people need to go to the doctor. The growth rate for physician’s offices does not typically change drastically.

Overall, the home health-care industry has seen positive growth rates in revenue over the past year as consumers look for an alternative to moving into a nursing care facility, says Bierman. Skilled nursing care facilities come up on this list as a shrinking, but that’s partly because of the restrictions placed on the data. For this research, Sageworks included only those businesses with less than $10 million in annual revenue. The decline in skilled nursing care facilities may be an indication that smaller facilities are losing ground to their larger competitors or home health care alternatives, she says.

If you thinking about starting your own business, what industry are you considering and why? Leave a note below and let us know.
































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