The entry of Facebook Marketplace (FM) into mainstream digital media space augurs well for Pakistan’s e-commerce sector, particularly small and medium-sized businesses.
FM is a digital market where users can buy, sell and trade items with other people in their areas or communities. It came to Pakistan in 2016 as a C2C (consumer-to-consumer) market model. But now, because of the restrictions caused by the Covid-19 pandemic, FM has also launched its B2C (business-to-consumer) model in the country.
When the announcement was made at the end-July, PM’s commerce advisor Razak Dawood welcomed it, saying it would create opportunities for small businesses with a variety of products, services and training programs.
Razak Dawood also said that Facebook would launch its B2C marketplace in September 2021, where bulk listings will be charged based according to Facebook’s tariffs.
Despite several competitors in Pakistan like Daraz.pk, Zameen.com, Pak Wheels.com and OLX.com, FM is expected to gain the trust of the users in Pakistan as almost 50 million people here are Facebook users. Though they differ in the products they offer, almost all of them have the same target market.
The e-commerce market in Pakistan is the 46th largest in the world with revenue of $4 billion in 2020, placing it ahead of Peru and behind Greece. With an increase of 84pc, the Pakistani e-commerce market contributed to its global growth rate of 26pc in 2020.
It grew another 35 percent in the first quarter of fiscal year 2021 to Rs96 billion, compared to Rs71 billion over the corresponding period of last year, according to the ministry of commerce.
Since the onset of the Covid-19 pandemic, especially, the level of spending dropped well below what was considered normal yet there are also clear signs of consumers substituting visits to the store with online purchases.
FM now stands to be a game-changer for small retail outlets whose business slowed down considerably during the pandemic by giving them a level playing field once again.
“Covid-19 initially pushed people to change their habits, from in-store shopping to online shopping and now a lot more people are comfortable with the latter, which will have a lasting effect on consumer behaviour,” said Faisal Sheikh, founder and CEO of Jack of Digital, exclusive resellers for TikTok and ESKIMI in Pakistan.
“FM will compete with markets developed by local brands such as Zameen.com, OLX, etc, giving a boost to the classified market and forcing people who do not as yet have Facebook accounts to create them as well.”
Industry experts also say that FM has no layers/categories for the sale of specific products. This would make it a better competitor for companies selling furniture online, apparel and bags as people looking for good bargains will trust FM more than others. But for more expensive products like property and automobiles, they will have to build more trust.
The pandemic lifestyle may have given online businesses a shot in the arm by minimising the role of traders and trading companies and giving consumers a direct stake in terms of buying and selling, but the process still has a long way to go; especially in Pakistan.
Just like OLX, Zameen and Pakwheels, FM would be a one-window-solution as it already leads as a social networking site, and a marketplace for business would definitely add more value to it
“Facebook marketplace is a perfect place for young entrepreneurs who run a small or medium-sized business,” said Zainab Syed, a young entrepreneur who runs a dairy and meat production business with her husband.
“The structure of FM connects buyers with the sellers based on C2C business model, that too in the local vicinity.”
She added that this was how she was utilising FM; by posting pictures and prices of her products within the vicinity and community through which she is able to sell her product, fresh from the farm.
“People in my vicinity approach me through FM and different platforms,” she said.
Specifically talking about female entrepreneurs, Zainab said that the opportunity was a blessing for women who prefer working or running their business or startups from home, and that too online.
“FM in Pakistan is empowering women”, she said, adding that “women who are unable to go outside can easily earn through FM by simply uploading pictures of their products for target markets, that too in a matter of minutes.”
This model also removes the middleman from the picture because of the ability to sell products directly to consumers.
Despite these advances, though, FM is still at a very early stage in Pakistan and is not available to everyone. To enable it on an individual account requires a minimum of eight years of an account’s registration.
“FM is surely a step towards innovation for markets like Pakistan’s, although there are complexities as the marketplace is in its introductory phase, it is surely going to bring new dynamics to the local market,” said Irfan Zafar, CEO of Arhamsoft, one of the country’s top software houses.
The FM business model would also give stiff competition to similar local ventures “because it is a one-window solution to all requirements of users, while local apps like OLX, Pakwheels, etc, require them to make separate accounts,” added Irfan.
Facebook algorithms and AI are more advanced than local alternatives. They are able to read user preferences and position products according to individual likes, dislikes, and budgets.
Irfan, however, does not agree that FM will mark the end, at least significantly diminish the role, of middlemen because “they have been incorporated in the local business model for a very long period of time.”
“It is more likely to enhance their role to businessmen,” he added.
Still, FM will help users digitise operations and support individuals as well as small, medium and even micro-entrepreneurs who use this platform.
