In the first story on this topic, this column highlighted the firms and their products that have been creating the on-demand economy in Pakistan. There are positive vibes, but there are many more areas where the local on-demand economy can expand, as shown by the launch of Sukoon, an online platform that plans to connect households in Karachi with pre-screened carpenters, plumbers, painters and electricians.
Lets now turn towards the forces that are enabling this economy. Three areas are particularly cited by folks operating in this space.
One is the adoption of smartphones and usage of mobile broadband. As per PTA, 3G subscriptions had grown to 12 million as of March end. As for usage, between July and December 2014 (the first six months of 3G services), Pakistans mobile data consumption had grown by nearly 250 percent to 6.8 petabyte (10^15 bytes of data), as per data presented by the PTA Chairman at a technology event recently. So, Pakistan is apparently doing alright on this metric.
Second factor is a "habit shift" from offline purchases to online buying. Besides the "need" for a product or service, a customer needs purchasing power and basic know-how of using an internet-enabled computing device like a smartphone. Arguably, upper urban areas will be the first to undergo this habitual shift, but there are reports that e-tailers like Daraz.pk have been picking up demand from small cities like Ghotki in Northern Sindh.
And the third factor is the capacity of supply-chains. On-demand economy is built on the promise "where you need it, when you need it, and how much you need it". Thus, e-tailers have got to have very responsive supply-chains because customers come to expect very short delivery times. To manage shorter lead times, they will need to invest in electronic data interchanges, build multiple warehouses, load up on inventories, and engage third-party logistics, among other things.
Having a responsive supply-chain means signing up for a long period of really high costs. But that is what is required to operate in the on-demand economy. A responsive supply-chain will, over time kick in significant volumes if service level is maintained and product variety is successfully minimized after mining the incoming data on customer purchase patterns.
All three forces discussed above bow in front of the potential scale. Compared to costs involved, the demographics look really favourable to aspirants. As per Euromonitor, Pakistan currently have about 50 million young adults (aged 18-29). Many of these folks are found to be better at technology compared to earlier generations and want instant order fulfilment.
Then there are some 40 million middle youth folks (aged 30-44), some of whom, in their married and working lives, would be looking for the conveniences offered by the on-demand economy. Add to this the 80 million+ under-14s, or consumers-in-waiting, who may well turn out to be more impatient that the current lot of Millennial. Even a 10 percent penetration in the 18-44 demographic offers good scale.
While smart customers are sure to benefit from the on-demand economy as they mix and match various offerings, the emerging era also offers great hope for the teeming millions that are unemployed. It is hoped that it will also offer an entrepreneurial leap to the ingenious youth that is looking for opportunities.
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