Rejected order sets off national growth of online shopping outlets

For Shayaan Tahir, it all began seven years ago when an order he placed on Amazon for a new iPod was rejected because the online giant would not deliver electronics to Pakistan.

Frustrated, he founded one of Pakistan's first e-commerce ventures, a sector that today is booming.

Tahir was working at a call center in Karachi at the time and had saved hard to buy himself an iPod. He enlisted a cousin in the United States to send him three of Apple's music players. Tahir kept one and sold the other two via classified ads.

That was when had the idea to create his own Amazon-like site for Pakistan, a country of almost 200 million people that has been all but forgotten by the web giants in the West.

Amazon, for example, can only sell limited products to Pakistan via its British site, at a hefty markup.

"Once I realized I cannot buy anything from Amazon ... then there might be others like me who want the same product," said Tahir, 29.

He launched Homeshopping.pk, an online commerce site that today deals with 500 transactions per day and employs 65 people.

Products are delivered within 24 hours inside Pakistan, and the business primarily works cash on delivery. because most people do not have credit cards. More recently the site began accepting online bank transfers.

Other young entrepreneurs have followed Tahir and today there is a host of online shops selling everything from consumer goods, such as shophive.com and daraz.pk, to real estate on zameen.com, and even cars from pakwheels.com.

About 15 percent of Pakistan's population, or 30 million, are Internet users. Total online sales were around $35 million last year, according to industry officials, which is a tiny fraction of the sales seen by Amazon, Alibaba in China or Flipkart in India. But experts agree there is potential.

"Basically, the 30 million could be 100 million in the next few years," said Shaun Di Gregorio, CEO of Frontier Digital Ventures, a venture capital fund based in Malaysia that recently invested in zameen.com and pakwheels.com.

"In order to surf, you need a wave, and the wave is here," added Frenchman Gilles Blanchard, co-founder of the site SeLoger.com who has invested in zameen.com.

Di Gregorio and Blanchard are among the foreign investors who are hoping to cash in ahead of any move by the global giants to acquire local companies.

"When Amazon and Alibaba come in ... they would not want to build anything from scratch. It's going to take too much time," said Muneeb Maayr, co-founder of the site daraz.pk, which sees around 1,000 sales per day. His goal is for his firm to one day be acquired by one of the big foreign players.

For now, young Pakistani entrepreneurs are battling among themselves for market share, said Maayr, a former investment banker at Bear Stearns.

The rivalry is pushing sites to offer better services and driving up the number of customers, observers say.