INDUSTRY: CONSUMER ELECTRONICS

FIRM: TELEMART
Financial Information
*This company started off as a growing concern in May 2014, hence the excerpts from
accounts and ratios are from 2014 and 2015 only.
Excerpt from the balance sheet
Non current Assets
Current Assets
Total Assets
Trade Links Enterprises C/A
Current year profits
Current Liabilities

2014
1,230,000
139,971,019
141,201,019
(108,786,821)
(1,567,550)
(30,846,648)

2015
1,586,600
147,379,168
148,965,768
(109,123,295)
(1,978,275)
(36,296,648)

2014
389,570,659
371,882,277
17,688,382
16,120,832
1,567,550

2015
589,570,668
571,882,277
17,688,391
15,710,116
1,978,275

Excerpt from Profit and Loss Account

Net Sales
Cost of Goods Sold
Gross Profit
Total Expenses
Net Profit
RATIOS

Liquidity Ratios
Current ratio
Quick ratio
Leverage Ratios
Debt to Total Assets
Activity Ratios
Inventory Turnover
Total Assets Turnover
Profitability Ratios
Net Profit Ratio
Return on Total Assets
Growth Ratios
Sales

2014

2015

(x)
(x)

4.54
4.53

4.06
3.42

18.6

21.8

No.
(x)

30
2.67

24.6
3.96

%
%

0.4
1.32

0.34
1.11

51.3

Primary Research
Two people were contacted and their names are as follows:
Hamza Abdul Rauf Essa- Director
Abdul Rauf Essa- The CEO
3 interviews have been conducted on different dates
The most notable findings revolve around Telemart's human resource management and
leadership being centralized. Also, a closer look of the industry reveals that it is extremely

price sensitive. Moreover, owing to corruption in the country, lots of fraudulent practices tend
to happen which further bring up the need for quality and trustworthy product providers.

Secondary Research
Consumer electronics being the second largest sector by market share (PKR 0.7 Billion) in ECommerce (euro monitor, 2014)1 and with an expected growth to PKR 4 Billion by 2018 with
a CAGR of 46%2, e-tailing is expected to increase by 197% in real terms from 2015 to 2019
and the change in consumer buying behavior depicting a positive trend in sales of E-mart, the
biggest challenge and obstacle faced by companies with the likes of Telemart are the unethical
practices carried out by the other players in the industry. These practices include getting the
electronics from unauthorized distributors, selling used products as new and selling defected
items without disclosure. Players are charging lower prices and thus attracting the customers.
Another factor concerning environment it operates in is the increasing influx of refurbished
electronics in Pakistan especially laptops and phones. These refurbished phones offer more
features at lower prices however, with a compromise on durability and quality. Since price is
the major factor while purchasing such products, customers let go of the drawbacks
associated with quality and durability. Although, the sales of new phones has greatly been
affected by these refurbished phones.
Between 2010 and 2013, disposable income per household increased by 4.6% (in real terms).
According to a report from the US-based Pew Research Center, this came to US$14.9 billion
in 2013.3 This is a positive factor for Telemart as the consumers are believed to be spending a
greater proportion of their income on mobile phones, laptops, tablets and other consumer
electronics. In the long run, the economic outlook will cause consumers to continue spending
more regardless of the inflation. Moreover, Retail & Wholesale sector had become the largest
sub-sector of the GDP (18.6%) which means immense growth opportunities.
Total value of Internet retailing stood at PKR2.5 billion (US$25.2 million) in 2014, a growth
of 2,034% over 2009 in real terms, though from a very low base. It is forecasted to grow by
197% in real terms over the period 2015-2019. The spending patterns in the economy are
good news for this sector. The demographics of the country are changing and therefore, also
have important implications for the businesses. The growth of females in the workforce has
increased the demand of consumer items along with a desire for convenience. According to
Pakistan Employment Trends 2013, female participation in the workforce has reached 24.3%
and, in turn, households are driving demand for a range of products and services to
accommodate this trend. Therefore, their changing preference has to be observed closely to be
able to respond them.
In Pakistan, the standard rate of goods and sales tax (GST) for 2015 is 17.0% which is a
percentage point increase from the previous years GST. There was less hope from the
government on the provision of favorable policies for local businesses. The system of bribery
at the customs was also disturbing for the company and therefore, they continued to search for
good alternatives for the situation.

1 Euromonitor from trade sources/national statistics 2014. Retrieved

from Passport by Euromonitor
2 Euromonitor International. 2014. Retrieved from Passport by
Euromonitor Database
3 Euromonitor. (2014). Consumer Lifestyles in Pakistan. Retrieved
from Euromonitor Passport Database

Competitors
The fact that all competitors offer homogeneous products makes it even more difficult for the
firm to differentiate themselves from their competitors. According to the CEO Ahmed Rauf,
Consumer electronics is an extremely price sensitive industry. People are quickly attracted
to lower prices without considering the possibilities as to how a particular retailer is able to
offer the same branded product at a much lower price. Margins are extremely low as it is the
same product being sold out in the market by everyone while at the same time taking into
account the cost of customer service quality becoming one of the most essential part of the
industry.
Homeshopping claims to be Pakistans largest online retailer and with a 12% retail value
share. Homeshopping remains to be Telemarts largest competitor in online shopping of
consumer electronics. It has come a long way in the past 6 years, from a small office in
Karachi to five more offices across the world. It has also won numerous awards, in 2010 and
2011 they got the Brand of the Year award in Online Retailing and were also one of the
world's top seven omni channel retailers at the World Retail Congress 2013. However, due to
insufficient marketing there has been a decline in sales in the past few years.
I want to convert Symbios.pk into the Amazon of Pakistan, said Saad Jangda, the owner
and founder of symbios.com. In 2006 Jangda launched Symbios.pk with the aim to
get international exposure which is an e-commerce portal and is one of the products
Symbiosistec.com. The organization is determined to promote the category (of online
retailing) as a whole and believes that the market is yet to expand with the increase
penetration of 3G and 4G in Pakistan.
According to Jangda, it is among the top three players along with Daraz.pk and
Homeshopping in the e-commerce market. Symbios has won a prestigious business contest
the Massachusetts Institute of Technology (MIT) Enterprise Forums Business Acceleration
Programme (MITEFP-BAP). It does not limit itself to consumer electronics but offers a
variety of products from women apparel to health care products. According to Express
Tribune4 the online retailing in Pakistan has already achieved a significant milestone to offer
more than 22,000 products in 15 categories and has served over half a million customers.
Symbios differentiates itself with the proposition of convenience which has been working out
well for the company.
Other online stores like Shandaarbuy.pk have a similar product mix in consumer electronics
category. ShandaarBuy is a relatively new player in the market and it offers its customers the
lowest possible prices to differentiate itself from other online retail stores. Even though these
players have been in the market for long yet Home shopping and Symbios have failed to
recognize the need of different marketing campaigns and activities and have failed to become
the top of the mind brands.

4 http://tribune.com.pk/story/650583/online-retail-marketentrepreneur-takes-shopping-portal-among-top-three/