It started by getting up early in the morning and heading to the super crowded bazar to purchase the items you needed. The difference now is that you go to a website or an app with a fast growing and highly trafficked audience.

 

60% annual growth in online purchases in Iran

The global e-commerce market size is estimated at 1 Trillion dollars. Emerging markets are facing a rapid growth in their digital economies especially in the e-commerce sectors. According to a report by Tasnim, Iran has had an average growth of 60% in online sales. Unofficial statistics also suggest that there are over 20 thousand direct online stores, or presence in market places that act as aggregators for offline shops to sell online. More traditional shops feel the threat of losing competition to their online competitors with a pinch of desperation to innovate. Iran is also at a point where businesses see an extraordinary opportunity to reinvent the retail experience by going online. Iranian e-commerce giant Digikala is a good example of a reinvented and revolutionized retail system. Digikala is also ranked 4 in Alexa ranking among Iranian websites. Statistics on Alexa also show that in the top 1 million websites ranked by the number of visits, around 11% are e-commerce websites. E-commerce going viral has caused businesses to start more online shops on niche targeted products and markets, which is still starting.

 

Growth in infrastructure development translates into more businesses

Infrastructure is key in building a prosperous and fast growing startup ecosystem. In the past 4 years alone with the further development of internet, many sectors in tech have been enabled resulting in a tsunami of online shops and startups. Due to the fact that internet development in emerging markets usually commence later than the more developed countries, it still faces a much faster growth and speed which quickly creates a competitive market for new comers despite the market immaturity. Currently LTE internet and 3G are available in more than 200 and 600 cities respectively in Iran. This alone has caused a massive opportunity for new businesses with diverse business models to emerge and for entrepreneurs to take advantage of this opportunity. Heavy investments in infrastructure has been done by the government to further boost the Iranian digital economy.

 

Digitalization of customer behavior 

As seen in every emerging market when e-commerce companies start to operate, a lack of trust for buying online becomes the main obstacle for businesses, and Iran was no different. With proper marketing and governmental support in the e-commerce sector, a positive and safe atmosphere has been created to shop online which is now far beyond the early adopter stage. By analyzing the products that are being sold online alone, one can see different cohorts of the market buying online. Today buying online is taking the place of the more traditional ways of buying. Iranians are also using uber-like startups like never before. This shift in customer behavior and the good condition of tech literacy in Iran makes Iran a perfect place to start a business. Comparing to the countries in the region the Iranian customer behavior seems more tech-savy than most countries in the region. More than 40 million smartphones are in the hands of Iranian which is considered as one of the key factors in the digitalization of Iran’s customer behavior.

Growth in online retail and online shopping has also attracted many attention from international investors. Competition is getting more fierce and thanks to the international sanctions on Iran, Iranian players have always enjoyed the foreign competitor-free market.

Photo credit: Ali Faraji

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