Market research

Market research – identifying opportunities and challenges In 2013 The Economist said that the most promising overseas markets for e-commerce would be ‘low-trust, underbanked emerging economies’(The Economist, 23 March 2013).On these criteria the internet market in Iran must rank high for opportunity. In 2011 it had extremely slow internet and only patchy 3G coverage. By 2017 there were three 4G providers. Because of religious restrictions and international sanctions having been lifted relatively recently, doing business in Iran can be difficult, but it has not stopped a spate of e-commerce start-ups. Internet and smartphone usage is now very high in Iran, with more than half of its 80 million population having access to the internet and smartphones, and some 70%of its population under 35 years old.Indeed, Internet World estimates that there are 46 million internet users in Iran – representing almost half the total number in the entire Middle East. Internet speeds can still be a problem because of restricted bandwidths, and there is still online censorship blocking social media sites such as Facebook, Twitter and YouTube, on which most apps rely. Like China, Iran has set up its own national internet and search engine to try to control access to the web and communications are monitored and filtered by the Supreme Council of Virtual Space. Most Western sites remain blocked. However, Iranians can get around blocked addresses by using virtual private networks (VPNs) such as Hide My Ass! (Case insight 4.12). E-commerce can also face the problem that Iran is isolated from the outside world financially and Iranians do not have access to international credit cards; however, they do have Iranian bank debit cards, which work online within Iran. The Rouhani government now offers grants to knowledge-based companies. It has seen the potential for internet start-ups to help solve the country’s dependency on oil and help provide jobs, particularly for Iranian youth who face an unemployment rate of 30%. Many Iranian internet start-ups are clones of western ones. Digikala is an online Iranian e-commerce site similar to Amazon. Founded by two brothers, Hamid and Saeid Mohammadi, in 2007, it has become the biggest e-commerce platform in the Middle East with some 750,000 visitors each day and over 2.3 million subscribers. Almost 90% of Iran’s e-commerce takes place on the site. It was launched from a small rented office in Tehran with a group of seven people, offering only two products – mobile phones and digital cameras. Today, it has 760 employees and is operating in more than 20 Iranian cities, shipping more than 4,000 orders a day.One of Digikala’s local competitors is Bamilo, a joint venture between South Africa’s MTN telecom company and Germany’s Rocket Internet, which also started a site similar to eBay called Mozando. As sanctions are lifted, Hamid Mohammadi does not see Amazon as a threat, as Digikala is too well established: I don’t think Amazon is a threat to us. Even if they do see Iran as so big a market, they would have to establish a Persian-language Amazon. I think lifting sanctions would be more of an opportunity for people like us than a threat … The situation in Iran is quite exceptional, there is a huge market for start-ups, something you can’t easily find in other countries, and maybe that’s why so many of the Iranian diaspora are returning to Iran.