The computer hardware business of Pakistan is a complicated industry. The business is extremely competitive and one has to be vigilant about what competitors are doing in the market. In the last few years, the industry has slowed down but these days sales of the desktop computers have improved because of increased demand in the market. Every office and institution wants computer systems for their employees and students. Moreover, as the technology is changing the consumer prefers to purchase the latest technology to keep abreast with the rapid advancement.
Market Condition
At present, a normal small size shopkeeper and the big vendors have profitable sales in the market because of the escalating demand. In hardware market, the competition in big cities ofPakistanis very high. There is a price war for every single part of a computer. Some big vendors are purchasing the hardware from other countries in bulk (refurbished computers) while other businessmen are acquiring in small quantities from local market on daily basis. There are traders who buy large containers of different items like monitors, hard disks, Rams etc and sell in the local market. Every container has a different price because of difference in quantity and place from where they are importing. Once you have purchased a container, proper market insight is needed so that these containers can be sold quickly. Once the sale of an item is delayed, there are chances that other vendors also buy a container of the same items at a lesser cost thereby effecting your sales inversely. Another reason for quick retailing of the shipment is the fluctuation of Pakistani Rupee against U.S. Dollar. If the value of dollar fluctuates in 2 days, it could either be a huge loss or a handsome profit. The big entrepreneurs only buy containers from other countries on the basis of demand in the market. They make sure that if they buy a container with 100 LCD monitors, they are able to sell the monitors in a few days. There are also a number of risk factors involved in bulk purchasing of hardware from other countries.
Profit Margins
In the hardware market, the profit margins are very less if we consider each item. Profit margin on a hard disk might only be Rs.25 varying from shop to shop and vendor to vendor. Prices are also dependant on brands. It is entirely up to the efficiency of the shopkeeper that he makes Rs.300 or Rs.1000 profit by selling a computer of Rs.20, 000. You need complete information about your competitors, their selling price of different products and their profit margins.
Imports
For new comers in the market, it is not advisable to import any hardware from other countries unless one has a huge investment, contacts in the other country and a sharp local market insight.
When placing orders through the internet, there are always chances of frauds. You also need a representative in the other country who can check the consignment at the time of dispatch because many times a consignment for instance arriving inKarachihas something else in the container. Refurbished computers are usually imported fromU.K., U.S.A,ChinaandSingapore. These computers are sometimes treated as trash in these countries but when they arrive here inPakistanthey are considered brand new. The duties vary on each item of a computer.
New vs. Refurbished Computers
Companies like Intel and Dell have monopolies inPakistan. They never want the refurbished market to exist here as it affects their business. On the other hand, refurbished computers are offering the consumers cheaper prices. These days there are also some restrictions from the government on the import of refurbished computers. Some of the big entrepreneurs are purchasing refurbished computers in bulk from the international market and selling in local markets. It can be perceived negatively as we are importing an old technology but at the same time Pakistani people have low per capita income. These old low priced computers suit their needs.
Advice for New Comers
These days profit margins have increased but still it is not advised for a new player to have a huge warehouse where he can dump trash which has been imported in bulk. There is no assurance that whether the items in that warehouse will sell.
It is recommended that a new businessman should not invest in major items of computer rather he should stock some small items and accessories like keyboards, mouse, headphones etc in a shop and should focus on providing services like installing software. He can also allocate a work space to a technical person whose expertise lie in fixing computers and solving other computer problems.
If a customer is interested in buying a computer, the shopkeeper should be knowledgeable enough about the market so that he can purchase the necessary computer items from the local market at the lowest possible prices and make a profit of few hundred rupees on one computer. Again if you can find a contract to supply computers or any other item to an office or university in bulk, you can obtain everything from the local market at lowest possible prices and sell them to that office or university by earning a reasonable profit. Everything depends on your knowledge of the hardware items, their software, and market prices of each item at different shops and locations. Usually a normal shopkeeper can earn up to Rs.30, 000 a month. The earning capability depends on the efficiency of the shopkeeper; he can even earn Rs. 80,000 from the same setup.
