Iran’s Internet and E-commerce Landscape

2011-2012

Table of Contents

1. Disclaimer

2. Introduction & Methodology

3. Iranian Internet & Ecommerce 4. Landscape Scan

5. Market Landscape Assessment

6. Market Landscape Conclusion

7. Market Entry Recommendations

8. Appendices

1. Disclaimer

Iranian businesses are generally rather secretive and unwilling to disclose information to protect themselves from undesired interferences and other legitimate and illegitimate reasons. This means that the information in this report is the result of an independent research, investigations and also some cooperation with those few that have been willing to share information. Needless to say, considering the sense of urgency, this is simply a snap shot of the work in progress and is based on best available resources at this time. The information provided in this brief report is, to the best of our knowledge, factual and up to date. This is a very dynamic market, and we cannot accept responsibility for any discrepancy in the data that may arise through future developments in the business of the consulted companies and individuals after the submission of the report. The views expressed in the report are exclusively based on research, independent assessment and those of the subjects interviewed.

2. Introduction and Methodology This report is on the Internet and Ecommerce landscape in Iran. Our analysis is focused on the sectors which are identified by Internet demonstrated below.

The following specific sub sectors and business opportunities are applicable to the Iranian market and have been analyzed in this study.

Commerce

Community

Content

Communication Games

MVAS

Social

Networks

The companies in this report are initially assessed based on the following criteria. Based on this analysis a short list is generated for further investigation, including face-to-face meetings and due diligence:

Score: 1-10 Weight: 1-5

A. General business: W=5 1. Classification of business according to primary vertical for example general classifieds, B2C

ecommerce like Amazon etc 2. Key distribution- mobile, online, real world, combination 3. City that is based in 4. Customer locations and spread 5. Revenues and profitability 6. Years in operation 7. Management details (CEO/ CTO specifically) 8. Brand recognition

B. Operations: W=5 9. Unique Visitors (UV) per month from Google Addplanner, verified suing Google Analytics

during visits

• Like OLX and DubizzleClassifieds: General

• Like Jobs, Property, Autos, … Classifieds: Verticals

• Like Online Yellow Pages Business Directory

• For Insurance, White, like Price check, BuscaPePrice Comparisons

• Like e-bay and AllegroMarket Place

• Mobile games, online games like QQ and Level UpGames

• Like Amazon, Kalahari and othersB2C Ecommerce

• Like AlibabaB2B Platform

• Also called private Shopping Clubs like MarcofiniPrivate Event Retail

• Like Kayak or Go IBIBOOnline Travel

• Also called group buying, like GrouponDaily deal

• Like china’s Baidu, etcSearch

• Like Yola and ShopifyInternet Site Builders

• Internet based add servicesAdd Networks

• Like PayPal and PayUOnline Payment

• Like M-Pesa and IceniMobile Payment and Banking

• Selling ring tones, wall papers and etc.Mobile Value-add Services

• App stores, Online Video, etc.Online Content

• Like local versions of FacebookSocial Networks

• Like MXiT and NimbuzzMobile Social Networks

10. Page Views (PV) per month 11. Registered users where applicable 12. Bounce rates or conversion ratio 13. Modes of traffic acquisition 14. Items listed for classifieds and ecommerce 15. Stale inventory take-down policy

C. Support infrastructure: W=5 16. Logistics and key providers 17. Payments environment and modes (Credit card, Debit card or Mobile payment) 18. Platform support and services

D. Ownership: W=5 19. Ownership structure 20. Ownership transparency 21. Shareholders

E. Team: W=5 22. Strong proven management team, with solid DNA 23. Lead by world class leadership, the best attract the best

F. Business Model: W=5 24. Revenue Model 25. Economic moat – high barrier to entry 26. Power in the value chain 27. Performance through the cycles

G. Competitive Advantage: W=5 28. Dominant market position (number 1, 2) 29. Regionally competitive

3. Iranian Internet and Ecommerce Market Here are some of our critical findings about the Iranian Internet and ecommerce market.

• Internet generally slow: – Up to 2Mbps, average 128kbps, non-Iranian sites heavily throttled or blocked

– Current internal infrastructure upgrade will amplify this – National Internet (Intranet) to speed up to 8 to 10 Mbps

• E-commerce emerging and growing quickly: – Estimated growth rate of 30-40%

– Online payments (EFT & debit card) growing, 90m issued – Trust and strong brands lacking – Majority of ecommerce orders are from provinces where choice is limited

• Mobile Internet almost non-existent: – GPRS coverage spotty and unreliable, but

– SMS cheap (0.1-0.2 US cents) and very popular – 3G rolling out in Oct. in Tehran, exclusive to 3rd MNO

• IP protection weak/non-existent: – Istgah (first online classifieds) copied almost exactly, numerous clones

– Businesses with low barrier to entry and weak brand have no protection • Large, young and talented workforce available at very competitive salaries:

– Top software engineers from Sharif University (Iran’s MIT) for ~$2,000 per month

– Talent migration is still a challenge, with limited exciting career opportunities. • Obstacles to growth and success:

– Lack of experience in marketing and building brands – Insignificant size and scope of business, no dominant category player – Weak general management , with a short term focus, and limited financial and

business planning experience – Limited access to latest technology and knowhow at global level

• Opportunity for to: – Invest in marketing to build strong brands, using local knowledge and global

experience – Supply technology and share best practices, keeping in mind local/cultural aspects

– Provide general management/financial support and expertise – Invest in the best companies and talents, strengthen their entrepreneurial culture

and fill gaps through incubation – Explore a number of opportunities by enabling joint venture with our other

established businesses

• Approach to build this opportunity – Require strong local presence to implement this strategy

4. Landscape Scan

The following companies in each of the subsectors have been identified for further research and assessment. This list will be updated as research continues and new companies are discovered or certain ones moved to new categories. The companies are not listed in any significant orders.

Classifieds General:

www.istgah.com

www.niazerooz.com www.rahnama.com http://vista.ir/

http://iran-tejarat.com/ http://www.payamsara.com

http://www.niazpardaz.com http://www.eforosh.com/ http://www.darjeagahi.com/

http://kalaniaz.com/ http://www.aftabfarda.com/

http://peykemrooz.com/ http://www.agahinema.com/ http://www.bia2agahi.com/

http://www.netagahi.com/ http://www.vitriniaz.com

http://www.saifa.ir Classified Vertical

http://ihome.ir real estate only http://damatajhiz.com/ construction materials only

Business Directory

www.iranyellowpages.net

www.iranianyellowpages.com www.ketabeavval.ir/

www.mogadam.ir www.kishtpc.com www.iran118.com

Price Comparisons:

http://gsm.ir (Mobile only) http://www.piitco.ir (Automobile only) iranecar.com iranecar.ir iranecar.net

http://www.7laptop.com/(laptop only) http://www.aris-co.com/(laptop only)

http://www.mob.ir (mobile only) http://www.bama.ir/welcome/(Automobile only)

Marketplace

www.vaseteh.com

www.kappermarket.com

Online Games:

http://bazikhone.com/

http://www.iranbazi.net/ http://www.flashkhor.com/ http://akhjoonbazi.com/

http://myfc.ir http://www.takkhal.net/

http://www.travian.ir/ Mobile Games:

http://www.mobfa.org/ http://www.faramob.ir/

http://www.ir-tci.org/archives/games/ http://www.far30mobile.com/game

B2C Ecommerce (Online Shops)

http://www.shop.ir

http://www.namabazar.net/ http://www.varchin.com http://iranmarcet.com/

http://www.digikala.com/ www.chapchi.com ،

http://www.chare.ir/ www.carti.ir www. narbella.comو

www. esafir.com

http://www.efeh.com/

http://www.shopiran24.com/fa/store/index.asp http://neek.ir/ http://www.bekhan.com/main/index.php

http://www.rayaneh.com/ http://persianebay.ir/

http://simorghshop.in/ http://cinama29.com http://www.tehrankala.com/ home appliance

http://parsetarh.ir/fa/ home appliance

http://www.dalano.com/

shop.p30world.com (software only) www.Parspay.com

B2B Platform

www.adpdigital.com

http://www.100barg.com/

http://icid.ir/fa/

Private Event Retail

To be discovered.

Online travel

http://www.iranhotelonline.com/ http://www.irantravels.ir/

http://www.gashtonline.com/ http://www.soorati.com/ http://www.travel118.ir/cat.php?id=9

Daily Deals

To be discovered.

Search

www.parseek.com www.rismoon.com

www.jasjoo.com www.jamasp.com www.ghatreh.com

Internet site builder

http://payeganltd.com/ www.Iranmc.net/ www.irandataco.com

www.shopiran.com www.hiberd.com

Online payment

Virtual currency

http://www.iran-gold.com/

Mobile Payment & Banking:

www.adpdigital.com

http://epaymenthub.com/ www.Jiring.ir

Mobile Value Add Services / Online content (including mobile content):

http://karinaco.ir www.sefroyek.net

http://www.negar-mobile.ir/ http://www.irmob.com/ http://www.ir-tci.org/

www.beep.ir

Social Networks

www.Cloob.ir www.webuzz.com

http://www.nashrine.com/ (Iran Twitter)

http://www.netiran.net

Mobile Social Networks

http://www.kharid24.org/

http://www.fardamobile.com http://www.adpdigital.com/

Others:

Parsonline Shatel Hamkaran System MTN ISC