Muhammad Fahad Farooqi

L18-3086
B section
Pakwheels.com—The Next Challenge!
Part I
In two-sided markets, platforms need to overcome the “chicken and egg problem” followed
by the “penguin problem” in order to grow. How did PakWheels.com resolve these issues
and create value for its users while scaling up?
“Should you attract buyers or sellers first?” is the chicken and egg problem in business
[ CITATION Iri18 \l 1033 ]. In business, penguin problem is no one moves unless everyone moves,
so no one moves [ CITATION eCa09 \l 1033 ].
PakWheels’ business model created value by facilitating interactions between vehicle buyers and
sellers, primarily by reducing search and transaction costs. By virtue of being a portal, both
sellers and buyers were customers of PakWheels. In the start they attracted the users by showing
that there was an activity going on in the discussion boards. To do this, Bhatti created more than
100 user accounts and started talking to himself by using different aliases. He would post a car-
related question with one alias and reply to that question from another alias. Soon, seeing the
activity, other users jumped in to take part in the discussion and joined the discussion forums.
That is how they attracted buyers. For businesses related to automobiles, PakWheels’ traffic was
a gold mine. The traffic was the direct target segment for these businesses’ messages and
products. Mostly, the PakWheels team did not even have to go out in search of sponsors; the
sponsors came to PakWheels themselves. PakWheels launched a field team to focus especially
on engaging car dealers. This dedicated field team focused on educating dealers about the
services and also started posting their used car inventory which helped not only the dealers get
more customers but also the buyers as they had a large choice pool of cars available to them.
How did Pakwheels.com formalize their monetization strategy as part of their platform
business model?
PakWheels attracted the desired traffic and then generated multiple streams of revenue in the
following ways:
 On-Site Advertising
o Google Advertisements
 o PakWheels-Managed Advertisements
 Lead Generation
 Featured Advertisements
 Dealership Packages
 Content Marketing through PakWheels Blog
 Offline Advertisement through Auto Shows
In Google advertisements, PakWheels used Google AdSense and let Google display
advertisements from its partners. In PakWheels-Managed Advertisements, PakWheels sold
banner space directly to its partners and sponsors. In lead generation, PakWheels offered various
options for lead generation to different institutions and corporations, such as banks, oil marketing
companies, insurance companies, and vendors. PakWheels offered featured advertisements to
sellers where they could their car advertisement highlighted for a week by paying a small fee
(e.g., Rs 1,000). They gave dealership packages to car dealers like making websites for the
dealers and setting up social media accounts for those dealers. In content marketing through
PakWheels Blog, it partnered with international and local automakers and auto-parts-related
complementary manufacturers and pushed sponsored and branded content. It arranged large-
scale auto shows in six cities across Pakistan annually and earned through sponsorship.
Part II
Use this exploration and SWOT analysis to devise a strategic direction for PakWheels.com
for next 3 years. You can develop S&W from the case and company’s history and O& T
from your understanding of Pakistani internet, media and technology landscape in 2019.
Be creative in creating your answer.
The SWOT analysis is on next page.
  Strengths Weaknesses
1 It has first mover advantage. They rely heavily on the loyal community
members and their positive word of mouth about
its auto website to market it, but this will not be
sustainable for long.
2 It won many prestigious awards including the Local 75% of its listings came only from Karachi,
Brand of the Year Award 2013, the highest IT National Lahore and Islamabad which shows that it is still
Excellence Award Teradata 2013 and Teradata 2014, and almost unknown in other parts of Pakistan.
the International Arabia 500 Fast Growth.
3 It is the market leader. PakWheels makes almost no money through
customer to customer (C2C) interactions that
occur on the classifieds on the website.
4 Multiple streams of revenue, as mentioned in second Unlike Suzuki, they do not have any alliance
question, are available to PakWheels. with Honda and Toyota.
5 As Confiz Limited is the parent company of PakWheels,  
finding developers and talent to upgrade the website is an
easy task.
6 In 2019, customers can buy Suzuki Certified used cars  
from PakWheels.

  Opportunities SO Strategies WO Strategies

1 Internet population of Pakistan is expected to grow to 100 By leveraging its brand Make alliance with
million active users by 2020. name, target the dealers Honda, Toyota, Audi
and get them on board. and Nissan.
2 The per capita car ownership is expected to grow to    
sixteen or seventeen cars per 1,000 people by 2020.
3 There are 4,000 car dealers in Pakistan.    
4 New car companies like Audi and Nissan have established    
their presence in Pakistan.

  Threats ST Strategies WT Strategies

1 Most of the dealer population in Pakistan had dismally low By using Confiz talent, Give specialized
internet and technology awareness. make simple application services to loyal
in Urdu for those who community if they either
have low internet and bring sellers or buyers so
technology awareness. it can fight OLX.
2 OLX is deploying significant advertising budgets for    
mainstream media advertising.
3 Carmudi, a German company similar to PakWheels, has    
entered Pakistan.

Bibliography
e-CareManagement. (2009). Overcoming The Penguin Problem: Setting Expectations for EHR
Adoption. Retrieved from e-CareManagement : http://e-
caremanagement.com/overcoming-the-penguin-problem-setting-expectations-for-ehr-
adoption/
M., I. (2018, January 2). The Chicken and Egg Problem of Peer-to-Peer Marketplaces: Who to
Attract First? Retrieved from Ruby Garage: https://rubygarage.org/blog/chicken-egg-
problem-of-marketplaces