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Pakistan’s E-commerce trade flourishing, reaches over $600m capitalization by 2017

E-commerce has helped expand industries, telecommunications enabling small-scale businesses to flourish: Analysts

The e-commerce industry is booming throughout the region, with India’s leading e-commerce website, Flipkart, raising a record US$1 billion in investment and Alibaba’s – China’s e-commerce giant – market capitalization estimated to be over US$250 billion. Pakistan, although a late entrant to the world of e-commerce, has started witnessing rise in online shopping trends and other e-commerce businesses. Such exponential growth trends over the past few years – with US$30 million being spent on online purchases currently – depict a positive outlook for the future and the size of Pakistan’s e-commerce market, which is expected to reach over US$600 million by the end of year 2017.

The future of e-commerce trends lay in the ability of online business to gain their foothold and establish trust in online shopping and e-commerce initiatives. There is a long way to go. With just 3-pe cent of the Pakistani population indulging in online shopping, several initiatives are starting with online businesses in Pakistan to reach out to their potential market, build up their credibility, and garner consumer trust. This is especially true for risk-averse shoppers.

With many new online ventures springing up rapidly and existing businesses recording unprecedented growth rates, there is still a lot that needs to be done to reach the true e-commerce potential of the country and compete with other big players of the region.

Several factors are responsible for drastically changing shopping trends over time and driving the growth of e-commerce in Pakistan.

Analysts believe that rapid pace of technological innovations and their impact on people’s lifestyles are giving rise to newer socioeconomic conditions. What we have been witnessing now is that the physicality of life is fading away where everything is online and just a click away. According to them, e-commerce has helped expand industries and telecommunications enabling small-scale businesses to flourish and spread internationally. This new form of interaction has brought along many new trends, a few of Jovago’s most distinguished ones are: Jovago, Uber, Karim and Aone besides host of others. Be it any business category, apparel, electronics, gadgets, hotels, airline tickets, entertainment tickets, motor vehicles, etc if we don’t find them physically, they are always available online. Now what we can make out of this is that e-commerce is certainly here to stay. It has brought ease and convenience to the world and we surely can benefit a lot from its presence.

Over the next few years, 28-percent of the country’s population is estimated to have internet access. With increased access to the internet and social media sites such as Twitter and Facebook, marketing trends are also rapidly changing and transforming the way opinions are now being shaped. This will not only transform shopping trends but also significantly impact several other e-commerce arenas, such as online job hunts through Rozee.pk, which has facilitated job hunts for over 1 million people, and land, property and rental transactions via Zameen.pk, to name a few.

Along with increased internet penetration, 73.2 percent of the entire population have access to mobile phones. There is also a recent surge in smartphone usage with an estimated 9 million smartphone users in Pakistan. Internet-enabled smartphones have dramatically increased the ease of internet access and made online businesses much more accessible for all.

Both the rise of internet penetration and the declining costs of smartphones have accounted for this rapid rise in smartphone usage in Pakistan. Many Chinese brands have launched sophisticated devices at the fraction of the costs associated with the world’s leading mobile phone brands, which has augmented mobile penetration across the lower income strata of the country.

With such easy access to the internet via affordable smartphones, e-commerce trends in the country are expected to boom in the near future.

Even though Cash-on-Delivery (COD) payment methods continue to remain widely popular in Pakistan and account for more than 95 percent of online purchases, other promising initiatives such as branchless banking (Telenor’s Easy Paisa, Zong and Askari Bank’s Timepey, Mobilink’s Mobicash etc.) and Inter Bank Fund Transfer (IBFT), are also underway.

Many banks and telecom operators have introduced the concept of branchless banking, and the number of branchless banking agents facilitating offline payments for online purchases have recently tripled, making it much more convenient to transfer money in a secure environment.

Many visionary local players such as Shophive, Home shopping, ROZEE, Just4girls.pk, and Pakwheels, as well as giant foreign investors such as Rocket Internet with their diverse online initiatives such as Jovago, Tripda, and Foodpanda, are all swooping in to establish their market share in the emerging e-commerce industry of Pakistan, within their respective domains.

Various other local and home operated business have also flourished through Facebook pages as a result of rapid penetration of the internet and smartphones, COD and IBFT services and the overall growing trends of online shopping.

However, there are some issues hindering growth of e-commerce in Pakistan. Among the most important impediments to the growth of e-commerce in Pakistan is the issue of trust while counterfeiting and distribution of below par products in the face-to-face transactions is a common problem in the country. How can people be expected to trust the sellers whom they do not know, and who would deliver goods online/offline after the payment is made? A large number of people in Pakistan will take a long time to come round to the idea that they can order goods and make payments through internet from their homes without physically going out.

In present literacy ratio, the growth of e-commerce in the country cannot be expected to progress at any faster pace. In order to undertake e-commerce transactions, one must be connected to the World Wide Web, for which possession of a personal computer (PC) or a laptop is a basic requirement.

Low credit card penetration and low trust in online transactions has led to cash on delivery being the preferred payment option in Pakistan. Unlike electronic payments, manual cash collection is laborious, risky, and expensive. Cost is a crucial issue. The initial investment for the adoption of a new technology is proportionately heavier for small than for large firms. The high cost of computers and internet access is a barrier to the uptake of e-commerce.

With improved IT education and dependence on internet and mobile applications, e-commerce is set to grow at a fast pace in Pakistan in time ahead.

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