Is Ecommerce Good For the Economy in Pakistan?

In comparison to the global e-commerce scene, Pakistan's market share is small, leaving plenty of room for growth. This country aims to address the challenges confronting the e-commerce industry and propose solutions to overcome them.

Pakistan's e-commerce impact on the industry and faces a significant challenge in terms of consumer trust in the country. Online purchases are a novel concept, and buyers are concerned about potential fraud and scams.

The economy is expected to grow steadily as there are nearly 87.4 million Internet subscribers in Pakistan, a figure that is expected to grow significantly over the next five years. As per local trade resources, Pakistan is the 46th largest market for eCommerce with a revenue of $5.2 billion in 2023. 

There are also more than 7.3 million Facebook users in Pakistan and several local companies now use social media to promote their products and services. 

Current Market Trend:

The e-commerce industry has primarily focused on consumer products and accessories. Online customers in Pakistan search for and purchase consumer electronics, make employment queries, get online education and counseling, sell/buy and gather information on vehicles, computers, finance, food and groceries, and a variety of other products and services. Consumer choices and the records they generate also produce a trove of data that is used in targeted advertising.

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eCommerce Services

Google Chrome is the most popular browser, accounting for 56% of total visitors, followed by Microsoft Internet Explorer/Edge (21%). The remaining 23% of searches are through Android, Safari, Opera, Opera Mini, UC Browser, Safari, and Maxthon respectively.

Popular eCommerce Sites

Some leading eCommerce websites in Pakistan include:

• OLX

• daraz

• Naheed Super Market

• Cheetay

• Spotify

• PakWheels

• Zameen

• Shophive

• Food Panda

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Online Payment

According to industry reports, 95% of e-commerce sellers accept cash-on-delivery for their products. Because e-commerce businesses must now have more liquidity on hand and hire expert teams to handle cash receipts, increasing operating costs. The larger players in the e-commerce domain have started to use digital payments, and they believe that the industry will work together to persuade consumers to switch from cash-on-delivery to online payments. Digital payments can also be a challenge for Pakistan's e-commerce sector. 

While a number of mobile banking products, such as EasyPaisa, JazzCash, and uPaisa, are currently available, none have a high market penetration. This, combined with the fact that only 24% of the country's population has a bank account, drives up the cost of doing business for e-commerce companies.

Mobile eCommerce 

With the introduction of 3G/4G services, internet penetration has risen rapidly. Internet subscriber growth in Pakistan is averaging over 35% per year and total subscribers crossed over 100 million marks. Cheap smartphones, low cost of 3G/4G services, and a consumer-goods-obsessed middle class have meant that Pakistan’s e-commerce sector is “mobile first”: some e-commerce start-ups claim that over 75% of their total business is online. 

Major Buying Holidays 

E-commerce entrepreneurs enjoy heavy traffic on Pakistani holidays and event seasons such as Eid-ul-Fitr, Eid-ul-Adha, Black Friday, New Year and Wedding Season (October through April). Major sporting events can also drive purchases of related equipment and merchandise.

Social Media 

The introduction of mobile broadband coupled with affordable smartphones has driven social media use and the popularity of Facebook, Twitter, Skype, and Instagram. Facebook leads social media with more than three billion connections per day and more than 43.7 million user accounts in Pakistan. Twitter is also fast becoming the preferred social media portal with more than 280 million connections per day. Google, YouTube, and Instagram are also popular. 

The Future of E-commerce in Pakistan

Pakistan is currently recovering with support from several of countries and organizations, including the International Monetary Fund. Furthermore, increased government spending is expected to offset the damage, supply shocks, and disruptions to economic activity in the first half of the fiscal year, July - December 2022. Sustained macroeconomic policies, reform implementation, improving external conditions, and recovering from supply shocks caused by flooding can boost the country's GDP growth up to 2% by FY2024.

The country has been making strides in boosting retail sales capabilities, especially in current times, with the benefits of e-commerce and the untapped retail market demand through expansion in new locations. The Digital Strategy of the country coupled with the immersion of Pakistani consumers into e-commerce platforms are creating an opportunity for an additional stream of retail sales.

• E-commerce giants spreading their presence in Pakistan

There is a huge growth potential for e-commerce as it is still at its nascent stages. Pakistan has been receiving investments, from UAE and Saudi Arabia to name a few, for e-commerce and ancillary services such as last-mile, infrastructures, payment systems and e-commerce partnerships

• Organized retailing will expand significantly

Large grocery and hypermarket chains are expected to drive growth in the organized retailing segment. Although informal stores will continue to dominate the market, organized stores will broaden their reach and increase sales. Pakistan's growing retail and trade momentum will attract more international investors and companies to establish a presence in the country. 

Although the country is still in its early stages, efforts to launch digital payments and banking are already underway, and they are expected to contribute to the creation of a seamless model for the e-commerce ecosystem. This opportunity will help MSMEs gain confidence in entering the retail and e-commerce industries, capitalizing on the vast market and rising demand for them.

Final Thoughts

That’s e-commerce makes the economy of Pakistan more promising by facilitating job creation, increasing market accessibility, and increasing productivity. Reduced the entrance barriers for entrepreneurs and expanding the reach of businesses beyond traditional brick-and-mortar constraints, e-commerce can foster competition and innovation in the market. Additionally, it could increase export revenue, diversify the economy, and strengthen the economy as a whole. But before it can reach its full potential, there needs to be a supportive infrastructure, digital literacy initiatives, and legislative frameworks that prioritize consumer protection and trust.