E-commerce industry in Pakistan is not like the industries in Europe, Regardless of baring huge population in the country. Europe alone generated 250.2 billion euros in 2017 in retail commerce sales, and United Kingdom shared 15% percent of this contribution being the biggest e-commerce market in the entire Europe. The figures in Pakistan are relatively much smaller, industry itself is growing though and has huge potential to grow further. But there are some barriers to it, despite the fact that industry itself is growing it is not running at full throttle. According to Propakistani the current market size of e-commerce industry in Pakistan cannot be measured accurately, we can just account for popular names in online shopping, clothing, food, travel retail stores but we are unable to grab the whole market’s real picture.
Internet Penetration and Use of 3G/4G
The first building block or fuel of growth is the internet itself, according to statistics; only 18% of the population in Pakistan has internet access. This means 360 million internet users in Pakistan. On contrary, UK has 92% of the population using the internet, UK’s current population is 65.14 million (2015). Total current internet users in the UK are 59.9 million; Pakistan’s internet population is six times bigger than UK comparatively. This shows Pakistan has huge potential in ecommerce which is yet to be discovered.
3G/4G users reached 32 million in Pakistan during the last year. Mobile internet usage is also expected to be doubled in the next 3 years.
However, looking at the stats and just only focusing on internet penetration, despite it is 18% of the whole population, Internet is not the main barrier to ecommerce industry, even if we account for 60 million users for ecommerce industry that is equivalent to UK’s entire industry.
The second most common barrier to ecommerce growth is infrastructure, E-commerce infrastructure is bigger word, it involves almost everything including; Internet, hardware, software, websites, payments systems and delivery mechanisms.
Websites And Stores
Unfortunately Pakistan is lacking in everything regarding infrastructure. You could just count a bunch of online shopping websites on your finger, couple of years ago, now the number has grown instead.
The second problem is; not everything is being sold online there is a lot of gap in the market where people wish to buy from. Increase in Websites and Stores would increase in overall industry, they are directly proportional to each other.
Secure Payment systems that can be used online for instant purchases in another barrier. Not everyone has credit or debit card to make an online payment in Pakistan. Even if people have it they are reluctant to use it online for security reasons.
But the ground reality is changing now, alternative payment systems like Jazzcash and Easy pay has been developed specifically focusing on online shopping and ecommerce. Although, started just last year, these systems can serve as catalyst for ecommerce growth in Pakistan.
There is still need for better payment systems, that can be used by wider audience.
Trust And Consumer Behavior
The most damaging factor is the lack of trust in stakeholders and consumer behavior of Pakistani market. Whether you are on buying side or selling side there is always a trust deficit. Businesses might think why we should sell online, there would be lot of problems in dealing with customers things like; payments, returns, frauds, bad debts and small number of buyers make them revisit their idea of opening an online store. On the other side of the picture, buyers might think, how can I trust this website, what are the guarantees, returns are accepted or not, what about payment I don’t use cards online, how long it will take to deliver and many other things.
Even if we just focus on 18% of the population, Pakistan still has huge market potential; ecommerce can flourish in Pakistan at an unprecedented rate. This needs a careful review of the situation. By removing above barriers especially “Trust and Consumer behavior” and “Payment Systems” the industry is expected to see strong growth in the next few years if the above barriers can be minimized.
Changing consumer behavior cannot be done overnight, it would take some time to build trust among stakeholders including consumers and businesses. Once this trust deficit is curbed, rest will become easier to manage.
image via: Telenor