E-Commerce Market in Pakistan will Cross $1 Billion in Two Years – Research Snipers

E-Commerce Market in Pakistan will Cross $1 Billion in Two Years

E-commerce market in Pakistan is in a growth phase. The State Bank of Pakistan (SBP) has unveiled its official figures indicating the actual size of the e-commerce market. After analyzing the official data, it could be said with authority that Pakistan in the e-commerce market would be exceeding beyond $1 Billion in revenue generation in two years.

The data has been obtained from two primary sources, which are:

And

The official data released by the SBP is depicted in the form of a table as follows:

SBP Offiical Data of the E-Commerce Market

MetricNumberDate RangeReport
Prepayment
(Number of Online Transaction)
1.2MFY-17APR
Prepayment Transactions Value LocallyRs. 9.8B [1]FY-17FQR
Prepayment Transactions Value InternationallyRs. 20.7BFY-17FQR
Local E-Commerce Merchants571FY-17APR
USD: PKR10530-06-2017Business Recorder

Based on the report it could be concluded that each and every prepayment order in the country had a price range greater than rupees eight thousand (Rs. 8,000) and each of the five hundred and seventy-one merchants processed (in prepayment orders) approximately around rupees seventeen million (Rs. 17M).

MetricPKRUSD
E-Commerce Market Size in Pakistan (Prepayment)Rs. 9.8B$93M
Order Size on Average (Prepayment)Rs. 8,176$77.8
Revenue per Merchant on an Average (Prepayment)Rs. 17.2M$163.5K

It is important to mention not every transaction in the e-commerce market is done via prepayment. Like for example, in market places and brand outlets, most of the payments are made through cash on delivery terms. To exactly measure the size of the e-commerce market, we must assume on the basis of volume of transactions processed through Cash on Delivery (COD).

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Majority of the industry professionals are of the view and claim that the payments made via Cash on Delivery contributes for about ninety percent (90%) of the complete e-commerce transactions. But, the official figures indicate the number of transactions not the volume of transactions.

Let’s take the example of Yayvo, seventy six percent (76%) of its orders which ranges below rupees one thousand five hundred (Rs. 1,500) were paid through Cash on Delivery, while sixty percent (60%) of its orders which were above rupees five thousand (Rs. 5,000) were paid through prepayment.

Yavyo.com Revenue Breakdown as per Prepayment Method-2017

Order Value (PKR)Cash on DeliveryPrepayment
0-250075.86%24.14%
2500-500057.97%42.03%
>500039.99%60.01%

In Pakistan, not all the e-commerce sites process their payments online. For the year 2017, e-commerce players like Uber, FoodPanda and Careem processed their payments through international gateways. Their revenue generated by prepayment cannot be included within the local e-commerce market size as its is counted in the international volume of transactions instead.

As per the SBP there are a total of 571 e-commerce merchants in Pakistan. The most typical of them are Yavyo.com and Daraz.pk. Careem, Uber and FoodPanda cannot be included as their payments are not processed in Pakistan.

Other giant merchants include the platforms for providing tickets like the Pakistan Railway and the Pakistan International Airlines.

The overall e-commerce market size is much larger than what is estimated by many industry insiders. The analysis on the data indicates that the e-commerce market size exceeded the $600M within twelve months period between July 2017-June 2017.

This number would transcend more during the present fiscal year. We have already shown the numbers of Yavyo, which on its road to growth and development would increase their profits three times more this year. Therefore, the overall market, even if just doubles in the growth rate would increase approximately to $1.2 Billion—which means that Pakistan would be crossing the mark of $1 Billion in e-commerce revenues even before 2020—the set deadline.

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