eCommerce Growth in Pakistan Over The Last Few Years

ecommerce growth

The financial landscape of Pakistan has the potential to soar as high as the snow peak mountains found in the Northern Areas of the region. The forecasted population will be up to 210 million by the year 2020 and 245 million by 2030, according to those numbers the consumer market could positively drive the economic growth of the country. 

Foreign investment by companies such as Telenor helped create a competitive local telecommunication infrastructure that has led to rapid advancement in national network connectivity. Now we have Mobilink, Ufone, PTCL, and Zong offering coverage in remote areas of the countries. Telenor set a precedent for other telco companies to develop accessible and affordable connectivity packages for a range of economic backgrounds. The success of 2G, 3G, 4G mobile internet in the last 10 years has directly effected the climate of E-commerce in Pakistan. Pakistan Telecommunication Authority’s data states that as of July 2019, there are 161 million cellular subscribers, 70 million 3G/4G subscribers, and 72 million broadband subscribers and total teledensity of 76.56%.

For wholesome and healthy E-commerce trading in a developing country, it is important to define the role of online portals and platforms that create the national online market. The education needed to understand these economic trends is now studied through computer science that has become a popular area of study in Pakistan.

Students looking to enter into vocational training are entering into machine learning and data science expertise as these are now among the top-grossing skills in developing countries. This rise in demand for computer experts is directly correlated with the fact that now homes, schools, hospitals, social agencies and offices in Pakistan have a computer, laptop, desktop, tablet or mobile access. The average user is conducting their work, business, and financial management through the internet.

The older generation of Pakistan had only a physical financial exchange done at the nearest local bank without any access to their accounts outside. Now with the rise of ATM machines and online banking, they are switching to more mobile electronic transactions. Today, we have mobile banking that saves time and energy for millions of Pakistanis. Automated Teller Machine (ATM) make withdrawing money simple and hassle-free for Pakistanis. They are available as far as the Khunjrab Pass located at the Pakistan China borderline.

The government is working towards creating a National e-Commerce Council that will hold various stakeholders accountable and strategize for the future of eCommerce in Pakistan. The Securities & Exchange Commission of Pakistan (SECP) will be able to regulate eCommerce enterprises through various regulations such as maintaining a physical address. These regulations will help promote transparency and legislative economic growth.

According to the Adviser on Commerce, Textile, Industry & Production and Investment, Abdul Razak Dawood “Around 64% of Pakistan’s population is under the age of 29 and is, thus, more open to embracing technology.” He goes on to say in the draft of the E-commerce Policy and Framework document that “Pakistan and its youth have an exciting journey ahead and the promotion and regulation of e-Commerce become more significant in providing employment to around 130 million Pakistan’s youth in the next 30 years.” With access to debit and credit cards, people are more inclined to choose online shopping portals saving them the hassle of browsing multiple stores in search of the best deal in the market. 

Traffic on Daraz can be estimated at 2 million daily active users as it offers 4 million products in over 100 categories. Pakistani online stores can have over 25,000 clicks a second on major electronic product launches such as smartphones or during an Eid or Black Friday sale. These surges of online traffic are proof that eCommerce can thrive in the Pakistani market. Accessed through URL addresses or website links these online stores now have a permanent presence on the internet. They are able to offer an extensive inventory database to users nationwide. It is imperative that eCommerce platforms are able to build stable and reliable linkages between online warehouses and sellers.

Online portals are becoming popular all over the world, we are familiar with online market giants such as Amazon that aim to cater worldwide but are still not available to a Pakistani market. Our electronic commerce is yet to achieve an online payment system that can directly pay the seller, for this reason, eCommerce platforms become a meeting place for all local sellers to reach their consumers. We now use a variety of online services in various categories to solve day to day problems such as booking hotels, air tickets, bus tickets, cab service and even ordering food from portals such as Foodpanda.

The digitization of the economy helps safeguard transactions between micro small and medium enterprises (SMEs) delivering goods to the consumers through cash on delivery. The eCommerce market is currently dependent on national networks with services such as delivery bikes such as TCS and FedEx. They outsource their electronic payment systems to systems connected to telecom networks such as Easypaisa and Western Union, in order to accelerate online sales. 

Social agencies are switching to digitized electronic operational systems to provide economic relief to marginalized communities. The Benazir Income Support Programme introduced a Smartcard in 2011 created in collaboration with NADRA to provide a social safety net to women and poor families in need of cash transfers. With an aim to alleviate poverty among marginalized and underprivileged segments of society, BISP now collaborates with Banks and Telecoms using electronic mobile banking payment channels for cash transfers.

It further built on this electronic cash system and now has a Benazir Debit Card (BDC) that provides access to loans and cash relief to poor citizens. Such an extensive electronic payment infrastructure to accelerate social development shows the kind of potential the country can have for self-empowered eCommerce growth in Pakistan. 

It is evident that there are online alternatives on the rise globally for various social activities, now users can connect with their friends online, share photographs and videos seamlessly and be able to stay connected with each other through their smartphones. Services are not limited to products and goods, applications such as muzmatch and shadi.com make finding relationships and marriage a subscription and registration process. Rozee and LinkedIn are popular ways of seeking employment online and enable users to directly connect with desired businesses and employers. In such a digitized climate, it is only natural that users actively use online shopping to buy and sell their products.

Online Shopping has become a household phenomenon that is used by a large demographic, users want to buy electronics, home and kitchen appliances, decorations, books, clothes and toiletries through online stores. Pakistanis were not aware of alternative methods to solve these daily problems but now shopping online has become a commonly known concept throughout major cities of the country. As early as 15 years ago, the average consumer would go to the closest market to purchase items but through the eCommerce model, they are now able to save time and energy in using online stores and portals to search for products.  

A wholesome market Place is a place where sellers are able to set up stores to facilitate a large number of customers at a time. The online market place can house an infinite number of customers; In 2018, the online giant Amazon had more than 5 billion items shipped through their various shipping program. An online portal can target different demographics with one master search engine. Marketing conditions play a vital role in facilitating eCommerce, there are communication tools and strategies which are implemented to increase awareness about available online markets.

The Travel Sector becomes E-travel as users are able to buy tickets for buses, flights, train and even rent vehicles online. The biggest benefactor of good marketing strategies are retail businesses also called ETailing, which includes various importer, distributor. exporter and manufacturer enterprises. An eCommerce platform will be able to create an online showroom where all these products are not negatively competing with each other, instead, they work together to make the platform stronger. The reliable linkages formed through an eCommerce platform can connect businesses with businesses while also creating a seamless gateway for business-to-consumer (B2C) channels. 

The marketing tools available to growing eCommerce awareness are called Conversion Tools, they are the reviews, product reviews, social media or sharing network platforms, product recommendations and featured video content designed to provide relevant information to the consumer. Online platforms such as Ali Baba, Daraz, Shophive and Shopsy incorporate these marketing tools not to promote any specific brand or product but includes these tools into their database to inform the user.

The website incorporates important search selection features such as price, reviews, pros and cons, key features, specifications to create a wholesome shopping experience. The design is ergonomic keeping in mind the intuitive nature of shopping for each individual user, the search engine is simple and easy to navigate. The related search sections will enable users to find exactly what they are looking for while being able to compare prices from different online stores housing the same product. 

An online hub will customize its design and search engine software to create a special focus on the development and promotion of SMEs. In order to the fastest and accurate search engine, they use machine learning and artificial intelligence to create a more humanistic eCommerce environment for users. The national factors that create an advanced eCommerce market are an active legislation, safe digitized payment infrastructure, a large SME network, regimented taxation, ICT infrastructure, easy logistical systems and lateral collaborations between Ecommerce services. 

Stated in the draft of Ecommerce Policy and Framework document the Information Economy Report from 2017 recorded a global e-commerce sale of $25.3 trillion in 2015. B2B sales from that amount were $22.4 trillion and B2C was $2.9 trillion. When comparing the global growth rate of B2C in 2015 of 20% with Asia-Pacific, it can be seen that it was higher at 28%. It goes on to showcase the global GDP was 3.1% in 2015 as compared to AsiaPacific, where it was 4.5% of GDP.

North America was 3.1% and Europe was 2.6%, showing the potential of eCommerce trading in developing countries. The report highlights that “In 2017, Asia-Pacific was the fastest-growing region in the global e-Commerce marketplace and accounted for the largest share of the world’s B2C market, i.e. over $1 trillion out of the global market of $2.3 trillion, followed by North America with $644 billion.” these numbers indicate the immediate need to foster a healthy eCommerce ecosystem in Pakistan.  

For increasing trust and safety in the Pakistan eCommerce marketplace, the Ministry of Information Technology and Telecommunication (MoITT) will create a Cloud Policy and draft a Data Protection Act. According to the draft of Ecommerce Policy and Framework “the first quarter of the financial year 2017-18, the number of registered e-Commerce merchants was 496 which reached 1,094 by the year-end and was around 1,242 by the first quarter of 2018-19. e-Commerce transactions processed by these merchants are also increasing proportionately.” It is important to see these numbers as indicators that smart design and reliable linkages will be able to reduce B2B and B2C business costs enabling the average Pakistani seller to reach infinite consumers for their products. Online portals are able to see the digital economy as a growing market place in need of strategic consumer behavior analysis that helps them create an intelligent eCommerce platform for online stores and consumers.

The relationship between the consumer and seller will promote sustainability, create inclusivity and promote quality control of online stores. With the potential to pave digital roads for export growth, online portals can showcase millions of products and creates search results according to the demand for export quality products by the younger generation of Pakistan. 

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