The growth of e-commerce in the sub-continent is happening at a fast pace. Whereas E-commerce has been able to engage a fair chunk of the Indian market, while E-commerce in Pakistan is still far behind in the race. The boom of E-commerce in India occurred in 2011. Not only big guns like Flipkart and Amazon, but a lot of small online shopping websites also paved their way and gained from this industry.
Pakistan is moving ahead in E-commerce, and by 2020 it is anticipated to grow up to $ 1 billion. Another aspect which can help the E-commerce industry grow is online payment gateways which have given customers the option to make payments in the comfort of their home.
5 Factors Negatively Impacting E-Commerce in Pakistan
Conversely, online shopping comes with many challenges which need to be addressed by the e-commerce companies. Here are a few critical factors which hinder the performance of online businesses.
The investors should look at E-commerce as a long-term project and not anticipate immediate profits.
E-commerce requires dedication and hard work along with plenty of patience for growth and profit.
Investors expect fast growth and stream of revenues which is not possible in E-commerce.
- Payment Method
Even though a lot of payment methods have emerged for online transactions, such as Jazz Cash and Easy Paisa, around 90% of purchases are cash on delivery. Reclaiming money from various logistic ends takes a lot of time. Coupled with returns and exchanges, it is not at all easy to handle big amount of cash flows.
- Focus on Websites and not Products
All the E-commerce companies want their websites to have lush graphics, styling, easy navigation, etc, but the majority of the products that are delivered are not what they look like in the marketing campaigns. One of the frequent complaints businesses get is that the product is entirely different from what they saw on the website.
Also, at times customers receive damaged products due to mishandling by the courier companies.
- Discount Driven Market
All the online shopping portals offer substantial discounts on their products. Discount is the most important factor for buying goods in the Pakistani market. As a result, the competition in prices is more which leads to a decline in profit margins.
- Human Resource
E-commerce industry giants hire experts and fresh employees from renowned institutions and attract them by offering higher salaries along with other benefits.
At times, employees in the industry are overpaid. When an employee is laid off or if the business shuts down, such as the case of Aramshop.pk, employees have to take up jobs with fewer incentives and lower salaries. The lower salaries affect the motivation of workers which affect the outcome of the company.
The hurdles that the E-commerce companies have to face are obvious. Despite these, there are some companies which are working by the book and are gaining valuable profits from the market.
Companies like Cheetay.pk, Daraz, Sastaticket, Elo, Foodpanda, etc offer excellent services and products to their customers which enable them to build a permanent clientele. These companies are adding value to the E-commerce industry of Pakistan and aim to make it flourish more in the upcoming years.
Recommended Reading: 5 Key Factors Promoting the Growth of E-Commerce