Geared up for Growth: Pakistan E-commerce Market

In today’s technologically advanced world, the concept of e-commerce is not new, but it has shown a rapid growth over the past few years. In the current fast age when the time is money, the logic behind e-commerce is to find quick and easy ways for financial transactions to get cash, pay bills or shop for goods and services anywhere, anytime just by touching buttons.

Pakistan’s E-Commerce market size exceeded $600 Million in 2017 whereas, by the year 2020, it is expected to touch $1 billion

With the rapid growth in the internet and cellular technology, e-commerce has swiftly transformed into m-commerce where all the transactions are now done through mobile applications.

Geared up for Growth: Pakistan E-commerce Market

Online commerce refers to any form of a business transaction conducted online. These business transactions occur either as business-to-business, consumer-to-business, business-to-consumer, or consumer-to-consumer. The most common example of e-commerce is buying and selling of goods and services on the Internet. Pakistan is among those countries where a swift growth in e-commerce industry has been witnessed. According to State Bank of Pakistan, Pakistan’s E-Commerce market size exceeded $600 Million in 2017 whereas, by the year 2020, it is expected to touch $1 billion. According to State Bank of Pakistan, Business to consumer E-Commerce (e-B2C) is on the rise in Pakistan as 571 local e-commerce merchants were already collecting payments through banking channels as of the end of June 2017, with cumulative annual domestic sales worth Rs 9.8 billion. Also, transactions worth Rs 20.7 billion were carried out by consumers on international e-commerce websites. Many business-to-consumer businesses like daraz.pk, yayvo.com, shophive.com and olx.com etc, have achieved massive popularity over a very brief period of time. They have even developed their own mobile apps that have permitted them to promote their products more easily.

The logic behind e-commerce is to find quick and easy ways for financial transactions to get cash, pay bills or shop for goods and services anywhere, anytime just by touching buttons

In business to business transactions, Pakistan has demonstrated extraordinary growth as well, especially in IT industry.

IT industry has various medium-sized IT firms earning about USD530 million, mainly in software development and service outsourcing. However, Pakistan’s share in the global IT sales is just $2.8 billion out of global $3.2 trillion in the global market. According to the Pakistan Telecommunication Authority, the software industry will accomplish the goal of $5 billion export mark by 2020.

According to the Pakistan Telecom Authority, the software industry will accomplish the goal of $5 billion export mark by 2020

With countless new online ventures coming rapidly and existing businesses recording unprecedented growth rates, there is still a lot to be done to reach the real e-commerce potential and contest other big players of the region. Many aspects are responsible for significantly changing shopping trends over time and changing the growth of e-commerce in Pakistan.

Internet Accessibility in Pakistan?

One of the most significant factors is the rate of internet accessibility in Pakistan. In Pakistan, there are more than 53 million internet subscribers. 3G/4G subscribers are increasing at an exponential rate that is adding up to the digital inclusion of the country. Statistics from the Pakistan Telecommunication Authority (PTA) show that the total number of 3G/4G mobile subscriptions have risen up to 51 million in February, 2018. With increased access to the internet and social media sites such as Twitter and Facebook, marketing trends are also quickly altering and converting the way opinions are now being shaped. This will not only change shopping trends but also significantly impact several other e-commerce aspects such as online job hunts, banking, agriculture, lifestyle, and travel.

Smartphone Users

Along with increased internet penetration, 72.90% of the entire population uses cell phones. A recent surge in smartphone usage shows that there are almost 9 million smartphone users in Pakistan. Smartphones with internet service have intensely increased the ease of internet access and made online businesses much more accessible for everyone.

3G/4G subscribers are increasing at an exponential rate that is adding up to the digital inclusion of the country

The growth of internet penetration and the decreasing prices of smartphones both have accounted for the rise in smartphone usage in Pakistan. Many Chinese brands have launched gadgets at the fraction of the costs linked with the world’s leading mobile phone brands, which has improved mobile penetration across the lower income people of the country.

Smartphones with internet service have intensely increased the ease of internet access and made online businesses much more accessible for everyone

With such easy access to the internet through reasonable smartphones, e-commerce trends in the country are more likely to flourish in the near future.

Online Payment Methods

Even though Cash-on-Delivery (COD) payment methods continue to remain extensively popular in Pakistan, other promising steps such as branchless banking like easypaisa, mobicash and Inter Bank Fund Transfer (IBFT), are also getting popular.

Growing Entrepreneur Culture in Pakistan

Pakistan is the country where we witness a rapid growth of start-up businesses to enhance the country’s economy. We can some very impressive online startups that have emerged over the years and made a great impression in the market. Due to increasing trend of entrepreneur culture in Pakistan, many international companies have also started working in Pakistan like Uber, Careem, Jovago etc.

A substantial untapped part of the population outside of urban centers is gradually transitioning to online shopping due to the lack of options available for rural shoppers

All these companies have not only played a crucial role in boosting local economy but it also helped to promote e-commerce in Pakistan.

Delivery Infrastructure

Delivery giants such as TCS and Leopard, as well other couriers, are giving COD delivery services countrywide. A substantial untapped part of the population outside of urban centers is gradually transitioning to online shopping due to the lack of options available for rural shoppers. These inclinations offer sufficient growth opportunities for developing an online business, as well as potential exploration and growth avenues for courier services by association.

Another effective step towards promotion of e-commerce is the development of regulations regarding Framework for Payment System Operators (PSO) and Payment Service Providers (PSP) that have already been devised and approved by the State Bank of Pakistan (SBP) while development of e-commerce policy framework is also under process to cater to all the elements of the user-merchant trust with dispute resolution and remedial mechanisms.

Pakistan is already one of the fastest growing economies in the world and has now become one of the hottest destinations for the mobile industry and global retail and e-tail giants

Since the essential element of e-commerce ecosystem is the payment gateway, such developments will improve the overall business environment and enable entry of credible international players in e-commerce ecosystem of Pakistan and will resolve longstanding barrier to the growth of the country’s e-commerce market.

Pakistan’s millennials are rapidly growing who are much more technologically advanced and literate than the older generation

World’s largest e-commerce giant, Alibaba is also planning to enter Pakistani market and has signed an agreement with Trade Development Authority of Pakistan (TDAP). Pakistan is already one of the fastest growing economies in the world and has now become one of the hottest destinations for the mobile industry and global retail and e-tail giants.Also, Pakistan’s millennials are rapidly growing who are much more technologically advanced and literate than the older generation. So, in the coming years, we will definitely see further progress in e-commerce industry of Pakistan and witness an exciting mobile and technology evolution in Pakistan.