Pakistan’s e-commerce market is set to hit the $1 billion mark by 2020 if current trends in the sector continue apace. The Pakistan Telecommunication Authority’s (PTA) annual report for 2017, which was released recently, details the various happenings and trends in this area, providing proof that the country’s e-commerce sector is on an upward trajectory. In recent times, Pakistan has consistently been included among the fastest growing e-commerce markets in the world and considering that this aspect is a major driver of the country’s digital side, the importance of e-commerce cannot be overstated.
Industry experts estimate Pakistan’s e-commerce market current worth to be around $120 million, with its size multiplying every year, growing at a compound annual growth rate of more than 100 per cent. The Nation reports that as per Google’s analysis, this trend will continue during the next three to five years with the result being the surpassing of the $1 billion mark by 2020.
Several measures taken by the authorities are facilitating the growth of the e-commerce sector. APP reports that the regulations regarding the Framework for Payment System Operators and Payment Service Providers have been devised and approved by State Bank of Pakistan. In addition, an all-encompassing E-commerce Policy Framework is also being developed to cater to the various elements important in e-commerce transactions, including the user, merchant trust, dispute resolution and remedial mechanisms.
Furthermore, the PTA’s annual report reveals that the Ministry of Commerce has formulated an E-Commerce Policy Board to monitor progress and ensure coordinated cross-institutional efforts for the development of e-commerce in Pakistan.
A barrier to the growth of the e-commerce sector so far has been the cash-driven nature of the Pakistani economy, with only a small percentage of the population having access to credit and debit cards. This has meant that a huge majority of transactions are carried out through the Cash on Delivery system. This has prevented the entry of major international players in the Pakistani market.
However, now the government is working towards enhancing the payment gateway, often considered the most important element in the e-commerce ecosystem. This is sure to attract leading international e-commerce companies like Alibaba to the Pakistani market. Alibaba recently signed an MoU with the Trade Development Authority of Pakistan to bring small and medium enterprises in the realm of the e-commerce platform. This can prove to be revolutionary as engagements with Alibaba can transform the reach of Pakistani products in international markets and help promote e-commerce and financial services in Pakistan.
Private sector initiatives
The PTA’s report further details the various private sector initiatives that are behind the growth of Pakistan’s e-commerce market. These include Business-to-Consumer set-ups like daraz.pk, olx.com and homeshopping.pk, among others.
In addition, the Business-to-Business front has also been doing well, with the country’s software industry aiming to enhance its exports to $5 billion by 2020. At the same time, medium-sized IT firms in Pakistan earn around $530 million annually.
Another recent feature of Pakistan’s e-commerce landscape is the mushrooming of websites for the sale of cars, property and travel, which is proof of the enhanced sophistication of the country’s consumer and e-commerce sector. These websites include PakWheels (online auto portal with listings of over 160,000 cars and 24,000 motorcycles, which is accessed by 100,000 unique visitors daily), Zameen.com, the largest online real estate database, and Foodpanda, Pakistan’s leading food delivery app, which generated Rs1 billion in sales for the restaurant industry last year.
In addition, there is Rozee.pk, the country’s leading job website, and daraz.pk, Pakistan’s largest online shopping mall. Furthermore, all leading brands in various sectors also offer online shopping facilities to their customers.
With the international research group, Euromointor recently revealing that Pakistan’s huge youth bulge has transformed the country into the world’s fastest growing retail market, it goes without saying that there is tremendous potential for the e-commerce sector to flourish even further. Major international players would be keen to take advantage of this growth in the e-commerce and retail sector if they are provided with a positive, enabling environment. Therefore, it is essential that the government join forces with the private sector to come up with ways to ensure the development of a safe and reliable environment for e-commerce operators.
In this regard, at a recent workshop held in Karachi to discuss the growth of the sector in Pakistan, industry experts identified the three areas that need to be made more reliable, namely customer protection, payment methods for both domestic and international transactions, and delivery. It is important that all relevant stakeholders work towards providing solutions to the problems that currently exist in the e-commerce sector so that it could fulfill its true potential.