Pakistan has a huge potential for e-commerce, but infrastructural and logistical issues needs to be resolved to unleash that potential, the government can play a role in this matter, said Jan Poeter, Head of Cross Border, Daraz Group. He welcomed the Government of Pakistan’s step of introducing e-commerce framework recently. “The good part of the framework was inviting the private sector to take a lead role in developing the e-commerce sector in the country and also advising the government on that matter. The government has taken a wise approach by willing to listen to the private sectors about their concerns and needs,” he said while talking to Business Recorder here on Thursday.
He noted that in Pakistan there is a lot of traditional legislation when it comes to retail, it is about pricing, returns and imports, but “it is also about granting licenses to e-wallets (online payments), such as Easy Paisa; this needs to be stronger in Pakistan”. He observed that it is vital to ensure an easy access for people to avail online financial services, as right now Pakistan is still a very cash-driven society.
He believed that in the area of logistic, the government can introduce encouraging policies, remove red tape and engage with the private sector to assist the e-commerce platforms in transporting of goods. “For an example, with collaboration with the private sector, the government could introduce a programme to subsidize transportation cost to rural areas where costs of online products are high,” he added.
Poeter talked about his experience working in e-commerce industry in Pakistan and drew a comparison with other countries. “The Pakistan e-commerce industry is very different from other parts of the region because it is so new to the market. If you compare it with China, over 30 percent of its market’s total retail transactions, both offline and online, are coming from e-commerce and it is the highest number in the world, in fact far higher than the Europe and America. Coming back to Pakistan, the share of e-commerce transaction is below one percent.
“Thus, it is not about having competition or convincing people to prefer Daraz over online shopping giants, this is about educating people, both sellers and buyers, on the benefits of online shopping. We have brought 25,000 sellers in Pakistan to sell their products online and they are also our customers.”
This he found exciting for being a part of creating an e-commerce structure in Pakistan and are not just working to run a ‘business as usual’ and competing with others. In Pakistan, he saw a huge potential for e-commerce, but in his opinion a weak infrastructure was holding back its growth. “The potential is big, but at the moment the infrastructure is difficult. Three key competent are vital for the success of e-commerce in any country: e-commerce platform, logistic and convenient payment method.”
Poeter said that if deliveries are not made in shortest time then buyers will be discouraged from using online platforms for shopping. Similarly, he said, by not offering convenient payment methods will exclude a large number of buyers from online shopping. “For an example, if only allowing online payment through credit cards, people who do not possess such facility will be left out. Hence, with these impediments e-commerce will not succeed,” he added.
Hence, he said, it is imperative to develop all the three key components together and again if one of them lags behind, the all thing will not work. “These are the challenges Pakistan faces today in the e-commerce sector,” he added. Touching on the people’s concerns over online shopping, he said that people’s trust on online shopping is one of the biggest challenges they face. He elaborated that in Pakistan e-commerce about winning the trust of the people, but unfortunately there is no shortcut to overcome this hurdle.
“The only way to move forward is to build trust over a time. In Daraz, we continuously improve our services by firstly taking care of our sellers that are on our platform, and ensure that they are selling quality goods and delivering them on-time. They are required to fulfill the service level set by Daraz otherwise they will be penalised.
“Secondly, we make huge investment on customer service; buyers can contact Daraz anytime and they will get a prompt response. We always try to resolve issues and disputes to their satisfaction. We know that e-commerce is in critical phase of building trust and one mistake could have a huge impact on the business.”