Report: e-Commerce to Evolve at an Amazing Speed in Pakistan

The world of e-commerce has lately evolved and progressed at an amazing speed in Pakistan with many new and prevailing organizations, businesses, and customers. The e-commerce industry is flourishing throughout the region, with India’s leading e-commerce website, Flipkart, making a record US$1 billion and Alibaba,  China’s e-commerce giant market capitalization likely to be over US$250 billion.

Pakistan, rather being a late entrant to the world of e-commerce, has lately recorded an enormous rise in online shopping trends and other e-commerce businesses. Such exponential growth trends over the past couple of years with US$30 million being spent on online purchases currently portray a highly positive picture for the future and the size of Pakistan’s e-commerce market is more likely to reach over US$600 million by 2017.

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 of the country and contest with 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.

Report: e-Commerce to Evolve at an Amazing Speed in Pakistan

Internet Accessibility in Pakistan:

One of the most significant factor is the rate of internet accessibility in Pakistan. In Pakistan approximately 30 million people have access to Internet. However, it is expected to rise up to 56 million users by 2019. After the 3G/4G auction in 2014, internet accessibility in Pakistan has increased and it will most likely impel the growth of online purchases. Statistics from the Pakistan Telecommunication Authority (PTA)  show that the total number of third-generation (3G) mobile subscriptions have risen up to 10.3 million in 2015. The number of 4G or LTE users also increased to over 68,000.

During the next 5 years, 28% of the country’s population is projected to have internet access. 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 through Rozee.pk which has eased job hunts for over 1 million people, and land, property and rental transactions by Zameen.pk.

Smartphone Users:

Along with increased internet penetration, 73.2% of the entire population use cell phones. A recent surge in smartphone usage shows that there are almost 9 million smartphone users in Pakistan. Smartphones having internet have intensely increased the ease of internet access and made online businesses much more accessible for everyone.

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. 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 and account for more than 95% of online purchases, other promising steps such as branchless banking (Telenor’s Easy Paisa, Zong and Askari Bank’s Timepey, Mobilink’s Mobicash etc.) and Inter Bank Fund Transfer (IBFT), are also in progress.

Several banks and Telecom operators have introduced the idea of branchless banking, and the number of branchless banking agents assisting offline payments for online purchases have lately tripled, making it much more suitable to transfer money in a secure environment.

Online suppliers now have much greater access to merchant accounts that assist them to collect payments electronically by the 12 million debit cards in circulation in Pakistan. Moreover, with more and more banks now offering consumers internet banking payment facilities, a vast volume of payments are made through IBFT which help consumers to electronically transfer funds directly from their online bank accounts to online stores.

Delivery Infrastructure:

Delivery giants such as TCS and Leopard, as well other couriers, are giving COD delivery services across 150 cities countrywide. The fact that 35% of the total 70,000 COD parcels are delivered to cities other than the urban cities of Karachi, Lahore, and Islamabad, shows the potential of the large untapped part of the population outside of these urban centers that is gradually transitioning to online shopping due to the lack of options available for rural shoppers. This has also stimulating various specific online grocery stores to recently pop up and tap into the need for specialized online stores, such as AaramShop, PakistanGrocery and Doorstep.pk.

These inclinations offer sufficient growth opportunities for developing online business, as well as potential exploration and growth avenues for courier services by association.

Developing Trust and Confidence on E-commerce:

The future of e-commerce trends lay in the ability of online business to increase their foothold and create trust in online shopping and e-commerce initiatives.

With just 3% of the Pakistani population involved in online shopping, several initiatives are starting with online businesses in Pakistan to reach out to their potential market, build up their reliability, and garner consumer trust. This is especially true for risk-averse shoppers.

Online brands such as OLX have now started to set up substantial advertising budgets for mainstream media advertising, as well as targeted digital marketing initiatives through social media. Rocket Internet, which runs various ventures in Pakistan, has injected a lot of capital into the Pakistani e-commerce market.

Unilever’s recent collaboration with Daraz to use the platform for reaching out to customers all over Pakistan for its beauty and personal care products implies a shift of the FMCG sector towards e-commerce as well.

Kaymu.pk has recognized itself as a successful online marketplace through a consumer-to-consumer (C2C) and business-to-consumer (B2C) model. It has also launched a mobile phone app to provide widespread access and chances to existing and budding entrepreneurs. Almost 17.3% of e-commerce activities take place through smartphones.

Such marketing initiatives are usually fruitful in reaching out to first time consumers and generating overall awareness, acceptance, trust and credibility.

Pakistan’s E-commerce Perspectives:

Many idealistic local players such as Shophive, Homeshopping, ROZEE, Just4girls.pk, and Pakwheels, as well as foreign financiers such as Rocket Internet with their assorted online initiatives such as Jovago, Tripda, and Foodpanda, are all jumping in to make their market share in the developing e-commerce industry of Pakistan, within their own realms.

Innumerable other local and home operated business have also succeeded via Facebook pages as a result of rapid penetration of the internet and smartphones, COD and IBFT services and the largely mounting trends of online shopping.

In Pakistan all these businesses have developed despite of all the obstacles  such as misunderstanding and distrust of e-commerce, security concerns about online transactions, low access to technology, low literacy rates, and inadequate infrastructure and logistical support.

Taking everything in to account this indicates that the market and timing both are suitable for e-commerce in Pakistan, regardless of the few interruptions the industry is all geared up to create substantial waves in the country, with vast scope for modernization and enhancement as well as exponential long-term growth.