ISLAMABAD: Pakistani fashion e-commerce industry has the potential to grow exponentially, but there are some challenges that need to be addressed.
A latest report published by Pakistan Business Council (PBC) highlighted that the main markets for Pakistani fashion using the e-commerce platform are the United States, United Kingdom, United Arab Emirates, Canada, Australia, Europe, and Gulf countries.
The report said that even though Saudi Arabia and UAE have the highest number of overseas Pakistanis, the sales of fashion products are mainly dependent on the purchasing power of the diaspora, currency conversion rate, and customs regulations of that country.
Data shows that in 2021, the global cross-border e-commerce trade was estimated to be about $784.6 billion and was expected to grow at a CAGR (compound annual growth rate) of 26.2% between 2022 and 2031, reaching $7.9 trillion by 2031. In 2022, global e-commerce sales were estimated at $5.5 trillion, accounting for about 19.7% of total global retail sales.
The report said the top three websites in Pakistan, limelight.com, gulahmedshop.com, and khadi.com hold 2% of the online revenue in Pakistan. It added that the Pakistani fashion e-commerce industry is hindered by inefficient and costly logistics, lack of local tech talent, and manual government processes. There is also a need for better collaboration between merchants, the government, and the financial sector to promote the industry growth, it added.
The report stated that the Pakistani fashion industry faces challenges in catering to a wider international customer base due to the lack of expertise amongst manufacturers, weak international reputation, absence of a complaint redressal mechanism, and difficulties with product returns and credit card payments.
Muhammad Shahrukh Khan, a creative content strategist at URTASKER, a leading marketing agency, told WealthPK that Pakistan’s e-commerce industry is facing several challenges that are impeding its growth. He said these challenges include a lack of trust in online payment methods due to data breaches, poor shopping experiences, shortage of awareness and adoption of technology, and outdated distribution and logistics networks.
Despite these challenges, he sees promise in the increasing availability of the internet in Pakistan, which could lead to faster and more unique selling and purchasing experiences for e-commerce consumers and sellers.
“To fully realise the potential of e-commerce, Pakistan could learn from the experiences of leading e-commerce players such as China and the US, which have resilient competitive advantages in logistics and distribution networks,” he emphasised.
To increase the potential of e-commerce in Pakistan, he suggested that the government devise investment-friendly taxation policies and ensure intellectual property rights for businesses operating in the sector. Additionally, he said, there is a need to develop a robust supply chain structure in the country. He believes that e-commerce activities could have a positive impact on per-capita income, employment generation, and GDP growth in Pakistan.
Additionally, the report stated that the presence of websites with similar sounding names as leading brands, and the exclusion of customs duties and VAT (value-added tax) from displayed prices further impact buyer trust and sales.
According to the report, the target market for Pakistani fashion e-commerce is primarily female, and there is a lack of standardised dress sizes.
The report pointed out that in order to overcome the challenges facing Pakistan’s fashion e-commerce industry, it is necessary to standardise the practices and improve logistics capabilities, as well as establish third-party service providers to handle specialised e-commerce tasks.
It said digitalisation of banking and customs procedures is essential, along with revisions to the State Bank of Pakistan (SBP) and customs laws. It said collaboration with international designers, certification of genuine fashion brand websites, and the promotion of Pakistani fashion through ancillary products, fusion wear, and Western wear can help diversify the customer base and stimulate growth in the industry.
