By Zeeshan Riaz
Pakistan is still a developing nation striving to find ways to transform its monetary sector. After the unpardonable wave of COVID-19, global states have faced economic shocks, including the developed countries.
However, the e-commerce industry has witnessed a significant boom during the pandemic. Especially in developing states like Pakistan, the e-Commerce sector is showcasing a promising future.
According to Statista, the expected e-commerce revenue in Pakistan is projected to be 7.66 billion US dollars in 2022 which were 4 and 7.3 billion US dollars in 2020 and 2021.
The above figure shows the revenue of e-commerce in Pakistan based on categories. In 2025, the e-commerce market will probably cross 9 billion US dollars. This indicates that the future of e-commerce is remarkably promising in Pakistan, and it is getting the attention of multiple stakeholders.
If you are still thinking about whether it’s favorable to invest in Pakistan’s e-commerce industry, then below are some persuasive reasons that can change your mind.
Reason 1: The Growing Pace of Technology
The technological pace in Pakistan is growing tremendously. According to a survey for the fiscal year 2021, Pakistan’s IT export remittances increased to 1.29 billion US dollars which were 918 million US dollars in 2020.
One of the primary reasons behind the growth of the technology sector is that more than 63 percent of Pakistan’s population comprises youth looking for emerging investment and growth opportunities.
Technology is the pillar of e-commerce. It helps e-commerce sellers and customers to connect smoothly on mobile and web platforms. Moreover, it also endorses efficiency and stability in online business management.
Government sustainable IT development policies is another dominant factor linked with the technological revolution in Pakistan. The government initiatives like promoting digitization projects and creating specialized foreign currency accounts for different IT firms to carry out their operational demands positively impacted IT sector performance.
The e-commerce giants like Alibaba and Amazon have already entered the economic boundaries of Pakistan, and more are expected to come soon.
The potential catalyst to encourage e-Commerce development in Pakistan is to trigger online transactions for a smooth cash flow. Pakistan’s government is already working on hiking the growth of e-commerce and the IT sector. Hence, ensuring a promising e-Commerce future.
Reason 2: The Use of the Internet and Smartphones
According to a Digital 2022 report of Pakistan, there were 82.90 million internet users in Pakistan in January 2022. The internet services like 3G and 4G have become common in Pakistan.
Pakistan Telecommunication Authority is planning to launch 5G services in April 2023, which will further scale the development of internet services. Resultantly, the internet connection will get faster and more robust, optimizing the experience of online shoppers and e-Commerce sellers in Pakistan.
Statista reports that Pakistan is ranked number 16 worldwide in smartphone users, with 47.1 million people using smartphones in 2021. The growing use of smartphones and cost-effective internet prices are dramatically booming e-commerce. It can increase the number of online shoppers and sustain the online shopping trend in Pakistan.
Reason 3: Seeking Advantages of Low-Cost Labor
If you are running an e-commerce business within developed countries, the cost of producing goods can be expensive due to high labor costs. In Pakistan, labor costs are relatively low in comparison with developed nations.
Start your e-Commerce business by opting for cheap labor services and save substantial costs in manufacturing goods. If you have experience in sports, clothing, or any other industry, you can produce these items at a relatively cheaper price using low-cost labor.
The only thing you have to do is conduct research on the online business you want to pursue and analyze its long-term demand. Planning to expand your online business internationally is a lucrative option, but after having an effective plan and valuable research. Sometimes locally manufactured products with cheap labor costs can provide unprecedented financial advantages in the international markets.
Reason 4: Popularizing Digital Transactions
Online transactions and digital cash have become popular globally. If developing economies want to grow in technology, they must adopt digital transaction methods.
Pakistan is already practicing and encouraging the online transaction process. It can be seen from the below figure that in 2021 more people selected the cash-on-delivery option compared to other transaction types, and only 36 percent of the payments were through online credit cards. In 2025, online transactions and digital cash is expected to exceed compared to cash on delivery or other old transactional practices.
When the trend of online transactions propels in Pakistan, the e-Commerce industry will boom due to the instant transfer of funds within no time. Overall, the future of e-commerce is bright in Pakistan.
Bottom Line
The discussed reasons for investing in Pakistan’s e-commerce are promising in providing a high return on investment (ROI). The government of Pakistan is taking numerous measures to further strengthen the e-commerce system. Therefore, multiple stakeholders are planning to invest in the promising future of Pakistan’s e-commerce sector. – The Writer is an e-Commerce Expert and Chief Operating Officer at Urtasker.
