By Zeeshan Riaz
Pakistan has been considered a cash-based informal economy by the International Trade Association, which means that most of the transactions are made with cash in this region. In this type of economy, experiencing the high growth of e-commerce is astonishing, which raises the motivation to explore this market.
E-commerce has been experiencing modest online retail sales, but after COVID-19, the statistics have changed sharply, leaving several online business opportunities. The present article puts light on the scope, challenges, and future of the e-commerce industry in the region of Pakistan.
SCOPE OF E-COMMERCE IN PAKISTAN
Pakistan has been considered the 37th largest market for e-commerce worldwide. This market has been reported to generate revenue of US $5.9 billion in the year 2021. In 2022, the projected revenue was US $7.6 billion, which means that the revenue is increasing rapidly in the region due to online shopping among consumers. It can be due to the shift of customers towards e-commerce due to COVID-19. However, one can also say that e-commerce became a popular platform before the outbreak of COVID-19.
The research has also shown that the revenue is generated for different markets, including electronics, food, media, and many more, as seen in the figure below. However, the most popular market in terms of revenue can be electronics which has the largest revenue share. It shows that the fashion market is not the only one benefiting from the growth of eCommerce in Pakistan.
Source: Statista
There are many online stores like Limelight, Gul Ahmed, and Khaadi, which are heavily emphasizing online presence and sales. For example, Limelight generated the US $50 million in online sales in the last fiscal year due to its online presence. Besides, there are also top online markets like Daraz.pk, Olx, Aliexpress, etc., raising sales by generating consumer trust. It means that there is greater scope for the country in the e-commerce industry, which is why businesses have been investing in raising their brands’ online presence.
CHALLENGES FACING THE E-COMMERCE INDUSTRY IN PAKISTAN
With more significant opportunities, there also come many challenges that need to be managed to form a successful strategy. The aforementioned growth opportunities of e-commerce in Pakistan are undeniable, but some problems hinder online platform growth.
MISTRUST IN ONLINE PAYMENT METHODS
There is also mistrust of online payments. The payment methods which are being preferred are also multiple. However, due to a lack of trust in online payments, the users still choose the cash delivery method, as indicated by Statista. However, by 2025, the cash on delivery will be reduced, and card payments will be considered the predominant method for making online purchasing.
Source: Statista
POOR SHOPPING EXPERIENCE
People report experiencing poor product experience when they purchase online. It can be because of fake reviews on e-commerce websites which are placed by businesses to mislead the customers and raise sales. Such factors can be why people mistrust any other brand with good reviews. Thus, increasing the trust in the new brands can become a significant challenge.
LACK OF AWARENESS AND TECHNOLOGY ADOPTION
There is 65% of the population from the age of 15 to 40 in Pakistan with high technology adoption in which mobiles and websites are used. Other than this, there is a large target market with low technology adoption who can be willing to purchase the product online. Technology adoption has increased in COVID-19, but there is still a significant gap in the market that needs to be filled by raising technology awareness.
OTHER CHALLENGES
According to Dawn, Pakistani businesses need to work on improved product range, delivery time, product quality, return policy, the price listed, and customer service to improve performance. It means that the brands need to work on their products, procedures, and services strategy to enhance their sales in Pakistan. Unfortunately, many online brands lack consumer trust as they neglect these factors.
THE FUTURE OF E-COMMERCE
The future of e-commerce has also been studied due to the market’s potential. Global e-commerce sales can also be expected to increase in the upcoming years due to the increased development of the middle class in East and Southeast Asia, focusing less on brick-and-mortar businesses.
As per the data from Statista, the annual growth rate of the revenue will reach 6.09% from 2022 to 2025. The increase in users will also reach 65.1 million by 2025. According to Tribune Magazine, the top three Pakistan fashion brands are generating half a million dollars with rapid growth in sales and revenue.
Source: Tribune Magazine
It can be expected that in the future, there will be an improvement in technology and the online presence of brands which will reduce the brick-and-mortar business models. Such factors will help foster the country’s economic growth as well.
If you want to know in-depth about the ins and outs of e-commerce and its overview in Pakistan, you can visit the link of my recent talk show on Roze News.
SUMMARY
The scope of e-commerce has been increasing over the past few years. However, in line with the growth of e-commerce in Pakistan, some barriers are being faced by the region. Such challenges result in raising hindrances towards consumers’ acceptance of e-commerce as a fast-growing technology. However, despite these challenges, the future of e-commerce in Pakistan seems bright.
– The Writer Is e-
