The world, today, stands on the brink of a technological revolution because of COVID-19 that will completely transform the way human beings interact with one another and organize their lives – be it jobs, education, or day-to-day routine activities.
People and machines are increasingly being connected through the internet and are communicating at a speed unknown to mankind before, leading to increased globalization and commercialization.
Pakistan – with an emerging IT sector, growing population, and a growing number of internet and mobile phones and computer users – has already been in a long quest to transform its economy and commercial activities into a vibrant and technologically advanced nation.
A country that will have a trade surplus, ample foreign exchange reserves, greater job opportunities, better incomes, and higher standards of living. A country that is driven by export-based economic growth, whether in goods or in services.
The emergence of e-commerce, not just in Pakistan, but for the whole world, have paved the way for inclusive trade and economic development. To get a glimpse of where the world is headed, here are some numbers:
- Global e-commerce has been growing exponentially since the last two decades and recorded sales growth of 13% in 2017 with an estimated sales of $2.9 trillion.
- This is expected to nearly double to $4.5 trillion by 2021.
- The number of online shoppers grew by 12% and reached 1.3 billion in 2017.
- Studies show that in 2018, 18% of all retail sales took place online.
- By 2040, it is estimated that 95% of all purchases or retail sales will be facilitated by e-commerce.
Evolving into a global phenomenon, worldwide e-commerce sales have grown rapidly over the last few years. However, the majority of these sales were driven by domestic buying from domestic vendors, but buying from foreign vendors is also gaining the much-needed traction as the share of such buyers has increased from 15% to 21%.
About a quarter of the world’s shopping is now being done online, with China alone having 440 million online consumers. In terms of country-wise sales, the United States is the undisputed king with almost $9 trillion in sales, 3 times higher than Japan, and 4 times higher than China.
However, these estimates do not take Coronavirus into consideration, hence it can be safe to say that these are very understated for now.
Where the world is expecting a huge surge in e-commerce, Pakistan’s e-commerce industry has also been experiencing steady growth. The industry, as a whole, is estimated to be at Rs. 99.3 billion in 2018, experiencing an increase from Rs. 51.8 billion in the previous year 2017, with a year on year growth of 92%.
Since e-commerce stores observe most of their traffic from the mobile web store, it has the potential to become one of the major chunks of Pakistan’s economy. However, e-commerce in our country still has not reached a level where digital money or wallets will be predominantly used instead of cash.
There are a lot of reasons why Pakistan has not been able to realize its full potential in developing its e-commerce system. Two factors highly critical for the promotion of the e-commerce industry in Pakistan are financial inclusion and literacy required to conduct a transaction. The world’s preferred digital payment method, PayPal, is not available in Pakistan due to a number of reasons. Some are political, others… not so much.
Furthermore, the presence of global B2B and B2C portals and giants like Amazon and eBay are also not present in Pakistan. If there was a portal such as Amazon or eBay, it would have a far-reaching benefit across all the sectors and businesses in the country as their externalities tend to have a trickle-down effect.
E-commerce offers huge opportunities to the developed and less developed world alike. These primarily include access to the distant markets, rapid exchange of goods and services, secured payments, promoting innovation, and creating employment opportunities.
It has the potential to provide the less developed country, like Pakistan, with an opportunity to cover a considerable distance on the road to socio-economic and technological development in a very short duration.
E-commerce in Pakistan can play a vital role in improving livelihoods, augmenting enterprise competitiveness, and increasing their share in global trade. With respect to increasing the share in global trade and to narrow the digital divide between developed and less developed world, it is essential to take measures, which enhance local capacity qualitatively and quantitatively.
Just a glimpse of numbers can paint a very optimistic picture for the future of e-commerce in the country, let alone if we dive deep in the pond.
- From 2017 to 2018, the numbers of local e-commerce merchants increased by 2.6 times and e-commerce payments increased by 2.3 times in just 12 months.
- SBP’s Annual Report on the State of Economy 2017-18, shows that sales of local and international e-commerce merchants were Rs. 20.7 billion in 2017, growing by 93.7% in 2018 to reach Rs. 40.1 billion.
- These figures do not include all the post-paid cash-on-delivery transactions which account for 60% of the total value of e-commerce in Pakistan.
- Pakistan’s e-commerce industry has been estimated to be valued at Rs. 99.3 billion in 2018, experiencing an increase from Rs. 51.8 billion in the previous year 2017, with a year on year growth of 92%.
- Digital payments (credit/debit/prepaid cards, interbank funds transfer, and mobile wallets) grew by an impressive 93.7% in 2018 to reach Rs. 40.1 billion compared to Rs. 20.7 billion in the year 2017.
- Cash on Delivery (CoD) is still the prevalent payment mode and makes 60% of total transaction volume.
With a population of approximately 208 million, a number of financial inclusion solutions in terms of branchless banking, and more than 3.2 million SME units in the country accounting for 98% of all the enterprises, Pakistan offers one of the largest untapped markets in the world for e-commerce.
Around 64% of Pakistan’s population is under the age of 29 and the country will continue to enjoy the youth bulge for another 30 years or so, according to a report from United Nations Human Development, 2017.
As the young population is more open to embracing technology as compared to the older generation, the promotion and regulation of e-commerce become more significant in providing employment to around 130 million Pakistan’s youth in the next 30 years.
Pakistan in the past two decades has developed a strong Information and Communications sector by liberalizing the telecommunication sector, creating an environment conducive to an expansion of its information technology-enabled services industry. Hence, cultivating an information society with a wider diffusion of the ICT sector and the internet with the day-to-day life of an ordinary person.
As per UNCTAD’s B2C E-commerce Index of 2018, Pakistan ranked 117 (out of 151 countries) on e-commerce readiness index with a value of 32.34. However, a noticeable surge has been witnessed in the recent past in the number of online vendors, local e-commerce platforms, and online payment facilities introduced by banks and large cellular service providers.
Pakistan has also observed an exponential growth in internet subscribers and internet users. Pakistan Telecommunication Authority’s data reveal that the country saw an increase from 32.22 million in 2015 to 78 million broadband subscribers with a penetration of 36.86% of the total market. Whereas, Pakistan also observed an increase in 3G/4G users up from 29.18 million to almost 76 million in by the end of 2019 with a market penetration of 35.90%, which is still very low indicating that Pakistan has a long road ahead in the journey of digitization.
However, one indicator that looks promising and optimistic is the overall reach of the cellular subscriptions. Pakistan had a total of 165 million cellular subscribers (including the 76 million 3G/4G users) by the end of 2019 up from 114.66 million in 2015, with a total market penetration of 78.16%.
- Multi Retailer Platform
These are the dominant forces in the e-commerce industry having a wide collection of products listed on their websites. Examples of these platforms are Daraz, Symbios, Foodpanda, Bookme.pk, Yayvo, Goto, Well.pk, etc.
- Niche Retailers
They focus on one niche and try to leverage their speciality to drive sales. Examples are online stores like Higher.com.pk and Babynestboutique.com.
Companies having their own online stores through which orders can be placed. Retailers like Gul Ahmed, ECS, J., Sana Safinaz, and Khaadi are good examples of this category.
- Social Media Retailers
Social media retailers having well established Facebook or Instagram stores or groups.
Recent analyses on the global e-commerce environment have revealed one significant development that e-commerce of today has quickly evolved into becoming a priority for B2B consumers. In fact, as many as 57% of B2B companies believe that commerce is rapidly shifting from offline to online.
These buyers increasingly prefer the option to self-serve online by researching, contacting, buying, and managing their suppliers through a single web-based platform.
Three trends in particular that have had a substantial impact on how, when, and where B2B companies sell their products and services are:
- Innovation has made it remarkably effortless than ever for B2B companies to affordably and quickly create an online buying experience to meet their client’s needs.
- Two-thirds of B2B companies expect to stop publishing print catalogues within the next three to five years. Instead, shifting to a mobile-friendly version for all their operations.
- Before the emergence of e-commerce, most B2B buying processes were managed on paper, through a digital order entry system or over the phone. Though some old fashioned B2B customers still prefer those processes, about 60% of business buyers purchase goods for their companies online.
As businesses across the country, even around the world, grind to a halt amid the coronavirus crisis, one industry has something of a lifeline: retail. Be it the economic recessions or much-dreaded pandemic; these black swan episodes are changing the entire course of businesses.
With COVID-19, at its all-time high, the early signs of consumer behaviour shifting can be palpable. While the vast majority of retailers, with the exception of grocers and pharmacies, have temporarily closed their brick-and-mortar locations, they can still sell goods to consumers on their websites or the websites of their retail partners.
Brands that have made digital their top priority are in a better position to weather what comes next. Direct-to-consumer businesses, for one, may find themselves at an advantage. While some have expanded into physical retail, digital still represents the bulk of their business.
The success of the retail industry, then, would seem to rest firmly on the shoulders of e-commerce. And while digital has long been touted as the future of retail, the coronavirus pandemic presents an opportunity for it to flex its muscles.
“Retailers that have gone digital to defensively cover one aspect of running their business, but they’ve never thought of winning the online world, will really have to step up their game,” a word from our CEO, Hafiz Muhammad Idrees.
We ensure to help the small businesses to get on their feet and build an e-commerce ecosystem around them by meeting the expectations of our every client. We not only build an e-commerce website, but we also ensure that we execute just the right amount of work, at the right time, at the right place.
So, if you’re planning to hop on to the train of success, you would need some help to reach to the destination and who can help you better than Pakistan’s leading Magento agency – RLTSquare.