The Potential & Challenges for E-Commerce in Pakistan

Pakistan’s e-commerce is expected to reach a benchmark of $1 Billion in 2020 as projected by an earlier report by the Pakistan Telecommunication Authority (PTA). But the potential of Pakistan’s e-commerce is far greater than what we are observing.

Egypt is considered to have similar macroeconomic dynamics as Pakistan where the e-commerce industry is of $5bn, similarly, Iran’s e-commerce sales were of $18.5bn despite international sanctions and troubling economic conditions. This reflects that the potential of Pakistan’s e-commerce industry is far greater than current expectations of $1 Billion.

The e-commerce industry of Pakistan dates back to 2001 when Beliscity took the revolutionary initiative. Later many other players entered the market which includes Shophive, Symbios, HomeShopping & Rozee.pk.

The growth of mobile users and the internet also attracted international players and in 2010 OLX started its operations in Pakistan then came Daraz, Foodpanda, Careem, and Uber.

There are 162 million mobile users and 71 million 3G/4G subscribers in Pakistan, from which the majority is an untapped resource for the e-commerce industry. This makes the telecommunications network an important stakeholder in reaching this untapped resource by removing hurdles and solving challenges.

One of the hurdles for customers making online purchases was the payment method, exacerbated due to the lack of access to banking services. According to World Bank report out of 1,000 adults only 240 have bank accounts, which is far below than other countries, and even lesser numbers have access to debit or credit card facility.

This is where innovative ideas by Pakistan’s telecom companies helped the e-commerce sector, such as JazzCash. Such payment methods revolutionized the concept of online purchase. Now customers can pay without bank account whether they are buying online tickets from the website of Pakistan Railways, buying clothes from Al-Karam Studio or some home appliances from Daraz.

There are many other challenges faced by Pakistan’s e-commerce industry and if all stakeholders contribute by working together then it can easily cross $1 Billion in 2020.