Can e-Commerce in Pakistan has the potential to fast-track the economy?


By Zeeshan Riaz

The technological revolution has completely transformed the outlook of human beings’ interaction and their daily lives. People and machines are interacting with each other through the internet with excessive speed, leading to globalization.
Pakistan is an emerging IT sector in which the number of mobile, internet, and computer users is continuously escalating. e-Commerce has not just changed the economic structure of Pakistan, but the whole world’s economic development has been enhanced through this sector, especially during COVID-19.
The pandemic has shifted the consumers’ behavior from offline to online shopping. Due to the worldwide lockdown during COVID-19, shoppers relied on online shopping to purchase goods. Resultantly,the revenue growth of e-Commerce multinational giants like Amazon, eBay, and Walmart got a massive boost.
Amazon became the largest e-Commerce platform worldwide with a 469 billion US dollars sales revenue in 2021. Remaining e-Commerce platforms like Walmart, eBay, and a few others also witnessed a significant boom in their sales.
Pakistan has become the 37th largest e-Commerce market worldwide, reaching an estimated 6 billion US dollars in revenue in 2021. Most of the traffic for the e-Commerce market comes from mobile web stores, and with 118.8 million internet subscribers in Pakistan, the e-Commerce market is expected to grow immensely in Pakistan. However, e-Commerce in Pakistan hasn’t reached a level where you can use digital wallets instead of cash.
Still, Pakistan cannot realize its full potential to optimize its e-Commerce system. Two factors are highly influential in promoting the E-commerce industry in Pakistan:
● Financial inclusion
● Literacy required to conduct the transaction
The most preferred digital payment method worldwide, PayPal, isn’t available in Pakistan due to multiple reasons. These are the Pakistan government’s lack of awareness to digitalize the economy and a few others. The Pakistan government needs to develop an innovative digitalized ecosystem for motivating companies like PayPal to enter their market. The entrance of PayPal in Pakistan can smoothen the transaction process within e-Commerce industry.
However, in 2021, the largest e-Commerce platform on earth, Amazon, finally opened its marketplace to new merchants from Pakistan. It’s an ample opportunity for Pakistan to scale its economic growth through E-commerce transactions and development. But there are significant challenges surrounding the sphere of Pakistan’s banking system. Pakistan’s traditional banking system should be upgraded to a digital banking system for extracting maximum e-Commerce benefits.
According to reports, nearly 95 percent of e-Commerce companies receive their payments in cash after delivery. It can create liquidity problems and need a large dedicated team to manage cash flow. Digital payments need to enter the Pakistan banking ecosystem to maximize effectiveness in the payment process. 24 percent of Pakistan’s population have active bank accounts, which increases the operational cost of e-Commerce companies.
Pakistan can increase its GDP by 36 billion US dollars and can create 4 million jobs by promoting the use of digital financial services alone.
The young population is more enthusiastic about opting for technological advancements than the old one, and e-Commerce regulation in Pakistan will generate employment for 130 million Pakistan youth in the next 30 years.
The internet penetration in Pakistan has risen rapidly with the introduction of 3G/4G services. There is a 35 percent average growth rate of internet subscribers in Pakistan every year. With the mounting number of internet users, online shoppers are more likely to increase. In 2025, the e-Commerce trade in Pakistan is expected to be enhanced by 9.1 billion US dollars. This financial influx will provide a significant push to employment opportunities, economic growth, and standard of living.
In the past two decades, Pakistan’s Information and Communication sector got massive progress, leading to the expansion of IT-enabled services. These efforts have cultivated an informed society that engages with the internet for multiple purposes (online shopping, social media interaction, and others).
Moreover, Pakistan’s educational institutes are on the front line in creating successful entrepreneurs. The students are coming out of these institutions with exceptional entrepreneurial skills to make them successful future CEOs. The awareness of the e-Commerce industry among the youth of Pakistan is rising influentially.
Pakistani shoppers are now more knowledgeable in choosing those e-Commerce platforms that offer versatile personalization features, enhancing the in-store experience and an efficient check-out system. By examining this, e-Commerce technology in Pakistan is expected to be on the way to further advancement. It will create more jobs and a successful future for Pakistan’s economy.
e-Commerce’s economic and statistical outlook in Pakistan shows the promising capability to fast-track the economy. However, there is an increasing need to switch from traditional banking to digitalized banking services to utilize the maximum benefits of the e-Commerce platform. e-Commerce development is expected to create massive employment opportunities in Pakistan, thus improving the standard of living. Moreover, the government of Pakistan should take further initiatives to enhance the e-Commerce sector if they want to attract multinational online selling platforms to enter their market. -The writer is an E-Commerce Expert and Chief Operating Officer at Urtasker