Scope, challenges and future of e-Commerce in Pakistan
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. 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.
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.
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.
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. 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 reliable sources, the top three Pakistan fashion brands are generating half a million dollars with rapid growth in sales and revenue.
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.
—The writer is e-Commerce Expert and Chief Operating Officer at Urtasker.