Pakistani retailers must tap into potential of online shoppers
According to data provided by We Are Social, a global digital rankings organization, the number of internet users in Pakistan crossed the 45 million mark this year with the figure expected to go beyond 50 million by the end of 2018, thereby placing Pakistan in the list of the top 25 countries with the most number of people online.
This is a significant increase and one that cannot be overlooked, especially since, in the year 2000, the country had only 150,000 people online, which was less than one per cent of its population back then. Today, 22 per cent of the more than 200 million Pakistanis are logged on.
That's not all.
At least 152 million Pakistanis have access to mobile phones, of which 59 million are subscribed to a 3G/4G network and more than two-thirds have internet access, according to statistics provided by the Pakistan Telecommunications Authority.
Delving deeper into the data, one realizes that a major activity that’s keeping the tens of millions of Pakistanis glued to their mobile phone screens is online shopping.
With a large population and a sizeable consumer market to boast, for retailers and merchants to tap into the numbers and set up shops online was inevitable. According to data provided by the State Bank of Pakistan (SBP), by the end of the fiscal year in June 2018, more than 1,000 local merchants had registered with the country’s banks, maintaining e-commerce accounts to bill their online shopping orders. Online shoppers in Pakistan can opt for either cash-on-delivery or through direct digital payments.
According to data provided by the State Bank of Pakistan (SBP), by the end of the fiscal year in June 2018, more than 1,000 local merchants had registered with the country’s banks, maintaining e-commerce accounts to bill their online shopping orders.
According to the SBP, 3.4 million online shopping transactions worth Rs18.7 billion were registered in the last fiscal year, leading to an accelerated growth of 183 per cent as compared to the previous fiscal year. Significantly, these online transactions were in addition to 6.8 million others which were carried out using credit cards, debit cards and pre-paid cards and clocked Rs39.7 billion in total. Bottom line? Pakistanis placed nearly 10 million online shopping orders worth Rs60 billion between July 2017 and June 2018.
So, what are Pakistanis buying in cyberspace which they are unable to find in stores made from bricks and mortar? A quick scan of the top 10 most popular online retailers -- ranked in June 2018 by Pro Pakistani, a portal that tracks digital and telecom developments in the country -- showed that most consumers were hungry for lifestyle products; with apparel, cosmetics, mobile phones, books, furniture and even groceries now delivered at the click of a button.
Such has been the growth of online shopping in Pakistan that Alibaba, the global e-commerce behemoth valued at more than $500 billion, purchased Daraz, Pakistan’s largest online retailer in May 2018 for an undisclosed sum but rumored to be around $500 million. Daraz showcases more than 500 brands from more than 30,000 retailers. In 2016, Daraz became the first Pakistani online retailer to rake up Rs1 billion in single day sales, while in 2017, its Black Friday single-day sale topped Rs3 billion. It now takes orders from several South Asian countries.
The growth potential of Pakistan’s e-commerce market is far from exhausted, though. The size is expected to cross the $1 billion annual mark by 2020 or even earlier. An issue that is blocking it from going beyond the $1 billion mark is in the form of regulations relating to the framework for digital payments, so as to include a global payment systems such as PayPal. These regulations have already been devised and approved by the SBP but are not yet operational due to a change of government in Pakistan.
An overhaul of the e-commerce policy framework for changing online merchant spaces in Pakistan is currently underway and could pave the way for credible international players to also enter the burgeoning e-commerce market and improve the online shopping experience.
– Adnan Rehmat is a Pakistan-based journalist, researcher and analyst with interests in politics, media, development and science. Twitter: @adnanrehmat1