In 2015, as Pakistans 30 millionth internet user logged on, it became clear that the

foundation for an ecommerce revolution had been laid. According to the report,
internet penetration in the country has reached 16%, while broadband subscribers
have more than doubled in the last two years.
The internet is already changing the way
connected Pakistans shop. Not only has it
opened up a new world of lower prices and
choices, it has also emerged as a wealthcreating tool for entrepreneurs.
Given the size of the Pakistan market and
growing consumerism, industry sources arent
surprised that ecommerce companies are
reporting double-digit growth. Most ecommerce ventures, particularly online retail,
are experiencing phenomenal growth with online
transactions growing by leaps and bounds every
month. said Muneeb Maayr, CEO Daraz.pk
Tariq Ahmed Saeedi business journalist, said:
Ecommerce is a force multiplier for retail.
Whatever retail does for the economy, e-commerce improves and enhances. The
primary advantages are reducing the cost of intermediation, enhancing consumer
information and choice and democratising retail. All of these would go towards
increasing choice and lowering cost for consumer.
Online ticketing and banking services are already popular, but Pakistanis are only
just dipping their feet in the e-commerce pool. Slowly, the comfort level is extending
to other products and services.
Pakistan's Internet penetration rate historically exceeded that of India until 2009. In
2009, India launched 3G and its Internet penetration sky-rocketed. The same hockey
stick growth took place in Sri Lanka's after its 3G launch in 2006. With Pakistan's
long awaited entry into the 3G club a few months ago, there will be a similar burst
of Internet accessibility which will further catapult online purchases.
For the first time in the country's history, we are seeing online brands deploying
significant advertising budgets for mainstream media advertising. Deep pocketed
general classifieds sites like OLX, funded by the South African mega media group
Naspers, and Asani, a Schibsted funded company from Norway, have embarked in
our online industry's first media war with ads competing for our eyeballs. Rocket
Internet, which runs Daraz and Kaymu in globally, covers more than 1.5 billion
people in total, and 300 million Internet users. Daraz and Kaymu are well funded
and will be pouring capital into the Pakistani e-commerce market in a magnitude not
seen here before. Several other Pakistani online players will be launching their TV
ads in the coming months, giving new credibility to the online medium and ecommerce.

All of these developments will lead to a rapid increase in trust as first time online
shoppers experience e-commerce and generate acceptance through word-of-mouth.
The benefits are clear to consumers
convenience, lower prices and price
comparisons.As Nadia Patel Gangjee said:
Customer service is the key. If you can build a
customer-centric ecommerce company in
Pakistan that provides a Sheops -like experience,
you will have a major edge over other
ecommerce businesses.
The rise of smartphones, secure transaction
gateways, banks going online with a vengeance
and the easy issue of credit and debit cards have
aided ecommerce.
All this has attracted investors in a big way; in 2015, the sector received
investments of more than $1.2 billion.
Globally, Kaymu covers more than 1 billion
people in total, and 250 million Internet users
Out of the above mentioned 250 million
internet users, approximately 68.39% have a
Facebook account. An approximate of 2.15% of
total Facebook users in the countries with
Kaymu's presence have liked Kaymu on
Facebook. Average Internet penetration rate is
29.14% (vs 76.15% in European Union)
While the opportunities are myriad, so are the
challenges. Foremost among them is finding a
way to grow the customer base. What is
needed, said industry sources, is a quantum
leap - getting at least 25% of internet users to start transacting online from the
present 6%-8%.
Logistics timely deliveries, ensuring against damage during shipments, return of
products and reversal of faulty transactions are a problem too, as is the poor
bandwidth and unreliable internet connections.
English is the dominant language of e-commerce, but only 18% (estimated) of the
population speaks it. As the internet adapts and assimilates different languages, the
industry will have to follow suit to ensure its customer base expands.
The sizeable investments, however, are allowing Pakistanies firms to build delivery
channels and devise payment systems. Cash on delivery, for instance, is the
preferred payment option in Pakistan and will remain so until consumers feel secure
about parting with their credit card numbers online. All leading players have

introduced this option. The industry is now betting on Pakistans young consumers
more than half the population is under 25 years of age and more than 65% under
35 years to push growth.
Growth of e-commerce in Pakistan
E-commerce in Pakistan is still nascent, but it is important for developing countries
like Pakistan.
The opportunities for ecommerce players are many rapid urbanization and rising
literacy rates, rapidly growing internet user population, a business model, it appeals
to the value-minded Pakistanis mindset, which is about getting the best value for
money spent, said Nelson DSouza, general manager, Fundsupermart.com, one of
Asias largest distributor of mutual funds online. Around the world, e-commerce has
brought in bargain hunting, which is common to middle classes around the world.
The success of Daraz and Kaymu shows that ecommerce is here to stay.
At present, travel leads the pack among ecommerce segments, flourishing on the back
of growing disposable incomes and an
internet-savvy urban population. However,
other segments such as retail, classifieds,
14%
jobs and downloads are doing well too.

Penetration % of Population

Pakistan

35%

Mobile commerce, which is only just India

being
SriLanka
introduced in Pakistan following the boom
in
Asia
telephone, could prove to be a stable
29%
complement
ecommerce.

Zishan Haider, a serial entrepreneur who

founded Q Mobile, a mobile commerce
22%
consultancy, believes that the shift is already
happening. His definition of mobile
commerce includes iPads and tablets, apart from cellphones. There are more and
more Android and iOS apps today in India than ever before. Most of our clients now
have a dedicated smart apps budget, he said. I am highly optimistic that QMobile
has a large customer base in rural Pakistan, which accounts for more than 65% of
the population. It entered the smartphone segment relatively recently.
The Minister for Commerce estimated that Pakistans ecommerce market is growing
72% and 10% exponential growth in e-commerce transactions for each passing
quarter.

Shayaan Tahir, Founder and CEO of local e-commerce giant Homeshopping.pk,

which has partnered with digital agency Creative Chaos to form HSN Ventures.
Currently valued at over $60 million, the countrys e-commerce sector is doubling in
size every year that is, it is growing at a compound annual growth rate (CAGR) of

over 100%. The industry analysts predict this trend (rate) will continue during the
next three to five years and help the sector surpass the $1 billion milestone in 2020.
Now a fully-owned subsidiary of HSN Ventures, Hompeshopping.pk is looking to fully
capitalize on these growth projections. HSN Ventures provides us the platform to
scale our business and operations for the growth that Pakistan is expected to see in
the next five years, Tahir said.
Though still in the 12% range, the broadband penetration (number of internet
connections per population size) is the real driver for the recent growth in ecommerce.
Since the rollout of 3G, which started in mid-2014, Pakistan has been adding more
than one million new users to its mobile Internet base every month. The number of
broadband users in the country skyrocketed to 23 million at the end of October,
2015, up from less than 4.7 million a year ago.
Third-generation (3G) [mobile Internet technology] is reaching remote areas and
adding new Internet users thus, boosting our traffic, Tahir of Homeshopping.pk
told The Express Tribune recently, adding 50% of their traffic is now coming from
mobile phone platform.
While it is expected that travel will remain the dominant sector, e-tailing and digital
downloads will probably grow at a faster rate.
Home Internet usage in Pakistan grew 16%. The proportion of households in the
developing world with Internet access has increased from 31.5% at the end of 2014
to over 34.1% a year later still well short of the Broadband Commission target of
40% by 2015.
The average value for Pakistan during that period was 5.05 percent with
a minumum of 0 percent in 1990 and a maximum of 13.8 percent in 2014.

Future of E Commerce Business in Pakistan

The future is certainly going to show an upward trajectory competition will heat
up, more players will come in and then there will be a consolidation in the market,
Said Engr. Khurram Dastgir Khan
A new breed of aggregators will arise for customers to visualize the multiple deals
available; expect a new business model too.
Pakistan, although a late entrant to the world of e-commerce, has recently
recorded a massive rise in online shopping trends and other e-commerce
businesses. Such exponential growth trends over the past few years with US$30
million being spent on online purchases currently depict a highly positive picture
for the future and the size of Pakistans e-commerce market is expected to reach
over US$600 million by 2017.
With many new online ventures springing up rapidly and existing businesses
recording unprecedented growth rates, there is still a lot that needs to be done to
reach the true e-commerce potential of the country and compete with other big
players of the region. Several factors are responsible for drastically changing
shopping trends over time and driving the growth of e-commerce in Pakistan.
One of the most important factors in the equation is the rate of internet penetration
in Pakistan. Pakistans internet enabled population is limited to around 30 million
users today. This, however, is expected to rise up to 56 million users by 2019said
By Junaid Ahmad.
Source: http://tribune.com.pk/story/975430/the-encouraging-future-of-e-commercein-pakistan/