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.
Approximately 63 per cent of Pakistan’s population is currently under the age of
30 and the total unemployment figure is estimated to reach 6.65 million during
the fiscal year 2020-21.
Moreover, according to a recent report published by the Asian Development
Bank (ADB), titled “Tackling the Covid-19 Youth Employment Crisis in Asia
and the Pacific”, more than 2.3 million Pakistani youth are at risk of losing or
have lost their jobs in case of a long term containment scenario implemented to
curtail the coronavirus spread.
The unemployment rate is set to increase by 12.6 per cent from 8.9 per cent at the
end of 2019 to 21.5 per cent and the present Covid-19 pandemic has added more
to the challenges Pakistan faces.

E-commerce in Pakistan has a huge potential for creating two million jobs and
boosting the country's GDP up to $40 billion in the next couple of years.