Jumping onto e-commerce bandwagon

LAHORE: Despite considerable economic growth due to the easy market access in the post-pandemic scenario, e-commerce in Pakistan still remains far below its potential, market players and e-retailers said.

The digital economy boomed during the Covid-19 crisis. As people embraced social distancing, they turned to online shopping more than ever before.

The market share of global online sales in 2021 hit 19.5 per cent compared to 13.9 per cent in 2019 — a 45 per cent increase in two years.

As per the State Bank of Pakistan (SBP), the number of registered e-commerce merchants in Pakistan jumped to 3,003 in 2020-21 from 1,707 in 2019-20 — a healthy increase of 76 per cent. As entrepreneurs ventured online businesses, the number of registered vendors has now crossed the 7,000-mark.

“E-commerce is gaining popularity in the post-Covid scenario. However, online sales in Pakistan are far less than the other countries in the region,” said an entrepreneur.

“Online sales in India are 10 per cent, equal to the United States. The share of e-commerce in Pakistan is less than two per cent.”

A big country like Pakistan is now trading just around $4 billion annually from the global e-commerce market worth trillions of dollars.

Interestingly, e-commerce giant Amazon’s one week’s sales volume is equal to Pakistan’s annual exports. From 50 to 70 per cent of the textile products sold on Amazon.com are sourced from Pakistan. The question is why exporters are stuck to the business-to-business model when they can earn more through the business-to-consumer model of e-commerce.

As per experts, there is a huge demand for Pakistani textile products, lamps, sports goods, surgical instruments, cosmetics, sunglasses and mobile phone accessories in the world. The business-to-consumer model of e-commerce is a perfect option to increase exports and earn the much-needed foreign exchange.

Experts said that the government can boost online businesses by promoting online payment Apps such as PayPal and fast internet facility. It can also accelerate the growth by offering tax relief for startups, setting up digital consumer courts and encouraging youth to take part in economic development of the country.

The most competitive sector in Pakistan is quick commerce/groceries where Foodpanda and Airlift are the leading players. Major brands like Carrefour, Al-Fatah, Metro and startups like Cheetah and Bykea are using different models.

Daraz is the biggest player which faces little competition from any established entity. Now owned by Alibbaba, Daraz has got the status of a premier e-commerce service with endless selection and quick delivery.

Saqib Azhar, Chief Executive Officer and Co-founder of Enablers, said that e-commerce is a big global industry and state patronage can bring a revolutionary change.

“There is a need for raising awareness and educating youth to earn and play the due role in the progress of the country. One businessman in Sialkot and another in Faisalabad is earning more than one million monthly through e-commerce,” he said.

Bilal Mumtaz, Co-founder of Ailaj, said that the number of registered vendors has doubled in just six months.

“Online shopping has increased considerably during recent times due to Covid-19. There is considerable growth but still the volumes are far less than the potential,” said co-founder of Ailaj — a Fazal Din brand, dealing in telemedicine and online pharmacy. Ailaj was founded last year with the merger of two startups Sehat and Augmentcare, respectively dealing in online pharmacy and telemedicine.

“Most people do not trust e-commerce. That is why cash on delivery is still the preferred method for payment for the majority of online orders,” he said, adding that the share of cash on delivery in the online trade was more than 80 per cent.

Bilal Mumtaz, head of Clinical Ecosystem and Partnerships Wing of Ailaj, stressed the need of devising short- and long-term strategies for promoting e-commerce and facilitating startups. Ailaj received a $1.6 million dollar investment from the JS Group. Pakistani startups have so far attracted $350 million investment.

Mian Nauman Kabir, President of Lahore Chamber of Commerce and Industry, believes that e-commerce can help boost enterprise competitiveness and increase their share in global trade.

“This trillion-dollar industry can change the fate of the country. Luckily, we live in the age of Information Technology. Most developments taken place in this sector during the last couple of decades have changed the entire face of daily life in general and the business world in particular,” he said.

Now e-commerce has become a must thing for all the individuals living in cities and surrounding areas, he said, adding that emergence of e-commerce has paved the way for inclusive trade and economic development even in the tough times of pandemic.

He said that the entry of Amazon and Alibaba in the Pakistani market is a good omen. The development will motivate other such companies to enter the market, he said, adding that local players will focus on improving quality and service delivery.