Pakistan looks towards a promising future for E-commerce
20/Sep Pakistan looks towards a promising future for E-commerce

E-commerce in Pakistan is rising rapidly at highly unlikely rates. Currently the online purchases in Pakistan stand at 30 million USD and an exponential growth is expected by the next year estimated to be 600 million USD. These figures are not just numbers one can hardly visualize but they are happening in real as more and more people gain the access to internet and become well aware with the online purchasing system. Critics are concerned with the payment methods and the lack of trust for E-commerce in Pakistan but the figures depict a potential niche that can be ripened in the near future by tech startups and rising entrepreneurs in Pakistan IT industry.

 

What is E-commerce?

 

what-is-e-commerce

Before we move any further, it is important to understand the definition of e-commerce. E-commerce in Pakistan is fairly a new term as compared to other highly competitive markets like our eternal rivals across the border and the US. However, it will be lame to compare our first chapter of the book to countries who are already standing at the 20th chapters of their IT progress. E-commerce is business done over the internet so the term e-business might as well be used for the concept. For a more precise definition,

E-commerce is the sale and purchase of goods/services or transmission of funds/data on an electronic network (the internet). These transactions can be inter-business or intra-business like customer to customer, business to customer, and business to business.

Source: Techtarget

E-commerce in Pakistan 2016

 

e-commerce-in-pakistan-2016

Even though Pakistan has entered the ecommerce industry later than the rest of the developed countries, still it is emerging as a strong player in the IT industry. With more and more startups being introduced by extensive platforms like Plan9 a venture of the Government, PlanX and educational institutes like LUMS, the talented people in the country are getting seductive opportunities to exhibit their ideas and actually execute them to practical models. The rise of IT startups gives more power to the common man in Pakistan to practice and perform electronic buying and selling.

Five Pakistani startups revolutionizing the internet 2016

The current year has seen many startups raise millions of dollars in seed funding not to forget the massive funds generated by beautyhooked, Healthwired and Patari. The year 2016 is high time for investors to take their chances on e-commerce in Pakistan. If you have done business or know anything about it, you can clearly see a huge potential gap for IT industry. The growth can be at unprecedented levels given a first degree project and successful execution by a professional web design company. At this point, the big shorts are not looking for any innovation or ideas because there is hardly any competition in several niches. We do see huge spendings in a few dominant niches like recruiting platforms by rozee and jobzee, automobile by Pakwheels, and real estate by zameen. One of the major sale and purchase platform in pakistan is OLX where people buy and sell used items to make money

However, there is much more to do in less competitive niches and areas that have not yet been touched in terms of an industry. Investors are seeing a major shift from the physical market to a virtual one and much is yet to be gained through E-commerce in Pakistan.

The vital element of the ecommerce equation is the internet penetration and we will discuss about that below.

Internet penetration and E-commerce in Pakistan

 

internet-penetration-and-e-commerce-in-pakistan

The growth of online business and increased spending of people on various platforms has been phenomenal. Pakistan has at the moment 30 million active internet users which will increase by 5 years to 58 million, accounting for a total of 28% of the population. Most of the interactions happening at social media platforms like Facebook, Twitter and instagram. Even you see different companies pitching themselves and brand campaigns running on Facebook. Fb also provides the option of running a shop at business pages to its users. This all has made the possibilities of earning through e-commerce endless in Pakistan.

Internet penetration is a major player in the flourishing of E-commerce industry

 

internet-penetration-is-a-major-player-in-the-flourishing-of-e-commerce-industry

The major driving force for increased internet access is the availability of smartphones and 3G and 4G networks. About 73% of the total Pakistani population owns a mobile and the fact that smartphones are readily available at impossibly cheap rates is making it even more easier for the IT world. We owe a great deal to China for launching smartphones for such lower prices with internet compatibility. According to statistics, there are 10.3 million 3G users in Pakistan and 68,000 LTE users. These are all the people accessing the internet and taking part in e-business. Buying stuff from the internet has  become so common that either you or at least someone you know has placed an order regardless of where you live. The fact that there are many courier services like leopard, TCS, DHL aid the  widespread delivery of these products. It is observed that the online purchases are not only made from major urban cities like Lahore, Karachi, Islamabad, but many of them are delivered to far off rural areas. The basic reason being the availability of 3G and 4G in rural areas with mobile devices.

Here is a splendid piece by ProPakistani about mobilink providing 3G service to 43 cities in Pakistan.

To conclude the internet penetration:

E-commerce in Pakistan is highly dependant upon internet penetration. Internet penetration is rising at supreme levels because of cheaper smartphones and 3G, 4G services by telecommunication companies.

The critics on E-commerce in Pakistan

 

pakistan-looks-towards-a-promising-future-for-e-commerce

Still standing on very vague areas is the payment methods for online purchases. Most of the online purchases are working on the Cash On Delivery system, 95% to be precise. Critics are concerned because no matter what COD is a compromise and not a very structured system to support an entire industry with infinite possibilities. Tech startups and companies are trying to bring in more innovative and simple solutions to be used by the common man in Pakistan.

 

We might be a few chapters behind the other IT boomed industries in the world. However, new horizons are showing as mobile wallets are being introduced, and other easy payment methods are put into practice by various telecommunication companies and banking sector. Easypay is an end-to-end payment gateway introduced by Telenor and implemented by upcoming and existing e-commerce companies like Jigar.pk. Rocket internet a german venture being a major existence in the Pakistan e-commerce also uses such payment gateways. Other significant mentions are Askari Bank, Zong, IBFT, MobiCash etc.

There is also a huge circulation of debit and credit cards and online merchant accounts which enables merchants to easily buy and deliver. UBL go green and other banks offer internet banking also know as the branchless banking which makes it possible to enhance businesses without limitations and barriers.

 

Right now, we might have COD as a major payment option people can rely upon, but in a few more years we will see a huge shift in the ecommerce industry for Pakistan.

 

Movements building trust for E-commerce in Pakistan

 

movements-building-trust-for-e-commerce-in-pakistan

The trust and reliability on e commerce is getting better as the market leaders like OLX, invest more in mainstream media and ATL advertising. Looking at Uber’s sudden rise and then careem in the transit industry, we are now wondering what the next big move the internet can make to revolutionize our lives.

 

  • FMCG also jumps on the bandwagon as Unilever partners with Daraz to deliver its beauty and personal care products.

 

  • Kaymu involving in both B2C and B2B selling also launches its mobile app to facilitate the process further.

 

  • Rocket internet, a foreign investor that works on multi dimensions like Foodpanda, Tripda and Jovago with a huge funding.

 

  • Rozee now seeing more companies entering the niche it had once established signifies there is much more to yield from the niche.

 

  • Pakwheels making significant moves and dominating the automobile industry at such a pace that it might be the future Godfather of Automobile industry in Pakistan.

 

These all major investors inclinations clearly show the trends and build trust of users on the online business. With word of mouth and mainstream media, e-commerce will soon open new doors in Pakistan.

 

Upcoming E-commerce startups Pakistan 2016

 

upcoming-e-commerce-startups-pakistan-2016

Even though, we have seen our social media newsfeed running with several posts about the few startups who made it to the heights through seed funding and entrepreneurial expeditions, there are many others in the list who are doing well and popping up around the corner without creating much hype on social media. These businesses have been careful not to boost before they actually have something but they have critically picked their niches and strategically played their cards.

  • Exportleftovers is a smart idea where they sell export leftovers through a website and convert tons of waste into nominal money.
  • Jigar is the first and the largest prank company in Pakistan, that will anonymously prank your friends or foes on your behalf and even though it might not sound real but they are making some good money by setting this trend.
  • Diaper delivery is another startup making enough of an income by delivering diapers to door. The company is currently operating in Lahore and aims to expand to other major cities of Pakistan. What sets them apart is that they are available round the clock to help you fight the trauma of the last diaper.
  • Targeting almost everyone who will get into a formal dressing, 3socks is a catchy yet successful business idea for ecommerce in Pakistan. The company provides one extra sock in a pair and works on a subscription model where you can set your preferences.

These models work perfectly well with COD and credit/debit cards but are also open to easypay and other payment methods easy for customers to use. The ideas might have started small but now they are making good money because they picked the right niche at the right time.

From larger arenas like real estate, automobile, transit and job hunt to day-to-day routine based things like personal care, hygiene, to pranks, and gifting, E-commerce in Pakistan has got it all covered and there be millions of dollars of revenue generated by the end of this fiscal year.

If you think I missed something or if you want to put in your suggestions, please comment below

Facts and stats taken from express tribune

Dania Khan
Running a household with 2 kids and an office with 20 more ;) Avid reader, passionate writer, traveler, parent and not a very good friend.

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