E Commerce growth in Pakistan, stunning report

E Commerce growth in Pakistan, stunning report

ISLAMABAD - Pakistan, with exponential growth in e-commerce activities over past few years, has witnessed Rs40.1 billion sales of local and international e-commerce merchants in year 2018.

An encouraging growth of 93.7 per cent has been registered in e-commerce activities as sale was Rs20.7 billion in Fiscal Year 2017. Lured by lower transaction costs, convenience and expanding internet penetration, both enterprises and consumers have started shifting their transactions online.

Thus far, business-to-consumer (B2C) side of e-commerce has been main beneficiary, though investments are underway to kick start business-to-business (B2B) e-commerce on a large scale as well.

As per State Bank of Pakistan data, the sale data of e-commerce only covers transactions made via digital channels (credit/debit cards, interbank funds transfer (IBFT), prepaid cards, and mobile wallets).

“If we go by market estimates, the share of digital payments is about 40 percent in total e-commerce transactions by value. For FY-2019 and FY-2020, a YoY increase of 25 per cent in digital sales is expected,” a financial services experts said on Sunday.

This is important to note, market estimates put share of postpaid Cash on Delivery (COD) settlements at around 80 to 90 per cent of total volume, and about 60 per cent of total value of e-commerce in Pakistan. The extrapolating accordingly, the figures for total e-commerce activity in FY-2017 and FY-2018 may have touched Rs51.8 billion and Rs. 99.3 billion respectively. The expert said digitization of commercial activities holds potential to reduce transactional costs for businesses and consumers. A key enabler of this phenomenon is the concept of disintermediation and reintermediation.

A conventional exchange would involve multiple agents such as producers, transporters, wholesalers, retailers, and consumers. E-commerce, however, allows possibility to bypass middle parties, thereby “disintermediating” the process and allowing direct dealing between a buyer and a supplier.

He said in Pakistan, leading producers of apparel, smartphone, food, and electronics industries now have a one-to-many online “e-retailing” channel in place. However, the more popular and established model of e-commerce is the online marketplace system.

Online marketplaces are platforms that allow transactions and dealings between multiple buyers and sellers. Reducing search and contractual costs for the parties due to computerized systems and common digital infrastructure, they help increase efficiency by allowing swift transactions and providing co-sales services such as data analytics and payment platforms.

In other words, the expert said they become new intermediaries between producers and customers, except this time the “reintermediation” results in an overall improved experience for the parties involved. He said in Pakistan, most of the major e-commerce players are either online marketplaces for goods-such as Shophive, Daraz.pk (for consumer electronics and apparel, etc.), and FoodPanda (for food delivery)-or online marketplaces for services via immediate delivery -like the ride -hailing platforms Careem and Uber. Then there are online information and financial intermediaries -or infomediaries, as they are often called –

like PakWheels (for automobile sale and purchase), Rozee.pk (job hunting and recruitment), and Zameen.Pk (real estate business). These channels serve to fill information gaps and mostly earn profits through advertisements, contract making, and commission fees. - APP