E-commerce is everything you can relate to any transaction over the Internet. Online shopping is the most popular e-commerce activity, and many people relate to it. The buying and selling of products online are referred to as one of the activities related to e-commerce. It is definitely on the rise in Pakistan if you go through the stats about seed funding and investment in startups and IT firms during the last three years.
Fintechs like Bazaar, Nayapay, and QisstPay are doing great after getting seed funding and investments from foreign investors so as concepts like Sehat Kahani.
A quick question for my readers. Do you think these big investments can be termed hypergrowth for the e-commerce industry in Pakistan? Surely not. So what contributes to it, and what is the future?
Read on as I discuss these aspects and more in detail now.
International Scenario and Future Growth
Globally, the growth rate of e-commerce in the past 20 years stands at 13%, which translates into around 2.9 trillion dollars. These figures touched $4.5 trillion in 2021. The purchasing power is vital as foreign buyers have climbed from 15 to 21%. Approximately 25% of shopping worldwide is online, with China having the lion’s share with 440 million online consumers.
Several studies have been about the increasing 18% growth in online retail sales in Pakistan in 2018. Since then, it has been a success story for everyone as there are many ways in which
And by 2030, it is expected that 95% of all retail sales and purchases will be online. Most stores nowadays gain sales from mobile or e-commerce platforms, which will be the case for Pakistan too. We still lack digital wallets as not many people are familiar with them, and cash on delivery is still the preferred way for many Pakistanis.
Growth in the E-Commerce Sector
Pakistani e-commerce market saw a growth of 45% against the worldwide expansion of 29% in 2021. The revenues grew considerably during the last two years, especially during the COVID-19 pandemic. We saw applications like Zoom, which saw astronomical growth and became a massive hit as companies were forced to do their business online. And there was no better way to engage all the employees than through video conferencing. Online shopping also saw huge growth as business closure was behind this.
As a layman, many of us would think that the growth in the e-commerce sector can be considerably less, given that online shopping has significantly dropped as businesses have opened. But as I have discussed above, e-commerce is not just about online shopping as in the last term. That’s why startups and IT firms will be responsible for the growth in this sector.
Some Further Explanation
Regarding e-commerce in Pakistan, B2C sales are also contributing to it and digitally distributed services like travel tickets and online stores are dedicated to digital media downloads or streams. Pakistani services, like Pitari for online audio streaming and Tapmad which offers shows like Netflix, have made a mark for themselves. And online e-commerce website builders like Webx offer startups and small businesses a chance to shine.
On the international front, companies like Alibaba and Amazon reported sharp expansions in a short period. The e-commerce boom in Pakistan will likely remain upbeat as Daraz, the biggest e-commerce marketplace in Pakistan is now a subsidiary of Alibaba group. And further entry by world tech giants like PayPal and Amazon will pave the way for more opportunities and growth for e-commerce in Pakistan.
E-Commerce Sector In Hyper-Growth Mode
Prominent names in the e-commerce scene and industry pundits in Pakistan believe that the country is experiencing hypergrowth. COVID-19 acted as a catalyst in the last two years, but now the market is experiencing tremendous growth due to increased interest from foreign investors. It will be a gross injustice, not to mention the great ideas and services offered by Pakistani startups that generate investors’ interest.
Neem, an embedded finance platform, based in Karachi, is the latest in getting a seed funding of 2.5 million dollars, as announced by the company on 13th September 2022.
E-commerce is still not generating even 2% of the entire retail market of Pakistan, and it is a significant factor why every newcomer has vast potential. And with solid confidence, they can take on the big players in the market. That’s why these companies work very hard to remain in the competition. The situation is favorable, with startups and IT companies looking to make a mark for themselves, fuelling hyper-growth.
What’s Instore in the Future for eCommerce sector in Pakistan?
Pakistan is the world’s fifth-most populous country with over 220 million people and thus has a great scope to attract foreign investment and seed funding, especially for startups. Startups have to realize their potential in developing their portals in such a way that they can draw their target audience. Lack of literacy and financial constraint are two factors that stop Pakistan from becoming a regional hub.
According to the latest report, Pakistan can achieve a 25% increase in the export of IT products and services export by the end of 2022. Pakistan also has the potential to become a regional powerhouse. Local e-commerce sellers have increased by 2.6 times in the last four years. In e-commerce, payments have increased by 2.3 times.
Bottom Line
Today’s youth are happier to embrace technology as they are far more tech-savvy than their previous generation. They watch Netflix and Disney+ and order tech gadgets from Daraz or other e-commerce platforms. The future for Pakistani e-commerce is bright, and slight blemishes and the political situation may not affect it in the long term.
If you think you can add something valuable to this blog or want to ask a question, you are more than welcome. For any feedback too, please use the comments section below.
