Pakistani e-commerce sales expected to hit $1 billion in 2018

Adam Dawood, Head of Yayvo speculates that Pakistan’s e-commerce sector will cross over $1 billion mark in the running fiscal year, two years before earlier suggested projections by the State Bank of Pakistan. This healthy development comes in the wake of increased broadband penetration and the rise of online payment merchants who are pushing the annual sales of the current year to go beyond $1 billion.

According to market numbers, four out of five orders opt for cash on delivery (COD) payments. Therefore, following the assumption that 85% of e-commerce is Pakistan follows COD payments then PKR 9.3 billion of prepayment sales have already been achieved by mid-year which is 95% of the previous year’s annual prepayment sales. Moreover, in the first two quarters of the financial year, total e-commerce sales have reached PKR 65.3 billion.

Broadband penetration and online payment merchants are the two major factors that have contributed to the exceptional growth of e-commerce in the country. The number of broadband subscriptions stands at 52 million from the previous numbers of 44.5 million, whereas the number of online payment merchants has increased from 571 to 905.

Buyers now identify with the appeal of e-commerce and the ease it provides compared to the traditional shopping experience. Pakistani e-commerce platforms have been working to strengthen the relationship of trust and reliability with their customers. Secure online banking and customer service is now compelling more consumers to opt for e-commerce retail.

While the growth is encouraging for the local e-commerce sector, it still has to go a long way before it can compete with the numbers of regional countries. Compared to China and India, with their e-commerce sales standing at 21.19% and 1.85% of total sales respectively, Pakistan’s e-commerce only contributes to 0.34% of the total sales. Pakistan can compete with regional numbers only when investors start putting money in technology infrastructure and more consumers start opting for digital financial services.