E-commerce sector has a huge potential of thriving with the increasing internet service subscriptions and rising market penetration of smartphones in Pakistan.
Pakistan has 44 million broadband users much greater than the population of Canada, still, e-commerce industry is treasured at a sheer $100 million.
Pakistan was ranked 105th out of 137 countries on the Unctad’s B2C E-Commerce Index in 2016, that measures the keenness to engross in online commerce. Position of Pakistan has dropped as compared to rank of 86 in 2014, from now, there is need to address e-commerce issues.
E-commerce as a technology offers playing field to all. Alibaba – Chinese e-commerce giant doing pretty good business across Pakistan though having no offices in Pakistan. Wholesale and retail trade of GDP is valued at Rs2,164,404 million that is $20.54 billion approximately according to the Economic Survey of Pakistan 2016-17.
E-retailer Amazon alone has 6 times more sales than Pakistan of around $136 billion.
E-commerce has spillover benefits like online ride-sharing apps that have not only generated employment opportunities but increased customer choice with automotive sales in Pakistan.
Suzuki’s 1,000cc WagonR’s demand has surged 172% on a year-on-year basis according to a survey. That is a boon for the financing industry in Pakistan.
In Pakistan, there are 400 e-commerce merchants that are mere 0.44% of 900,000 physical retail stores.
Around 80% of e-commerce transactions in Pakistan is paid for by ‘cash on delivery’ while usage of credit/debit cards is low that is so far only 36 million (debit and credit) cards have been issued.
International payment system providers such as PayPal not functioning in Pakistan leading to difficulties in making purchases by customers and receiving payments directly into their accounts in Pakistan by IT services exporters.
Even Google does not have an office in Pakistan despite the fact it offers localized versions of YouTube, Google, Google News and Google Maps for Pakistan. This lack of interest is due to Pakistan’s strict regulatory regime.
Online marketplace providers cannot ship products directly to customers on behalf of manufacturers because if they do that, they are deemed to be the sellers themselves.
In 1996, 29 WTO members signed the Information Technology Agreement (ITA), that calls for elimination of tariffs on IT products. It has 82 participants representing 97% of the global trade in IT products.
Pakistan is not a participant of ITA yet because of customs duty collected on IT imports.
When intended to remove barriers to free trade and imports, an important principle to remember is that what goes around comes around.
The writer is a research associate at the Policy Research Institute of Market Economy. All stats and figures along with the research mentioned here belong to the author.