E-commerce market expected to reach over $600m by 2017
ISLAMABAD: Although a late entrant to the world of e-commerce, Pakistan has emerged and recorded a reasonable rise in online shopping trends and other e-commerce businesses.
Such growth trends over past few years with more than $30 million being spent on online purchases currently depict a highly positive picture for future and the size of Pakistan’s e-commerce market is expected to reach over $600 million by 2017. No doubt e-commerce industry is booming throughout the region including in China where Alibaba’s e-commerce market capitalization estimated to be over $250 billion.
With many new online ventures springing up rapidly and existing businesses recording unprecedented growth rates, there is still a lot that needs to be done to reach the true e-commerce potential of the country and compete with other big players of the region.
Experts on Sunday said one of the most important factors in equation is rate of Internet penetration in Pakistan. Pakistan’s Internet enabled population is limited to around 30 million users today. This, however, is expected to rise up to 56 million users by 2019, they added.
Moreover, the experts said Pakistan’s entry into 3G and LTE services in 2014 has increased Internet accessibility and will also most likely propel the growth of online purchases. Statistics from the Pakistan Telecommunication Authority (PTA) revealed that the total number of third-generation (3G) and LTE mobile subscriptions have risen up to 24.8 million. Pakistan has now moved in era of broadband with 15% tele-density and it has great potential for proliferation.
Over the next five years, 28 percent of the country’s population is estimated to have Internet access. With increased access to the Internet and social media sites such as Twitter and Facebook, marketing trends are also rapidly changing and transforming the way opinions are now being shaped.
“This will not only transform shopping trends but also significantly impact several other e-commerce arenas, such as online job hunts, land, property and rental transactions,” said experts. Similarly, along with increased Internet penetration, 67 percent of the entire population also has access to mobile phones.
Internet-enabled smartphones have dramatically increased the ease of Internet access and made online businesses much more accessible for all. Both the rise of Internet penetration and the declining costs of smartphones have accounted for this rapid rise in smartphone usage in Pakistan. Many Chinese brands have launched sophisticated devices which has augmented mobile penetration across the lower income strata of the country.
With such easy access to the Internet via affordable smartphones, e-commerce trends in the country are expected to boom in the near future, the experts maintained. Even though Cash-on-Delivery (COD) payment methods continue to remain widely popular in Pakistan and account for more than 95 percent of online purchases, other promising initiatives such as branchless banking and Inter Bank Fund Transfer (IBFT) are also underway.
Many banks and telecom operators have already introduced the concept of branchless banking and the number of branchless banking agents facilitating offline payments for online purchases have recently tripled, making it much more convenient to transfer money in a secure environment.
In his comments on branchless banking, the PTA chairman has said, being a modern facility, it would have positive impact on gross domestic product. He said the consumers would have the most attractive benefits of keeping bank account in their pocket with advantages like low cost and fast transfers.
“The PTA is also making efforts to promote this area through holding workshops and bringing global and local insights from branchless banking industry,” he said. Online merchants now have much greater access to merchant accounts that enable them to collect payments electronically via the more than 12 million debit cards in circulation in Pakistan, he remarked.
“The future of e-commerce trends lay in the ability of online business to gain their foothold and establish trust in online shopping and e-commerce initiatives. With just three percent of the Pakistani population indulging in online shopping, several initiatives are starting with online businesses in Pakistan to reach out to their potential market, build up their credibility, and garner consumer trust,” he added.