In recent years, Pakistan’s e-commerce industry has emerged as a beacon of opportunity. Fuelled by
growing internet penetration and a predominantly young, tech-savvy population, the sector generated
$5.2 billion in revenue in 2023. The new 2024 Pakistan E-commerce Industry Report predicts this figure
will rise to $6.7 billion by 2029, with a compound annual growth rate of 5.92 per cent.
Yet, despite these promising numbers, Pakistan’s e-commerce landscape remains in its infancy,
particularly when compared to its regional counterparts. To truly harness its potential, the country must
address systemic challenges and establish a regulatory framework that ensures fair competition while
fostering innovation and inclusivity.
E-commerce has democratised business opportunities in Pakistan. Platforms enable individuals to start
businesses with little to no upfront capital. This is particularly transformative for remote areas where
traditional retail infrastructure is lacking.
Local artisans and small manufacturers now have year-round access to nationwide markets, significantly
boosting their income. Women, too, have emerged as secondary contributors to household incomes,
while students leverage these platforms to earn supplemental income amid soaring inflation.
E-commerce could be an over $6bn industry by 2029 if the government decided to set protective policies
in place to ensure a level playing field for businesses
Furthermore, e-commerce has catalysed ancillary industries. Increased demand for local goods has
stimulated manufacturing, while logistics companies have expanded to meet the needs of online
retailers. The result? Job creation across the value chain, from delivery personnel to warehouse workers,
underscoring the sector’s role in economic activity.
From the consumer’s perspective, e-commerce has been a boon. With millions of products available at
their fingertips, buyers enjoy the convenience of exploring options, comparing prices, and maximising
savings. However, this convenience often comes at a hidden cost to the broader ecosystem.
The entry of certain e-commerce giants operating from overseas presents challenges to the
sustainability of local businesses. Platforms like Temu, while appealing to consumers with economical
prices, often rely on unfair competitive strategies, such as predatory pricing or leveraging global scale to
undercut local sellers.
These practices risk creating an uneven playing field, making it difficult for local players who have
invested heavily in infrastructure and logistics to compete. Additionally, their return policies, hindered
by the lack of on-ground operations, can lead to delays and logistical issues, potentially impacting
consumer trust — a key driver of e-commerce growth.
Pakistan’s e-commerce policy, last updated in 2019, was a commendable first step. It aimed to simplify
taxation, improve logistics, and support local entrepreneurs. However, the industry has evolved rapidly
since then, especially after Covid-19, and the policy framework has failed to keep pace. Regulatory gaps
allow certain players to operate unchecked. Without updated policies, the potential for long-term harm
to consumers and the economy looms large.
It is important to prioritise a level playing field that protects the interests of local businesses and
consumers alike. Drawing inspiration from regional successes can provide a roadmap. Initiatives like
Malaysia’s ‘Shop Malaysia Online’ campaign and Indonesia’s ‘Proud of Indonesian Products’ movement
have effectively widened the reach of micro, small, and medium enterprises (MSMEs). India’s
partnership with Amazon to enhance export capacity underscores the importance of leveraging global
platforms to boost local industries.
For Pakistan to unlock its e-commerce potential, a multi-faceted approach is essential. It is important to
update the e-commerce policy to reflect current market realities. This includes stricter regulations to
curb anti-competitive practices and ensure that international players contribute positively to the local
economy. Incentives for local sellers, such as tax relief and capacity-building programs, should also be
prioritised.
A robust digital payment infrastructure is the backbone of e-commerce. Addressing consumer concerns
about fraud and security will increase trust and drive higher adoption rates. Currently, only 18pc of
Pakistanis have ever made online purchases according to a report by the Pakistan Software Export
Board, highlighting a significant untapped market.
Local sellers and small businesses should be supported through targeted initiatives. For example,
government-backed programs could help MSMEs digitise their operations and expand their reach, as
seen in Malaysia and Singapore. These efforts would not only strengthen the domestic market but also
position Pakistani businesses for export opportunities.
Competition is vital for innovation and consumer choice. However, unchecked dominance by a few
players risks monopolising the market. Regulatory mechanisms should ensure fair competition,
particularly for platforms that have faced backlash internationally for anti-competitive practices.
For instance, Indonesia recently ordered the removal of Temu from app stores, citing the need to
protect small and medium-sized merchants. Similarly, Vietnam suspended the operations of Temu and
fast-fashion retail Shein for failing to meet government registration deadlines, a move aimed at curbing
deep discounting practices.
The future of e-commerce in Pakistan lies in fostering an ecosystem that benefits all stakeholders. This
means prioritising local sellers, investing in digital infrastructure, and creating policies that balance
consumer benefits with long-term economic sustainability. With thoughtful intervention, e-commerce
can become a cornerstone of Pakistan’s economy, driving job creation.
Source Dawn: https://www.dawn.com/news/1884748/corporate-window-pakistans-e-commerce-at-
crossroads
