Pakistan e-commerce giant says online sales surged through coronavirus lockdowns

ISLAMABAD: Pakistan’s e-commerce and digital economy has registered a huge boost in sales during the coronavirus pandemic as shoppers’ physical mobility is limited, Pakistan’s largest online marketplace said on Sunday.

In recent years, the country has tried to expand the digitization of its economy through promoting online businesses in a bid to boost exports and create job opportunities for young people. 

But it is coronavirus-related containment measures that seem to be bringing in the digital upheaval Pakistan’s economy has long been aiming for.

“We have received an overwhelming response… our data shows that online orders have grown by nine times [since March],” Muhammad Ammar Hassan, chief marketing officer at Daraz.pk, told Arab News.

Daraz.pk, owned by international e-commerce giant Alibaba, is Pakistan’s largest online shopping store with over seven million products available to order online, more than 30,000 sellers and 500 different brands registered with the platform. Additionally, 300 Pakistani businesses are also registered to export different items to the international market.

“We are getting hundred percent year on year growth in each item … and this has even increased since March due to the coronavirus,” Hassan said.

However, he added a low number of bank transaction accounts were a major hurdle in digital marketing and online businesses in Pakistan.

The increase in online transactions comes despite only 21 percent of Pakistani adults possessing transaction accounts in a country dominated by a cash economy.

Of this number, a minuscule seven percent of account holders are women, according to central bank figures from November last year. 

Pakistan’s state bank claims that migration to electronic payments will stimulate consumption and trade, helping the country’s economy by as much as seven percent, creating four million jobs and boosting GDP by $36 billion by 2025.

Although the digital industry remains in its infancy stage in Pakistan, there has been a steady rise in e-commerce transactions and in the number of registered e-commerce merchants. Sales of local and international e-commerce merchants in Pakistan have increased to Rs40.1 billion in 2018 from Rs20.7 billion in 2017, according to the Ministry of Commerce.

“These figures do not include all the post-paid, cash-on-delivery transactions which account for 60 percent of the total value of e-commerce in Pakistan,” Aisha Humera Moriani, joint-secretary at the Ministry of Commerce, told Arab News.

The government is also developing an international payment gateway that will be integrated with other online payment companies, like PayPal, to facilitate incoming payments to boost exports and facilitate freelancers.

“COVID-19 has pushed back development of the payment gateway, but we will be trying to roll it out as soon as possible,” Shabahat Ali Shah, chief executive officer at the National Information Technology Board, told Arab News.

Businessmen said that the encouraging online sales figures would grow further if the government offered tax incentives and ensured regulation for Pakistan’s e-commerce platforms, as numbers of people visiting shopping malls and retail outlets trickles to a near-halt.

“The footfall on stores and shopping malls has declined up to 80 percent after the outbreak of the coronavirus while revenue of the retail business has been reduced to only 25 percent,” Rana Tariq Mehboob, chairman for Pakistan’s Chainstore Association which represents 200 of the country’s most prominent retailers, told Arab News. 

He said that an overall 60 percent decline in sales had been registered at brick and mortar stores since March, as most shoppers switched to buying online. 

“This [online shopping] has increased drastically,” he said. 

“The majority of our revenue is from online now. The online business has grown up to 50 percent... but businesses still aren’t sustainable.”

Mehboob said many brands in his association were mulling shutting down their brick and mortar establishments after August to cut down on expenses and to focus instead on boosting their businesses online.

But the scope of online businesses, he warned, would remain limited until the state took responsibility for e-commerce.