The growth of globalisation and information technology has opened new avenues for businesses and entrepreneurs to develop and deliver goods and services in less time with efficiency.

This combination of technology and business has led to the emergence of e-commerce where manufacturers, distributors and consumers are connected through the internet to buy and sell various products across the world.

Global e-commerce giants like Amazon, Alibaba, eBay and Zalando have successfully established their presence in international markets.

However, in spite of its global appeal and massive growth, this sector is not emerging as a large industry player in Pakistan.

As every market and its participants have unique characteristics, there are several economic, social and cultural reasons behind the slow growth and less acceptance of e-commerce businesses here.

The first reason is the cultural aspects of household shopping in Pakistan where the first choice for consumers is the traditional retail markets and emerging of new cash and carry model stores.

E-commerce websites should keep in mind that it’s ethical practices, fair pricing and efficient delivery that win the hearts of consumers

In the absence of other cultural activities and entrainment events, the shopping presents an escape from the daily routine and is an excuse for outdoor enjoyment. The women-led consumer model in urban Pakistan prefers outdoor shopping by combining buying groceries with family-dining at restaurants.

As opposed to western consumers who have less time for visiting physicals stores, Pakistanis actually enjoy this kind of shopping by making it a family event.

Second, there is a culture of fraud and misrepresentation in our markets where sellers conceal the weaknesses of their products. The physical visit to the markets becomes a necessity for consumers to check and verify the quality and quantity of the desired product.

This has been evident in several online shopping cases where colour, taste, size, shape, design or form of the product is different from the picture displayed on the website. The overall culture of fraudulent marketing practices of the Pakistani businesses has also affected the trust level of consumers on e-commerce sites.

Third, there is still a lack of deep discounts on online sites. Globally, large e-commerce players have achieved growth by offering high discounts to their customers.

Moreover, discounted prices displayed by some online sites are another form of distortion as even these discounted rates are higher than average prices offered by traditional retailers.

The promise of efficiency in delivery and distribution through e-commerce business model should be reflected in their lower prices for consumers.

The fourth reason is a lack of offering non-branded and second-hand products which consume the major part of family budgets in Pakistan.

As Pakistan has low per-capita income and high inflation, local markets are filled with low-priced, non-branded grocery and household items. But e-commerce websites have yet to explore this segment on a large scale.

The fifth reason why e-commerce has failed to gain widespread acceptance is online sites’ sole focus on urban upper-middle class consumers who are just one segment of the overall consumer base.

The urban lower-middle-class, rural consumers, industrial consumers, retailers, government procurement bodies, etc are other market segments who are not actively considered while developing new product.

Moreover, the logistics operations of existing e-commerce businesses are urban-centric and ignore the rural consumers who constitute the 60 per cent of the population.

In brief, online sellers should focus on these social, cultural and economic issues and develop product offering which are suitable and affordable for local markets and consumers.

Ideally, e-commerce businesses should work as wholesale establishments aligning themselves with local wholesale markets offering higher discounts on large purchases.

Like every business, the managers of e-commerce websites should keep in mind that it’s the trust of consumers and ethical practices of businesses with respect to the fair pricing, acceptable quality, no hidden charges and efficient delivery that win the hearts of consumers.

Published in Dawn, The Business and Finance Weekly, August 14th, 2017



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