For as long as one can remember, Pakistan has been stuck in a perpetual cycle of boom and busts. Ask any minister, finance bro or stock analyst masquerading as an economist the recipe to break free from this and they will tell you increasing exports is the answer. That’s also something Commerce Advisor Abdul Razak Dawood has made a key priority since the first day.
One such measure his ministry could claim credit for was getting Pakistan placed on the Amazon’s sellers’ list, which we were told would open new avenues for exports for local entrepreneurs. How many of those businesses, mostly used to business-to-business (B2B )contracts, would actually be able to position themselves in the direct-to-consumer (D2C) segment on arguably the most competitive marketplace on the planet was a different matter altogether.
There are more than 3,000 Pakistani sellers on Alibaba.com with close to 90pc of them coming from Sialkot
Meanwhile, a few thousand businesses from the country had focused their energies eastward towards Alibaba.com. In fact, Pakistan now ranks the highest in terms of paid sellers on the world’s largest B2B e-commerce platform’s Global Business. Since 2017-18, the number of Pakistani sellers on the platform has increased at a compound annual growth rate of 29 per cent, according to a presentation the company presented to a roundtable at the Board of Investment’s recent conference.
“There are more than 3,000 Pakistani sellers on Alibaba.com with close to 90pc of them coming from Sialkot,” says Mr Song Song, the company’s country manager for Pakistan. And now he wants to expand the platform’s reach to traders and businesses in other cities, especially the export-oriented ones like Faisalabad and Gujranwala, in addition to Karachi and Lahore. For that purpose, he and his team have been increasing their outreach efforts through awareness sessions at the various chambers of commerce and industries.
“Apparel is the most popular category among Pakistani sellers, followed by sports goods and surgical equipment given that the majority of our users are from Sialkot,” he shares. According to the ‘Digital B2B Outlook 2022 Pakistan’ published by Alibaba at the beginning of the year, 63pc of the sellers are in the apparel category while a total of 3.2 million listings have been made from the country so far. But how much does that translate into dollar terms? “Unfortunately even we don’t know the gross merchandise value of goods sold from the country on our platform,” Mr Song Song says.
That’s strange, isn’t it? Maybe at first. As a B2B e-commerce platform facilitating cross-border trade across hundreds of geographies, Alibaba.com is used by many buyers and sellers for discovery and information before actually negotiating the deal between themselves. “Outside China, the US and Malaysia, the transactions still take place offline so it becomes difficult for us to estimate the worth of goods sold,” the executive explains.
The reason behind that is, of course, the complicated nature of B2B payments which is made even more complex due to the cross-border nature of transactions. “It’s not like B2C where the average order value would be a few dollars. You are talking hundreds of thousands or even a million dollars per order which the current infrastructure doesn’t allow for in Pakistan. And payments are just one component of it; there’s also fulfilment, integration with customs authorities etc. That entire ecosystem needs to be built,” Mr Song Song says.
In that case, who else to build the ecosystem other than Alibaba.com — the most successful B2B e-commerce platform? “It requires huge amounts of investments as well as time. In China, it took us around five years to develop it,” he says. Before the company embarks on such an ambitious plan, it first wants to create a local presence and create more awareness among the sellers.
“We are going to set up a local entity for Alibaba.com, the first such for any of the companies of the Alibaba Group [excluding Daraz and Easypaisa as they were acquisitions], and build an on-ground team in Pakistan for functions like customer service, outreach and marketing by the end of the calendar year,” Mr SongSong shares. This is along with growing their channel partners — currently numbering 10 — who currently act as the e-commerce platform’s representatives in the country and help onboard new users and provide support to the existing ones.
Published in Dawn, The Business and Finance Weekly, March 21st, 2022