2016 a Landmark for Online Shopping in Pakistan Says PakStyle.pk

The online shopping trend in Pakistan witnessed a sharp turn with the introduction of 3G and LTE services, further packed by reduced smartphone prices. The population of Pakistan turning towards online sources for their purchases and the encouraging figures of different industries excelling through their online portals, the future of E-commerce activities seems brighter than ever.

​The boom that the E-commerce industry has been continuously witnessing in the past few years is no hidden fact today, given the high percentage of Internet users and shoppers in the developed countries. This trend however, does not only influence the developed regions of the world, rather developing and some underdeveloped countries too are experiencing the same development, including Pakistan.

Internet Use in Pakistan

Online shopping in Pakistan, has transformed into an epidemic in the country and even though Internet penetration on an average is much lower than that of the developed regions (i.e. 29.14% in Pakistan compared to 76.15% in European Union), the figures today compared to latter years are very encouraging.

Pakistan is considered as being a late entry in the E-commerce scene, the reasons to which are diverse, however the sudden increase in its use has paved way for exponential growth in the industry with almost every company aiming to maintain its online presence. Sitting amidst two internet giants India and China, Pakistan is currently depicting exponential growth in its E-commerce industry which is expected to cross the US$600 million benchmark next year. Another reason of low internet penetration in the country is owed to concentration of users in main cities only, with the rural population still not being a part of the E-commerce industry, leaving a large population behind.

Internet Cost in Pakistan

One encouraging factor that hints on exponential growth of internet use in Pakistan is the price difference of using the internet in Pakistan. Since use of mobile phones has increased considerably so has the use of internet by the population. The comparison of average internet use cost between Pakistan and other countries of the world help in defining the future potential of internet in the country.

Developed countries are found to have a higher average internet cost with USA offering the service on an average of $48.18 p.m., while UK and Australia’s average internet cost lies at $30 and $55.81 respectively. Comparatively developing countries are found to offer this service at lower average costs with India and Turkey having an average internet cost of $18.93 and $18.17 respectively. In Pakistan the average internet cost is $35.81 which is although still higher than several neighboring countries, however as the use of Smart phone is increasing, new service providers are emerging in the already competitive market, signaling lower internet costs to be witnessed in future.

Online User Base Description

The present online user description further defines the user base in Pakistan and the extent to which online shopping or E-commerce activities have or are expected to excel in the country.

  • In terms of internet users, use of social media sites is highest in online users with 55% users being Facebook users. Also based on age groups 48% people that use internet in Pakistan are aged between 18 to 34. ​
  • ​Owing to absence of internet facilities in many parts of the country the gender division of internet users in the country is uneven with internet users divided as 70% men and 30% women. The conversion rates however surprisingly are almost even with men and women spending equally online. 
  • Geographical division of online users in Pakistan accounts to 56% of users belonging to four major cities of the country with Lahore accounting to 21% internet users with Karachi close by with 20% internet users, followed by the twin cities, Islamabad and Rawalpindi, home to 15% of the country’s internet users. Other 22% internet users belong to cities including Gujranwala, Sialkot, Multan, Faisalabad and Peshawar

Considering sectors that have experienced a boom in their online businesses, the mobile phones and consumer electronics sector is the largest growing one in Pakistan’s E-commerce industry witnessing the largest market share of 20%, followed by services sector, with the second largest group of people (18%) hunting for jobs online. Auto vehicles and computer accessories sector comes in next with 10% and 7% share, with fashion accessories, men's clothing and women's clothing purchases amounting to 6% of the E-commerce business share in Pakistan. Other sectors are also experiencing an increase in their share over time.

With more and more companies aiming customers through online ventures and the rapid out spring of new online businesses is definitely promising further rise in the trend that can simulate the high online shopping trends in the developed regions of the world. The sudden transformation of Pakistan’s population towards online shopping is attributed to several different reasons that have contributed time and again to the E-commerce growth.

Enhanced Penetration of Smartphones & Introduction of New Facilitating Services

As evident by facts and figures, the biggest contributor has been the enhanced internet penetration with 29 million internet users and 134 million cellular subscribers, 17% out of which own smartphones. The introduction of LTE and 3G and 4G services have highly propelled the internet success in the country, with subscriptions raised as high as 10.5 million altogether at the start of 2016. Decline in smartphone prices have also aided the high mobile use in the country adding up to the internet users count in the country. In terms of mobile monthly costs including in internet and other service prices, Pakistan ranks 4th in offering the cheapest monthly mobile services to customers. The cheaper and better services are expected to play their role in reaching out to a majority of population in the country that still do not have access to internet connections.

Diverse Online Payment Methods

One reason internet was not popular in Pakistan earlier on was the very low use of credit cards in the country’s economy. However with the introduction of several different online payment modes, with the likes of Cash on Delivery and non branch banking services such as Easy Paisa by Telenor, Mobicash by Mobilink, etc, shopping online is now possible for almost anyone, anywhere. Such immense and not to mention safe and secure is the network of this system that offline payments for online purchases have tripled over the years making shopping online convenient for all. Especially the Cash on Delivery option which is the favorite among all others for Pakistan’s population of internet shoppers, have succeeded in building a new level of trust between online vendors and shoppers.

Increasing Reliance and Trust on E-commerce

Even though the trust and reliance on internet shopping has enhanced through time and more and more people today prefer shopping online owing to convenience, great discounts, time saving, etc however Pakistan still has a long way to go. In terms of online shopping and purchases only 3% (almost 6 million) of the Pakistani population can be considered as credible and loyal internet shoppers.

With more and more genuine shopping websites like Daraz.pk, Kaymu.pk, PakStyle.pk etc, the percentage of shoppers is expected to rise exponentially in the near future. With lots of efforts still required to derive the best out of Pakistan’s internet opportunities, it is credible to say that the time to indulge in the online shopping scene is ripe, irrespective of whether you are a shopper or a seller marketing your products. The prospects are bright and utilized efficiently E-commerce industry may well act as the next enhancer for the country.