Although it has not fully kept pace with the global expansion of cross-border trade, borderless business, and international online retail, the future of e-commerce in Pakistan has grown vibrantly and robustly as a result of rising internet usage, expanding mobile connectivity, and rising digitalization in the face of sectoral difficulties.
However, the current issues have affected the sector significantly enough to pressure e-commerce sales. The purchasing power of the general public has been drastically reduced by soaring inflation and currency devaluation, a phenomenon known as demand destruction. Additionally, VC financing for e-commerce firms has begun to decline.
This tendency is highlighted in a recent study by Data Darbar and Alphaventure titled “State of B2C E-commerce In Pakistan,” which also explores the sector’s trends, weaknesses, and possibilities. According to the report’s data, Pakistan is the 47th-largest market for e-commerce, with $6.4 billion in projected revenue for 2023.
E-commerce In Pakistan 2023
The future of e-commerce in Pakistan with electronics and media (34%), furniture and appliances (29%), and fashion (20%) are the three industries that would dominate this industry. However, due to currency slippages and a dim outlook for GDP growth, its estimated 5-year CAGR of roughly 6% is lower than the rise experienced over the previous five years.
Despite its rapid expansion in recent years, e-commerce in Pakistan is still a small industry compared to comparable nations like Bangladesh, Egypt, Indonesia, the Philippines, and the Philippines.
With a GDP contribution of just over 1.5 percent, the E-commerce market size is the smallest among comparable countries in absolute and relative terms. A flaw in the comparison is that it only considers card-based e-commerce transactions and ignores IBFT payments.
Regarding investment in the industry, the report makes another important observation. The number of investment rounds by e-commerce firms increased dramatically between 2019 and 2022; despite the current recession, the funding is centred on B2B e-commerce rather than B2C e-commerce.
Additionally, while the average ticket amount of a digitally paid transaction has increased in 2023 from its early 2022 lows, it still lags well below the peak reached in 2017, which was around Rs. 12,000.
Additionally, it is claimed that the recent rebound in 2023 compared to 2022 results from the impact of inflation because fewer transactions are being made despite higher throughput.