It all started with battering goats for a cow; trade these days happen at the most sophisticated levels and forms. Retailing became the most efficient way for individuals to buy goods and services they need. As the world is evolving, e-commerce has become an emerging method to trade. E-Commerce uses the internet to buy goods or services without consumers going to the actual marketplace. E-Commerce is on the rise in Pakistan, and this blog looks into how it impacts the retail sector.
State of e-commerce and its Impacts on Retail in Pakistan
In the past few years, E-Commerce has risen in Pakistan. With facilities like Daraz easy paisa, more and more consumers want to shop online. The present pandemic made E-Commerce an even more of a viable option. Many people participated in e-Kurbani the last two Eid ul Adha, and small retailers created WhatsApp accounts to take orders. The share of online purchases in a study conducted in 2019 identified Punjab as having 55% off share in online purchases. Sindh follows with 36%, then KP with 5% Balochistan with 2% and AJK with 2%. Karachi has the highest share among cities in e-commerce sales.
Though these statistics and trends show an excellent picture for E-Commerce in Pakistan, it faces some challenges. First, Pakistan does not have PayPal, and many Pakistani online suppliers cannot take international orders. Pakistan does not have an Amazon service in the country, which makes the purchase of books difficult. However, a positive point for this shortfall is that many local bookstores have become large online shops. Other than that, most of the online shops in the country and multinational with non-native owners. Alibaba’s Jack ma owns the Daraz, for instance. Internet availability and the digital divide are some key issues as well.
Impacts of e-commerce on Retail: What do studies say?
Many studies have assessed the impact of e-commerce on retail. One study compiling literature results on this topic found that despite the fear of e-commerce it provides an opportunity to assess retailers’ behaviour. It found that adopting e-commerce retail business-to-business relations is likely to be impacted than business-to-consumer relations. Large retailers usually embrace e-commerce and benefit from it. Retailers also need to access consumer reactions to e-commerce, which they usually ignore. Retailers have to come up with better strategies to organized a floor space.
Another study found out that there is much competition amongst retailers and online shops to provide information about the product to the consumer. Now consumers see information online and then go to the retailer for purchase, and many salespeople cannot make commission because of that. Another study conducted in Wales found that many retailers failed E-Commerce because they did not capitalize on its benefits. So it is more about how retailers react to e-commerce than e-commerce that defines their success or failure. Finally, a study conducted in Slovakia found that most people would prefer to go into shops for purchase so the retail industry will not die because of e-commerce. In short, most studies show that e-commerce is an opportunity and not a threat to the retail sector.
The Way Forward: Riding the Tide
The truth remains that retailers cannot change the world’s fate, which is rapidly moving on the tide of technology. If Pakistan wants to grow like other economies, it must bring modern and technological solutions to its business environment. Many retailers in the country have already started using e-commerce to boost their sales. One of the best examples is Pakistan’s clothing industry. These days most clothing brands could be found online, and their service delivery is quite efficient. These retailers, especially those that target women, have realized a growing awareness and education in women, who are now more financially independent. However, women can be restricted to go outside or too tired to go out with their other responsibilities. Therefore, these retailers have become excellent at online sales by giving discounts; they have boosted their sales revenue. It is advised that other retailers must follow this precedent. It is best if the retailers ride the tide of e-commerce instead of avoiding it.
In a nutshell, E-Commerce can be a massive opportunity for retailers in Pakistan. They can boost their sales using e-commerce techniques and also improve efficiency in their business-to-business relations. In the clothing sector, retailers are already doing it. However, internet connectivity is not present throughout the country, which can be a challenge for many retailers to grow. Nevertheless, locals have found solutions, and they are using WhatsApp to communicate with the consumer and take orders. The future of e-commerce in the country is bright, and retailers must adapt it to ride the tide.
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Bakos, Y., Lucas Jr, H. C., Oh, W., Simon, G., Viswanathan, S., & Weber, B. W. (2005). The impact of e-commerce on competition in the retail brokerage industry. Information Systems Research, 16(4), 352-371.
Lewis, R., & Cockrill, A. (2002). Going global—remaining local: The impact of e-commerce on small retail firms in Wales. International journal of information management, 22(3), 195-209.
Javed, A. (2020). Prospects and Problems for E-commerce in Pakistan. Asian Journal of Economics, Finance and Management, 131-139.
What is the state of e-commerce in Pakistan, and How does e-commerce impact retail in Pakistan?
What does the present literature say about the impact of e-commerce on retail?
What is the way forward for the retail sector in dealing with threats and opportunities provided by e-commerce?
E-commerce is growing in Pakistan, and the pandemic provided many retailers the opportunity to go online.
E-commerce is more of an opportunity than a threat to the retail sector.
Pakistani retailers should ride the tide and use e-commerce to boost their sales.