Despite having relatively low internet penetration, Pakistan is already home to over 30 million active shoppers. With the new government plans to expand internet access and the number of online shoppers growing at rapid rates, the country could soon become home to one of the world’s largest e-commerce markets, according to a research report.

E-tail, still being under-penetrated below the 2 per cent mark, is largely the reason why Pakistan has flown under the global investors’ radar, RedSeer said in its research report.

“The nation is still trailing, compared with the Southeast Asian markets such as Indonesia and China at 12 per cent and 20 per cent plus online sales contribution, respectively. Fuelled by the recent funding, the Pakistan digital landscape is now set to take off, as new players are taking the market by storm,” the report noted.

An additional key trend to look out for in Pakistan is the prominent rise in Q-commerce, it said.

“Consumers in Pakistan have shown a tremendous appetite for the innovative commerce model, as evident by the massive funding taking place, which has grown at 10x levels within the short span of three years.”

Khurram Schehzad, chief executive officer of Alpha Beta Core, said that the Pakistani startups raised over $375 million in financing from the international investors in 2021 that was twice the aggregate figure for the last six years.

Prominent startups that have attracted significant foreign investment are Airlift and Bazaar, as they received $85 million and $30 million, respectively, in advanced-level Series A and Series B fund raising.Besides, QisstPay, TAG and Oraan fetched $15 million, $12 million and $3 million in initial-level seed financing.

“Underpinned by the growth of internet broadband subscribers to 110 million, e-commerce and logistics have been and will remain the most attractive sectors in 2022, as far as investment goes. Also, the e-commerce market is well over $4 billion and is expected to more than double in a couple of years, as more and more buyers go online and order home delivery. A lot of potential for fintech and logistics sectors, as well as a natural outcome of more online business are taking place,” Schehzad said.

Similar trends have historically played across both Indonesia and India; whereby, both managed to grow at 30 per cent plus levels, amid the emergence of e-commerce, while doubling the number of online shoppers on a year-on-year basis.

Yogesh Khairajani, global market strategist at Century Financial, said that Pakistan is the 37th largest e-commerce market surpassing Iran. On an annual basis, the use of the internet in Pakistan is increasing at a rapid pace.

“With a 45 per cent gain in 2021, the Pakistani e-commerce market contributed to the global growth rate of 29 per cent. E-commerce revenue continues to rise. New markets are emerging, and the current markets have the possibility for expansion,” Khairajani said.

“Limelight.pk is the largest player in the Pakistani e-commerce market. In 2021, the store’s revenue was $50 million; followed by gulahmedshop.com, which has a revenue of $48 million and khaadi.com, which has a revenue of $29 million,” he added.

Khairajani said that the e-commerce in Pakistan has huge potential, as well as space for growth.

“Pakistan’s future in e-commerce seems bright, with exponential development, thanks to its burgeoning entrepreneurial culture and steady internet presence. The e-commerce would provide the country with a sector that would assist inhabitants in working towards a national perception of wealth. As per the statistics, Pakistan’s e-commerce sector could grow 25 per cent by 2022,” he added.

A A H Soomro, an independent analyst said that the rising e-commerce sales have given new business opportunity and also means to the government to document and collect taxes.

“Similarly, giants such as foodpanda and Careem have created thousands of new jobs and enabled hundreds of new businesses,” Soomro said.

“It’s a great opportunity for Pakistan where most of the cash is out of formal system and GDP is underreported by significant chunk. With the introduction of Raast by the State Bank of Pakistan, transactions have become even frictionless,” he added.

Mohammed Shaheen, CEO of Seven Capitals, said that the Information and Communication Technology (ICT) is a potential economic growth field, which rewards creativity and innovation with small investment.

“The nation’s growth has been commendable over the years. If we look down at the digital landscape, Pakistan’s online population has grown rapidly at 68 per cent/annum from 2016 to 2019, and the internet penetration rate reached 54 per cent in 2021,” Shaheen said.

Google has been instrumental in advancing the country’s digital transformation journey in its contributions to the three areas of action. It has and continues to invest in programmes, people and partnerships to support the “Digital Pakistan Policy”, which is another reason that the nation’s digital economy will grow in future.

“To achieve digital ambitions and unleash the potential of the digital economy, the foremost role of the government must be to broaden access to high-quality mobile broadband networks, affordable services and smartphones. Fair and predictable regimes for spectrum licensing and tax are central to this, serving as the catalyst to unlock the huge growth potential, investment and societal benefits associated with a better connected, modern Pakistan that ensures no one is left behind,” he said.

Equally as critical to the efforts being made to tap into Pakistan’s e-commerce potential are the plans to tackle the pain points. In terms of payments, the market is still overwhelmingly cash-on-delivery driven.

“With many enablers emerging within the fintech and BNPL space, forecasts are for the nation to exceed 20 per cent digital payments within the coming years. Similar landscape changes are seen in logistics; whereby, Pakistan is already a major hub to some of the biggest eb2b-trucking platforms in METAP (Middle East, North Africa and Pakistan)” the RedSeer report noted.

In a latest growth push, Prime Minister Imran Khan announced a zero tax rate for freelancers in the information technology sector and assured “all-out facilitation” to the young entrepreneurs.

The announcement was made at the launch of an e-commerce portal called “National e-Tijarat Portal” in Islamabad. The prime minister expressed the hope that with the government support, the country’s IT exports can “reach $50 billion in a few years.”

PM’s Special Assistant on E-commerce Senator Aon Abbas Buppi said that the government is making efforts to take the volume of the e-commerce trade from $4 billion to $7.5 billion by the end of 2022 and $9 billion by next year. In 2021, Pakistan’s e-commerce market was worth $4 billion, while the volume of the global e-commerce market was estimated at $30 trillion in 2021, which shows the huge potential for the country, he added.

Pakistan’s technology exports cross the $2 billion mark for the first time in the country’s history in the fiscal year 2020/21. The government aims at boosting the country’s technological exports by offering more incentives to the local companies. Pakistan is the fourth fastest-growing freelance market globally.