For the last couple of years, the word E-commerce is not alien to the people of Pakistan now. After the lockdown due to the Covid-19 Pandemic, people’s focus shifted towards using E-commerce services and became pretty famous among the masses. Since the beginning, Ecommerce has come a long way. You will find all the information about Ecommerce in the article below:
History of E-Commerce
According to the definition from Oxford Languages: “Any commercial transactions conducted electronically on the Internet.”
Let us look at the history of E-commerce and its transformation into the present form. In 1979, Michael Aldrich set up the first online shopping system. It was not as sophisticated as we see nowadays. Then, in 1981, Thomson Holidays UK was the first business-to-business online shopping system. From then onwards, more and more companies started to pour in efforts in the field of establishing online services. In 1982, France Telecom introduced Mintel to order online all across France. In 1983, the state of California passed its first Electronic Commerce Act. The next year in April of 1984, CompuServe established an Ecommerce Mall across Canada and the United States of America.
1990 was the year when Tim Berners-Leewrote the first web browser (WorldWideWeb), and soon, Book Stacks Unlimited opened a commercial website to sell books online using credit card processing. Mozilla. Netscape 1.0 came out a year later. It was a browser, but it had an SSL Certification that made all the transactions safe. Many new advancements followed, but in 1995, Jeff Bezos launched Amazon which is very popular almost all around the globe to this date. Later the same year, eBay was also launched, a very famous multinational Ecommerce company functional in more than 32 countries worldwide. In 1998, electronic postal stamps were. E-commerce grew so fast that Global Ecommerce reached 150 billion US dollars in 1999. People witnessed the dot com boom between 1995 and 2000. The Nasdaq Composite stock market index rose to 400 percent during the period of boom. In 2002, the dot com crash was also seen when the peak fell by 78%.
Because of this crash, many E-commerce companies had to shut down. Few of them, like Amazon, survived but faced a huge loss in their market capitalization. PayPal was introduced in 2000 and was acquired by eBay in 2002. In 2014, Alibaba Group had the highest Initial public offering in history, worth 25 billion US dollars. Amazon rose the ladder and, in 2015, accounted for more than half of all the E-commerce growth. A couple of years later, in 2017, the retail sales of E-commerce around the globe reached a total of 2.304 trillion US dollars which meant a 24.8% increase compared to last year.
Let us focus on the journey of E-commerce business in Pakistan. Online banking, buying e-tickets, e-trading in the stock exchange, online education, online medical consultancy, etc., are a few examples of online services used in Pakistan. The introduction of E-commerce in Pakistan dates back to 2001. Due to the ban on PayPal and the lack of any other such medium, the sellers relied mainly on Cash on Delivery or bank transfers. This created a void in the E-commerce industry which was filled in 2009 when Telenor launched Easypaisa. It is an online mobile service through which you can pay utility bills and mobile top-ups, send money (locally and internationally), and save money as it serves as a mobile account. Even though Ecommerce is now a major contributing factor to the economy of Pakistan, the road to its popularity was not smooth at all. In 2001, the first ever online shop by the name of Felicity was opened, but it was later shut down. People of Pakistan were more into shopping in brick-and-mortar shops. They were used to seeing the product before buying, touching it, and having face-to-face interaction with the shopkeeper. But when the online shop was opened, it lacked the facilities to see the product before buying or have an in-person conversation with the seller.
Hence, it did not grow in the beginning as such. This did slow the progress of Ecommerce but did not extinguish it altogether. A few more people tried their luck by opening online shops, and finally, in 2012, Rocket Internet launched three ventures by the name of Azmalo, Daraz, and FoodPanda. Almost everyone has used or at least heard about the latter two. Daraz and FoodPanda made a bit of their way into people’s lifestyles. Then Uber came. Despite all the skepticism, it did revolutionize the minds of the public. And afterward, many ventures started to sprout like Cheetay, Olx, and Careem, to name a few. Then came an online platform called Zameen.com, where people could buy, sell or rent places. After all of the progress, people eventually unconsciously turned to these platforms. This encouraged the growth of E-commerce in the country.
But all of this was happening slower when a Global Pandemic of Covid-19 erupted. Like all the world countries, Pakistan was also forced to go under lockdown to minimize the threats posed by Covid-19. The lockdown, unfortunately, proved to be a hurdle for the brick-and-mortar shops, and all types of businesses were undoubtedly affected by it. In all this chaos, Ecommerce Businesses seemed to have minimal to no effect. This lockdown made people turn to online options to buy anything as small as a nail. It is safe to say that online businesses boomed during this period and made the people of Pakistan see all the bright sides which were invisible to them before. Since then, E-commerce options have become a common way for people to live their life. Therefore, more and more people are joining the bandwagon now.
Reasons to start an Ecommerce Business in Pakistan?
Despite its late advent and slow growth in the country, Pakistan ranks 37th on the list of largest E-commerce markets, generating around 5.9 billion US dollars in the year 2021, leaving Israel and Iran behind. In the said year, Pakistan contributed 15% to the worldwide growth rate after an unbelievable increase of 45 percent in the E-commerce market. And these numbers are expected to climb more and more in the coming future. According to e-commerce DB, with a yearly growth rate of 7% between 2021 and 2025, Pakistan is expected to outperform the global average of 6% It is evident from these facts that the Pakistani E-commerce market is expected to grow further shortly. The major areas of growth can be
- Electronics and Appliances
- Personal care
It is a very welcoming field with high growth expectancy, at least for now. When anything is in its initial stages, it undoubtedly has greater potential as the market is not saturated at that point, and the competition is healthy, boosting the entrepreneurs’ morale. Therefore, with the statistics mentioned earlier, it is safe to say that the E-commerce industry will have a high growth rate soon, making it a good opportunity for people to start their businesses.
Every business, be it at a small scale or large scale, requires investment. You have to buy equipment, and raw materials, pay rent and utility bills, pay the salaries of the staff you hire, and much more. And this was all people knew before the online business came to light. People had to save a lot of money to start a small-scale business with minimal staff but still had to wait very long before starting to make any profit. On the contrary, the E-commerce industry asks for very little investment. You can start your business from home, as we all have practiced working from home during the lockdown. Working from home is not as pathetic as people make it to be. You get to be the boss of yourself. It also saves you from getting another place for the initial stages of your business and spending extra money on rent. Also, no extra expense on utility bills as well. In the beginning, you can work by yourself and save the money you otherwise had to pay for your salaries. The credit goes to lockdown because people started their small-scale businesses from home. A very basic example is a lot of people have become home chefs and use FoodPanda as a delivery service –
Just like any other business, there are some basic things that you must have before starting any E-commerce business or upgrading your business online.
- Make a thorough plan for your E-commerce business. If you have everything pre-planned, you can easily manage the risks beforehand. It also minimizes the element of surprise that may come your way in the future. Indubitably, planning everything and writing it down before starting is an important step to starting a successful business.
- To start an online business is very important to choose a name for your brand; if you are successful in choosing a name that is catchy enough to stick in the mind of the public, bingo! You are on the right track. Your brand’s name creates an image in people’s minds even before they explore you. So, put good thought into choosing the name.
- An E-commerce business means an online presence. It is vital for the success of your business that you have an online presence. This gives authenticity to your brand. Make sure you create an easy-to-use website for every kind of person. Make communication between you and the customers easy. And most importantly, secure your website from cyber attackers. Install antivirus, regularly scan for any malware, keep an eye on the traffic to your site, install two factors authentication, and have an SSL Certification. In short, keep your website secure.
- Product listing is another important factor. It helps you focus on the right product type for your business model. It presents creating a mess and avoids confusing your audience as well.
- Set up reliable payment methods. It will facilitate you and your customers as well. It is better to step up multiple payment methods like prepayment through bank transfer or mobile banking, or cash on delivery.
Sell services mean a platform through which people can sell to other businesses or customers. In Pakistan, we now have multiple sell services, i.e., Daraz, Pakwheels, Olx, Zameen.com, etc. The advantages of having such a platform reach both customers and vendors. Having multiple options just a few clicks away saves people from hassle. On the other hand, it allows vendors to reach a maximum audience, which is otherwise impossible due to geographical constraints. Let us see in detail how these platforms work.
Daraz is one of the famous platforms selling all kinds of products across Pakistan. It was initially launched by Rocket International and is now owned by Alibaba.com. There are hundreds of online stores on this platform. Anyone can run their online store on Daraz following some basic steps.
First, you must fill out the registration/sign-up form with basic information about yourself and your business. You do not have to submit any registration fee to register on Daraz. You will also be required to list all the products with their description. Then you are required to download the sell center app and log in with your credentials. And you have successfully opened your online shop with a few basic steps. The seller center app will assist you in managing the orders and customers’ queries. Once you have processed the order and packed the product, you must drop it off at the Daraz warehouse (closest to you), and your job is done. After a few days, you will receive your payment through a bank transfer. Shipping the product to your customer is not your responsibility. Daraz does this job for you. Daraz.pk provides a complete guide on how to become a seller on Daraz! It is an amazing opportunity and a fast-growing platform.
Let us take a look at customers’ perspectives. If you want to shop from Daraz, you can download the app or access the site through google. The home page has a search option where you can search for your desired products. A plethora of options will be displayed on your screen. You will see the prices provided by different vendors and the ratings given by other customers. This can help you to decide where to order. Once you click on the selected option, another page will appear with all the product features. At the end of the page, you will come across two options, i.e., Buy now if you want to buy the product straight away or Add it to your cart if you want to save it for later. When you want to order the product, the app will require basic information, including your name, address, and contact number. In the next step, you can set up your payment option. Daraz provides you with multiple payment options, which are:
- Credit card
- Daraz Wallet (which you can top up through your bank account or mobile account)
- Cash on Delivery
- Installments (For some of the products, Daraz provides installment plans to help its customers).
After selecting the payment method, the app will notify you of the expected delivery date. While staying home and with a few clicks, you have ordered a product.
Like Daraz, Olx is also an online platform that allows people to sell their goods without paying an extra penny. You can download the app or use it via google. Make an account by providing your name, email address, and other basic information. No registration fee is required. When you have to sell your goods, create an ad with basic steps. Click pictures of your product from different angles. Post them on the app with the description and the price that you demand, along with your contact number and address (It is not compulsory to give your address, you can skip this information for security concerns). This ad will be spread to all the users of Olx. Your ad will come up with others when anyone searches for the product. If the customer is interested in your product, he can contact you on the number you have provided. This has solved many problems and handed people a platform where they can sell their belongings without going from shop to shop and spending time bargaining.
Pakwheels is another example of an online selling service solely devoted to automobiles. Like Olx, anyone can sign up and create an account on the app without paying any registration fee. You can also use this platform via google. Once you have created your account, you are free to explore your options. Search for the name of your desired automobile, and you will come across all the available options on this site. You can select by comparing the specifications and price of the vehicle and can contact the seller through the number he has provided. And if you are someone who wants to sell your vehicle, all you need to do is click a few pictures of it from different angles, write the specifications, your desired price, and contact number, and upload the ad. The potential buyer will contact you. These platforms have made the job a lot easier than before.
Types of Ecommerce Businesses
There are six basic types of E-commerce Businesses which are following:
- Business to Business (B2B)
- Business to Consumer (B2C)
- Consumer to Consumer (C2C)
- Consumer to Business (C2B)
- Business to Government (B2G)
- Business to Business to Consumer (B2B2C)
Business to Business (B2B)
This model of Ecommerce Business means if you have the type of business that is meant to deal with the business sector’s requirements, then you have a Business to Business model. In this model, the major challenge you face is convincing these businesses to use your products or services. But with hard work comes benefits. And the major advantage of having this type of business is that you get orders in large quantities; therefore, more profit. Tetrapak is an example of a B2B model in Pakistan.
Business to Consumer (B2C)
This model means that you have the products or services that deal with the general public’s requirements. You spend on advertising and reaching the masses. You list your products/services on a website, and customers shop through the designed website. Blossom is a famous example of a B2C Ecommerce Business in Lahore, Pakistan.
Consumer to Consumer (C2C)
This model means that the users have direct contact with the users. No one is a professional seller, but they use an E-commerce platform to carry out their sales. The customers can buy, sell or rent out goods. These platforms need to be managed with great care to avoid any scams. A famous example of this type of E-commerce model in Pakistan is Olx.
Consumer to Business (C2B)
This model of Ecommerce Business means that freelancers work for their clients. These clients are usually big businesses, and freelancers are individual workers. Many platforms bridge the link between clients and freelancers. A famous example of the C2B model is Survey Monkey.
Business to Government (B2G)
As the name suggests, this business model means that Ecommerce Businesses provide services/products to government agencies. Usually, the government agencies put out their requirements instead of placing the order directly to the websites, and different Ecommerce Businesses bid on it. The suitor gets the order. Different projects are carried out at the local or federal level. For instance, the government says they require someone to complete gardening jobs in some parks. Different companies will bid on it, and the winner gets the job. But they have to stick strictly to the rules provided by the government.
Business to Business to Consumer (B2B2C)
This type of model has three prominent stakeholders. In simple words, a business sells its products to another business, then sells them to the general public. And the first party gets a share of the profit. Daraz is the top B2B2C example in Pakistan.
Things To Consider Before Starting An Ecommerce Business
Every business requires some resources and plans to carry it out successfully. The same is the case with E-commerce businesses. You need to put in your thoughts and make a proper plan to deal with all the potential questions and risks that may come in the future. Some of the basic things which you should consider before starting an E-commerce Business are listed below:
Before starting your Ecommerce Business, you should write down all your ideas and plans. This will give you a sense of direction and will help streamline things. Set all the rules and policies before starting the business. This will also prepare you for future problems beforehand. You should decide on all your products/services. It is fruitful if you keep the general public demand into consideration. Tools available online can help you figure out what people search for. Facebook is one such free tool. You can use this platform to figure out what is in trend nowadays.
Sourcing the Raw Material
The main goal behind sourcing the raw material before starting the business is to minimize the cost as much as possible. You should know all the areas where you can get the raw material at affordable prices. For instance, we have Shah Alam Market in Lahore, Boulton Market in Karachi, Qissa Khwani Bazar in Peshawar, etc. You can compare the prices from different vendors and then choose among them.
Platform to Start the Business: You have multiple options of where to create your online shop. You can create it on an online sell service like Daraz, or you can create your website. You can also utilize social media to create your page. Moreover, you should list your product/services thoroughly to facilitate the clients. You should create a user-friendly website for all kinds of people.
An important step in the E-commerce industry is advertisement. Because it is one of the major sources from where people can know about you, you should know about the advertising policies of different social media platforms, as they are the most promising sources. You should set the age limit of the audience you want to reach out to and boost your posts. You can also give out PR packages to influencers and ask for a shout-out in return. Many people follow them, and they are a good medium of advertisement.
How to Make a Customer
You must make a good first impression on your customers. It is a rather difficult task because, in an online space, people cannot interact with you in person. But you can still be polite with them, answer all their queries as quickly as you can, offer them discounts, and listen to their complaints if they have any. Make easy return and customer support policies. Overall make a good impression.
Delivery Service: Courier Service is another pivotal factor that contributes to any E-commerce business’s success of any E-commerce Business is Courier Service. To make a good reputation among people, their package must be delivered within time. Customers are impatient, and a delay in the delivery process can lead to a bad review. Moreover, you should compare the insurance policies, against your product, of these courier services. In addition, you should compare the delivery charges of different companies and pick the most suitable one. Following is the list of the delivery charges of different companies:
|Rate in Pkr||Size/kg||Flyer size||Tracking||Time of Delivery||cities||GST||Inter CoD||Link||Free Retry||Charges on 2nd attempt (Pkr)|
|PAKISTAN POST||30-70||0.5-1 kg||yes||3-5 days||226||13-16%||yes||yes||30-70|
|TCS||110- 250||0.5-1 kg||yes||24hr-48hr||2500||13-16%||yes||110- 250|
|CALL COURIER||110- 160||0.5-1 kg||8*12
|yes||24hr-48hr||400||13-16%||yes on website||yes||110- 160|
|leopard||180- 210||0.5-1 kg||yes||24hr-48hr||1036||13-16%||yes|
|Trax||120- 220||0.5-1 kg||13*9.5
|yes||24hr-48hr||600||13-16%||Yeson website||No (50- 100 Rs.)||120-220+18% fuel|
|movex||90- 191||0.5-1 kg||yes||24hr-48hr||230||13-16%||yes||No (80 Rs.)||
- Payment Method: Setting up multiple payment methods to facilitate your customers is better. In Pakistan, the following are some commonly used payment methods and their fee:
Easypaisa Business Account
- There are no annual or installation charges, and you will only be charged per transaction, which is tax inclusive; 1% OTC (Easypaisa token), 2% Credit & Debit Cards, and 3% Onboarding. To get onboard and utilize the gateway service, you must complete an online application and a technical integration.
- Payment settlement days against each payment method are; Daily & Instant, Credit/Debit cards: 4-5 working days, and OTC (Easypaisa token to be paid at Easypaisa shop) Day + 1 working day.
- Easypaisa Online Payment gateway offers a merchant portal where you can view your transaction history, settlement reports, and reversal reports, among other things.
HBL payment Gateway
- There are three types of fees that HBL charges to provide payment gateway services; Merchant Discount Rate which is charged on each transition up to PKR 50 and monitored by the bank, Setup Charges that are up to PKR 100,000, and Annual Maintenance Charges are up to PKR 100,000
- Onboarding, in which HBL shares the legal agreement with the merchant. He has to provide different types of details about his business. After obtaining all the required information, he is offered pricing by HBL. Once the pricing is accepted, he signs off the legal agreement and submits that to the bank.
- An implementation manager assists a merchant with the technical integration of their website or Mobile app. After the successful technical integration, the bank provides live credentials to the merchant. A Client Services Manager is also assigned to the merchant who assists him in moving forward.
- HBL Card-based payments allow E-Commerce merchants to accept payments through VISA, MasterCard, Union Pay International, and PayPal debit/credit cards. All card-based transactions are 3D secured. OTP authorizes all account-based transactions. In Multi-Currency support, the merchant can accept payments in multiple currencies (PKR, USD, EURO, GBP, and AED)
- In Recurring transactions, Cardholders allow the merchant to collect payments for goods/services on a prearranged schedule (Daily/Weekly/Monthly). It supports subscriptions and payment installments.
- Payment Method – Seamless addition of new payment methods (Credit, Debit, E-Wallets, Card-less Transactions, or Account Debits).
- Integration – Provides pre-developed Apps for common platforms Magneto & WOO Commerce. It will help merchants to integrate their website/Mobile app in a few hours. Code snippets for PHP and .Net are available to enable quick integration. Options to integrate either via APIs or by redirecting to the HBLPay gateway to process transactions.
Cash on Delivery
- As the name suggests, Cash on Delivery means the client pays the product price upon receiving it. It is collected by the delivery person of the courier service the merchant is using.
- The courier company then collects the payment. They act as the middle party and collect the money on the merchant’s behalf. They then transfer it to the merchant’s account within a few days (depending on the courier service he uses).
Prepayment vs. CoD
The two broad categories of payment are prepayment and Cash on Delivery. Put in the prepayment method, the customer pays the due amount of the service/product before utilizing it. There are multiple options through which the customer can pay in advance using Easypaisa, Jazz cash, or Bank transfers. And in Cash on Delivery, the due amount is paid upon receiving/utilizing the product/service. Let us have a comparison between these two:
|Prepayment||Cash on Delivery|
|Prepayments are processed faster||CoD takes a while in processing because of the involvement of a middle party.|
|Prepayments can be done in all circumstances such as Covid-19||CoD is risky and it can be banned in situations like the lockdown in pandemic|
|It can create a certain amount of doubt among customers because they have not yet gotten the product.||Customers are satisfied because they pay once the product is in their hand|
|It secures the seller because of having control over payment, in case the customer returns the product.||Sellers are prone to lose if the customer returns the product and refuses to pay for it.|
Customer Support Services
As mentioned above, there is no physical interaction between the customers and the sellers. It is a challenge to create an atmosphere of trust for your clients. But nothing is impossible. You can do so by creating strong Customer Support Services. The Customer Service Provider is the voice of your company. Customers will be loyal to you when they feel a sense of trust. A few things to consider before formulating your Customer Support Services are:
- You should be able to listen to your customers’ complaints and concerns attentively. Be patient with them. Regardless of the fact that they have ever shopped before or not, you should be all ears towards anyone who visits your page; if you can satisfy them, voila! You have a new customer. And in the case of existing customers, you have ensured their loyalty.
- You should always provide your customers with complete details about your products and try to come off as an easy-to-talk person.
- You should create solutions to all the potential problems that could come your way. If you encounter something you were unprepared for, be confident and assure your customer that their problem will be solved. Have a problem-solving attitude when making your Customer Support Policy.
- You should always have a positive attitude toward your customers. Ensuring you are here to help them and are not annoyed by their requests will take you and your company a long way. You should also be able to read your customers and respond to them accordingly.
Social Media Backlash
Social media has become a second home to most people around us. People usually express their views without filtering the words. If a couple of people start to express negative views about something or someone, more and more people join in, which takes the shape of a huge backlash. People running online businesses have many customers through social media, so they must be very careful about their actions and services. If you happen to be stuck in a social media backlash, you need to reconsider your policies and the quality of your services. Always take your customers’ complaints and feedback seriously and try to improve your service. Getting a backlash can be very frustrating, but you should never give up and lose your sense of confidence. Never run away from the problem; instead, acknowledge and learn from it. There is a high chance that the customer has come to you before taking this to the rest of the social media. Try to communicate with them, listen to their problems, validate the issues they have faced so far, try your best to assure them that their problem will be solved as soon as possible, and get to work.
Always try to understand the problems from the customer’s perspective and come up with a solution. This will help you get through them rather easily. The best thing to do is to apologize for the inconvenience they had to go through because of your service. A sincere apology can be very effective. After all, if you think that the issue is widespread, try to counter it with positive branding techniques. Do not target any individual specifically. Be general about it. And you will regain your place eventually. Following these steps are important if you do not want to lose your business altogether. An apology never brings you down, so apologize when you make a mistake and try to avoid spreading problems by listening to your clients in the first place. Nip the evil in the bud.
The growing E-commerce industry in Pakistan is a good omen for the country’s economy and people. Young entrepreneurs should avail this opportunity. The growth of E-commerce will generate the flow of capital in the country. The above article is a complete guide about Ecommerce in Pakistan and how you can start your setup. Put all your potential to work. It is high time for you to initiate the struggle. E-commerce allows you to be the boss of yourself, reducing expenses and having little bedding investment compared to the conventional types of businesses. With many other benefits, E-commerce is an amazing chance to work for yourself and your country.