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Ecommerce

Ecommerce in Pakistan likely to cross USD 1 bln in 2018

Monday 19 March 2018 | 10:27 AM CET

The ecommerce in Pakistan is expected to cross USD 1 billion in the fiscal year 2017-18, much earlier than previous estimates.

Propelled by the increase in broadband penetration as well as a rise in the number of online payment merchants, the six-month data of the central bank suggests that Pakistan will cross the threshold in FY18, two years ahead of earlier projections.

According to market practices, more than four out of five orders have been reported to be cash on delivery. Based on this assumption, total ecommerce sales during the first two quarters of the fiscal year 2017-2018 have already reached USD 1 billion.

Prepayment sales during the previous fiscal year amounted to USD 153.6 million. During the first half of the current fiscal, sales of almost USD 150 million have been made, according to the Payment System Review published by the State Bank of Pakistan (SBP).

Based on these numbers, half-yearly prepayment sales have already surpassed 95% of total prepayment sales during FY17.

Broadband penetration and number of online payment merchants have both witnessed a massive increase in the fiscal year 2017-2018. The number of subscriptions has increased from 44.5 million to 52 million subscribers while the number of merchants has gone up from 571 to 905 by January 2018.

Higher smartphone and Internet penetration coupled with an increased number of online payment merchants expand both the total serviceable market of customers and the availability of online purchases.

However, according to market research portal Statista, Pakistan’s ecommerce sales amounted to USD 622 million in 2017 compared to India’s USD 20.05 billion and China’s USD 1.2 trillion. In relative terms too, both India and China outpace Pakistan with ecommerce sales as a percentage of country retail sales being 1.85% and 21.19%, respectively, compared to Pakistan’s 0.34%.

This gap may be explained by the delayed availability of mobile broadband services for the relatively small size of the ecommerce sector, rather than deficiencies on part of ecommerce firms.

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