E-commerce on rise in Pakistan, says SBP

ISLAMABAD, Jan 28 (APP):Business
to consumer E-Commerce (e-B2C) is on the rise in Pakistan as 571 local
e-commerce merchants were already accepting payments through banking channels
as of end-June 2017, with cumulative annual domestic sales worth Rs 9.8
billion.
In
addition to that, transactions worth Rs 20.7 billion were carried out by
consumers on international e-commerce websites, stated State Bank of Pakistan
in its quarterly report quoting latest e-commerce data.
According
to the report, growing incomes, coupled with advancement in communication
technology and expansion of internet access and branchless banking, have been
propelling the sector forward.
Various
benefits such as comfort of shopping from home, wider selection variety,
ubiquity of 24×7 service, and interaction possibilities like reviews to make an
informed decision were the main sources of attraction to the consumers.
Businesses,
meanwhile, are venturing into digital platforms to increase their reach, the
report added.
“Additional
benefit comes from low operating costs and flexibility in inventory management
(based on feedback, recommendation, and just-in-time mechanisms) which results
in increasing margins,” the report said.
Thus,
a range of businesses has shifted to this medium to cater to the growing demand
and to remain competitive in the changing market environment, it added.
This
is an encouraging trend as it provides a potential to document transactions
that would otherwise not become part of the formal retail segment.
However,
a significant volume of transactions is carried via Cash on Delivery (COD).
Pakistan Telecommunication Authority (PTA) in its annual report for FY17
highlighted that more than ninety percent of online orders were fulfilled using
COD during the past fiscal year.
Businesses
are also hesitant to offer online payments options given considerable upfront
development costs, as this involves expenses on reliable and secured
infrastructure, negotiating contracts with payment gateway providers. In this
situation, COD allows a cheaper alternate, it added.
From
the consumer perspective, a preference for cash and low financial literacy
accentuates the need for COD.
Even
those customers who are financially literate feel hesitant to share their
personal information online due to security concerns.
A
second major issue that keeps consumers from adopting towards advance payment
mechanisms is the fear that their products might not be delivered or they might
be different in nature or quality from the items mentioned online.
The
report says, payment on delivery covers their risks in this regard, adding that
furthermore, absence of a common payment platform that could integrate mobile
wallet, debit/credit card, and bank accounts leads to consumers facing
inconvenience and higher charges.