The e-commerce industry in Pakistan is facing significant challenges due to the country’s economic conditions. A new report has mentioned these challenges and details the state of business-to-consumer commerce in the country. The cost of business and living has declined to disastrous levels, and companies are struggling to maintain sales and grow. As a result, the expected growth rate for e-commerce operations has become muted due to a continuous depreciation streak.
Pakistan’s e-commerce market already lagged well behind comparable economies, and its market size was the lowest in peer groups. Unfortunately, at a time like this, the market has taken a further hit due to the country’s economic misfortune. Funding for e-commerce startups was on an upward trajectory, and the sector’s investments were increasing, but these numbers are now affected. It may take years to recover once hit.
Last year, Daraz’s CEO, the largest player in Pakistan’s e-commerce market, mentioned that the company has been in a loss for consecutive years of operations and was far away from breaking even. Building and capturing a market requires years of growth, expenses, and investment. Now, with the situation getting worse, market leaders like Daraz may face further complications. Additionally, there has been a decline in e-commerce transactions in the first half of this fiscal year and a dip in total e-banking value, which is a significant concern. It is due to low trust of consumers in electronic payment systems, presenting an opportunity to work towards investing in e-transactions. However, any improvements to current systems cannot work when citizens are facing a price hike, food crisis, and general mounting pressures of the economy.
Money needs to circulate for a thriving e-commerce environment, but the current economic conditions are not conducive. Unemployment is on the rise, and retailers are struggling with operations. As a result, it is feared that things will go further south as they struggle to empty inventories and could go under.