With the pandemic hitting Pakistan, we have seen a trend in rising e-commerce and digital businesses over the past few months. There has been a boost in the sales of these businesses during COVID-19 because people are restricted from stepping out of their homes and they are avoiding coming into contact with other people in physical spaces.
Due to COVID-19 LMT sales have declined sharply for all brands and this has given a great opportunity to new e-commerce businesses to spring up and for existing e-commerce businesses to grow further. It was predicted that Pakistan’s e-commerce sector could actually rise from $60m-$100m in 2015 to $1bn by 2020. Since e-commerce businesses are growing now, all operations are mainly digitized and that means our online systems have to be quick and reliable for customers to use. People are becoming more familiar with the digital world and advanced technologies especially during the pandemic. Hence e-commerce businesses are also making efforts to provide more innovative digital solutions and using social media to promote and sell their products. People are also becoming more comfortable with shopping online. They are relying on feedback and reviews about the services offered by online businesses from friends and family who have used them and then making an informed decision about purchasing goods online. This way trust issues have been avoided and online businesses have progressed during this time. Therefore, with the growth and expansion in e-commerce businesses essential items such as groceries are being purchased online now by majority of the people.
Consumers are experimenting with new online ordering services for grocery and preferring to stay at home and order at their own ease so they can limit their out-of-home visits. Supermarkets and LMTs such as Imtiaz, Chase Up, Springs, Naheed, Amis and many others created apps and websites or started online delivery service to provide groceries to consumers at their homes. On the other hand, already existing online supermarkets of Pakistan such as HumMart also witnessed a rise in brands wanting to collaborate with them in efforts to increase sales online. However, brands that did not have online market platforms associated with them such as Daraz and Foodpanda also invested in creating online platforms for customers like dMart and Pandamart. PandaMart is Foodpanda’s grocery delivery service which is in competition with dMart by Daraz. But since these were new in the market, the top of the mind recall was not enough compared to that of Imtiaz Supermarket and Naheed. Data shows that in Lahore, Imtiaz Supermarket achieved PKR 600 million, PKR 700 million, and PKR 800 million in eCommerce sales during Covid-19 first 100 days. The highest demand during lockdown was of grocery items and mainly of sanitizers, disinfectants, tissue rolls and masks to take precautionary measures due to COVID-19. So Daraz reported that orders for grocery items rose by 6 times more in certain categories like personal hygiene, disinfectants, and groceries. Health products, and home and lifestyle items demand rose sharply hence sales also boosted and showed how people started trusting these online platforms even more now to meet their essential needs.
Another source of e-commerce ventures arose, since imports have been restricted in Pakistan and documentation and other procedures have increased by the government, the goods which were coming from the illegal channels have reduced drastically. Taking advantage of this online platforms such as Ali Express have jumped in to cover this gap and people are ordering from these platforms and buying imported goods from these platforms. More online platforms on Facebook and Instagram have started providing goods and services to people in Pakistan who wish to buy foreign goods such as imported chocolates, snacks, jewelry, makeup, clothing and so much more. Since they are not able to do so as travelling has significantly reduced and people are not able to shop from other countries which they used to do before. Moreover, as this trend is rising and such e-commerce businesses are flourishing an attempt to understand the lasting impact pandemic has had on consumer physical store shopping related behavior is being studied through a Visa survey. Statistics show 43% of consumers have sharply decreased buying in-store and even if they do then 55% of these customers make use of digital payments. Mobile wallets are being used by 51% of them and the remaining percentage relies on cards both chip and pin to make purchases. Visa has joined hands with Daraz in order to make this digital payments process more seamless for consumers. This way they’re encouraging merchants who operate offline to switch to E-commerce and carry out payments. Another online marketplace platform Yayvo which is backed by a courier service also overcame challenges associated with online deliveries. Since they had the support of parent company and its courier service they were able to meet targets of their online orders and last-mile deliveries.
To conclude it can be stated that due to sales generating mainly from online businesses, brick and mortar stores have seen an overall decline of 60%. Online shopping has increased drastically by about 50% but this is yet to establish if these businesses are sustainable or not in long-term. Because online transactions are not very secure and cybercrimes and data thieves are very common in Pakistan. Hence, policies need to be made to protect the rights of consumers who are functioning in the digital space so that they continue to trust and support these e-commerce ventures. A lot of people are still hesitant to use credit/debit cards online and enter their card details in fear of frauds, and cybercrimes so they prefer cash on delivery. Financial inclusion is needed where more platforms to pay online like PayPal start operating in Pakistan and make it more convenient for people to carry out transactions. Along with this literacy is needed in terms of educating people how to use these new digital modes of payment which some people are still not acknowledged with.
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