Experience from China can help e-commerce development in Pakistan
by Fatima Javed
The prospects of growth in online sales are huge and promising in Pakistan. The country's e-commerce in recent years has increased two-fold but still, it is in the early stage of development. The Chinese e-commerce model and experience can greatly benefit Pakistan's e-commerce industry if it is followed correctly.
In his recent tweet, Adviser to Prime Minister of Pakistan for Commerce and Investment Abdul Razzq Dawood termed Pakistan as one of the largest potential e-commerce markets in the world. Pakistan is a developing country of young people with an average age of 23 years old. Its young generation is educated and tech-loving, resulting in an amazing increase in online shopping trend in Pakistan.
Moreover, the COVID-19 crisis has brought a change in customer behavior for more than 65% of companies and people went online to buy essential products. Sales categories such as groceries, pharmaceuticals, health and hygiene products, restaurant delivery, as well as financial services saw the largest increases amid the COVID-19 pandemic through both third-party online marketplace and e-commerce.
This trend has also caught up in Pakistan and today almost all retailers have switched to online shopping. Those unable to establish an online retail organization are using social media platforms like Facebook and Instagram to create a market for their products.
On the other hand, China is the world's largest e-commerce market and accounts for USD 2 trillion in annual sales. In recent years, e-commerce has spread from China's cities into its rural areas with many low-income households. In fact, e-commerce is growing the fastest in some of the country's poorest provinces.
This is creating economic opportunities for a wide range of entrepreneurs and small businesses. Alibaba and JD.com dominate China's e-commerce. According to the World Economic Forum (WEF), in the last decade, China has advanced from generating just 1% of global e-commerce transactions to more than 40% of the world’s e-commerce transactions. China is fast to become a leader in e-business.
Therefore, the model of China's e-commerce industry, compared with the US or Europe, is much encouraged to follow for other Asian and developing countries like Pakistan. The way e-commerce works in China is quite different from that in the west. Unlike the west, about 90% of Chinese e-commerce is carried out by online malls, rather than stand-alone websites.
These online malls effectively act as their own search engine, with buyers hunting within the platform for the products they want. Credit card use is much rarer in China than in the US or Europe. Instead, consumers use digital payment systems such as Alibaba’s Alipay and Tencent’s WeChat Pay.
The Chinese Internet and e-commerce landscape which now counts hundreds of millions of users is now one of the most mature and advanced in the world, as the Chinese have become well-accustomed to using their phones and computers to buy almost anything and pay for it online.
The country’s appetite for technology only pushes the e-commerce market forward, making it already a leader in certain categories, especially in mobile commerce and payments. China’s e-commerce market continues to see high double-digit growth year on year. The Double 11 event on 11 November 2020 – also known as Singles’ Day, when single people in China celebrate, and which has become a popular shopping holiday – was a clear example of how China’s consumption-led economy is evolving digitally.
Chinese consumers are confident in their spending and that consumption will continue to rise. The same confidence should also be given to Pakistani consumers to boom the industry. The future of e-commerce trends lay in the ability of the online business to gain its foothold and establish trust in online shopping and e-commerce initiatives.
There is a long way to go. With just 7 percent of the Pakistani population indulging in online shopping, several initiatives are starting with online businesses in Pakistan to reach out to their potential market, build up their credibility, and garner consumer trust.
As e-commerce is taking its horizons in Pakistan, the development of online payment giants PayPal and Alibaba in the country will be the biggest step for making the e-commerce industry's future bright and flourished.