Retail E-Commerce in Pakistan: A case study of COVID-19
Pakistan is the 46th largest market for e-commerce with a revenue share of US$4 billion and a 26% worldwide growth rate contribution as of 2020. Sales through online shopping has grown exponentially and the retail sector in Pakistan has transformed into a thriving e-commerce business. Though Pakistan was steadily adapting the digital way of business, this functional paradigm shift occurred primarily due to COVID-19. SInce then, retail footfall has dropped to around 70% of the original retail and online shopping plus delivery has increased by 2X. Online grocery shopping has seen a quadruple effect in terms of order and sales growth.
Among the e-commerce businesses in Pakistan, the fashion & apparel category has been among the top contributors to online sales and growth, specifically in COVID-19 about 3X of the original volume is observed. Also, an online surge was seen in specific months, i.e. April, May, June and July 2020 followed by recent lockdowns imposed by the government. This has also boosted companies in another supplementary industry, logistics and supply chain, to fulfill the orders generated from online sales. Fashion brands in Pakistan heavily rely on third-party logistics providers and hence both parties work mutually to benefit the end user.
For any brand in retail looking to benefit from the online traffic, must follow these steps to become competitive player in the market:
1. Own a website to have first-party data for making informed decisions and relevant product recommendations to customers. Large brands with thousands of products would want to use high end technology such as augmented reality, chatbot solution and AI based personalization tools to cross / up-sell the products and remain engaged with their customers.
2. Ensure optimal site-speed compatible for mobile devices. This is important in customer acquisition and retention because after every three second delay, 53% of the customers will leave the mobile site leading to a drop in conversion rate and increase in acquisition cost.
3. In this era of quick-commerce, customers expect fast deliveries while ordering online for which the supply chain strategy needs to be customer-centric. In order to avoid delays, it’s recommended to store inventory in nearby stores where high order influx is expected. This will also help in reducing delivery costs, order cancellation rate and the number of employees retrenched as they will be occupied in supporting ecommerce operations.
4. Be discoverable and market your products through Google’s products because 75% of global shoppers used a Google product. Consumers tend to research extensively before making a purchase, hence, having accurate product information relevant to the brand that’s SEO friendly is also important to remain on Google’s top ranked search results.
Every industry is striving to make most of their sales through digital mediums. The process of generating online sales in Pakistan was at a steady pace pre-covid which expedited during the pandemic and is expected to rise post-covid as well. Retail ecommerce is expected to generate a market volume of US$3,893m in 2021 with an annual growth rate of 7.55% for the online market.
Data Sources:
● https://www.statista.com/outlook/dmo/ecommerce/pakistan
Note: The sources mentioned above are for internal reference only.
