Creating a Roadmap for eCommerce in Pakistan

Pakistan has witnessed exponential growth in the eCommerce arena over the past few years and since the launch of 3G services last year the time finally feels right for mass acceptance.

The launch of the 3G and 4G services in Pakistan in July 2014 has led to the number of overall broadband users in the country to rise rapidly from 3 million to over 18 million people. In its first year of release 3/4G users numbers at more than 15 million, therefore upgrading our IT infrastructure has obviously led to a very important step in the right direction. As more and more people come online from all the varying social groups existing in our nation, all ecommerce companies will become increasingly more important. Numerous online retailers have experienced a massive increase in orders with Kaymu alone growing from 700 orders a day to 3,000 orders a day. This increase in demand will have to be accompanied with an increase in efficiency, protocol and service standards in order for the industry to meet its full potential. If we want to continue and grow at an even faster pace we need to address some of the major challenges we are facing in the industry today and work on a roadmap for the future.

Nadeem Hussain, the CEO of Tameer Bank, recently held an eCommerce roundtable in Pakistan for this very purpose. His aim was to discuss ways and means of expanding the eCommerce industry in the country. The following is a comprehensive view of the findings from the roundtable talks held with some of the major players in the field of eCommerce and its related concerns, as well as my own experience.

It’s my strong belief that improvement in the following 4 tenants will lead to an even faster growth in the the overall expansion of the eCommerce industry

  1. Customer Experience

  2. Logistics

  3. Payments

  4. Awareness


The major focus for all eCommerce companies has to be Customer Trust. The rapid growth this industry is experiencing at the minute is due to a large influx of new customers that are trying online shopping for the first time. It is imperative for the long-term growth rate of the industry, that each and every new customer has a great first experience so that they continue to build trust in the concept of online shopping.

Customer trust can only be built when they receive the right product, at the right time, at the right price and if they are properly compensated when they don’t. Given that most companies act as as marketplaces that do not necessarily carry all their available inventory on their site, controlling customer experience becomes increasingly more difficult. Running your business as a marketplace like Kaymu, Daraz, Homeshopping, Symbios or countless other local e-tailers means facing and overcoming challenges such as product availability, delivery speed, and product quality. These aspects are the key to retaining customers and commanding their loyalty.

The reason for these challenges is as follows:

  1. Unavailability of Stock: Many marketplaces face inventory challenges when stock is not available with the seller but is displayed on the website due to manual “sync” between the merchant and the eCommerce store. This leads to the buyer’s’ orders either being cancelled or experiencing long delays in being fulfilled. By the time the item comes back in stock the buyer has already lost faith in either the marketplace or online shopping. Having improved and updated inventory processes will be a key factor towards achieving sustained customer growth and satisfaction.

  2. Slow Deliveries: The cause of these range widely but the most common cases I have witnessed involve sellers who prioritize their own individual sales over and above sales through online marketplaces. This delays dispatches for their online sales and negatively affects the overall customer experience. The online arena has a far greater reach than what most sellers can even imagine and if their commitment to eCommerce remains strong they can very easily become the market leaders that customers will come to depend on. Each seller needs to act as an ambassador for the customers who purchase online so that together they can thrive and grow to new heights they would never be able to achieve alone.

  3. Price Volatility: Prices of items in online stores do not always reflect current market prices. In categories such as mobile phones, the volatility of market prices regularly leads to the cancellation of orders. In the worst of cases customers are asked to pay more than the agreed upon charge due to sporadic price changes. These experiences can be extremely disheartening for most if not all customers. Each and every member of the eCommerce industry needs to form a firm commitment to their customers assuring them the freedom of complete choice and information when placing their orders. These commitments then need to be upheld in order for the customer to feel satisfied after having placed an order. Price volatility will not allow the industry a smooth road ahead.

To allay most of these building strong and lasting partnerships between sellers and merchants is they key. Building partnerships will lead to all the major issues being solved. Technological solutions by the eCommerce stores will be adapted with less friction leading to the overall efficiency of the value chain improving. In addition to that when it comes to dealing with complaints from customers, together both seller and the online store can quickly resolve any issues leading to little to no customer dissatisfaction.

In terms of technical solutions, manufacturers and distributors themselves do not have strong systems in place that keep up to date inventory numbers. If these were available then online marketplaces could easily tap into their systems and sync their products in realtime to limit the number of non-buyer cancellations. Startups such as Shopistan are already building real time inventory engines such as these under their Omni Channel brand and at Kaymu we are doing real time sync directly from other eCommerce portals. There is incredible room for growth in these areas and once better systems come in to play sellers and buyers will both greatly benefit from an increase of eCommerce activity.


Pakistan is very fortunate to have very strong 3PL providers. Other than India, our courier agents are probably the best in the region in terms of their coverage and reliability.

The eCommerce industry in Pakistan heavily relies on the following courier firms to diligently deliver all its orders:

  1. TCS has the largest network of any of the private companies. It’s COD services are very reliable and they have started offering 1 hour pickup services and are through their own online shopping portal offer 1 hour guaranteed deliveries for certain products.

  2. LCS was the last entrant into the COD business but now has the second largest network and its competitive rates have quickly allowed it to become probably the largest COD provider in the country.

  3. Blue-Ex pioneered COD services in the region and still maintains a very reputable clientele. unfortunately their reach is not as widespread as the other private operators in the country.

  4. OCS was recently purchased by Muller and Phipps who have hired a very strong management team to begin operations with a major focus on eCommerce fulfilment. They are aiming to use technology to fill in a lot of the gaps in the logistics industry that other providers have not as yet addressed.

  5. Pakistan Post, the national postal service is not well known for its reliability. It is, however, currently looking to expand its reach towards its COD offering. They are providing a very cost effective solution which is being used by an increasing number of retailers selling low cost goods online.

  6. Stallion is a local startup that offers customized COD solutions to local eCommerce stores. It began from a local university and received funding from investors to grow operations.

  7. Forrun/Delivery ChaCha/Fatafat/I2Y are all local city solutions for quick pickup and delivery options. As these smaller players grow they will begin to provide ample competition to the local 3PL’s.

Despite the large range of logistic competitors offering varying services and price levels there still remains many improvements that can be made especially within the ecommerce industry. The major problems being faced and the main improvement needed right now are as follows:

  1. Fast payments to sellers/merchants: given that the majority of orders are booked for COD, fast payment protocols would greatly benefit merchants and is crucial for the growth of the industry. Currently the average payment time ranges from between 7–15 days and with additional delays, which are currently a common occurrence, the actual payment time goes up by at least another week if not longer. Bringing this number down to less that 7 days and ideally within 2 days from the delivery date is crucial for merchants who are primarily generally cash constrained.

  2. Speed & Price: 3PL’s need to offer multiple options for delivery at varying costs. COD needs to be made available for Next Day, 2-day, and Overland Delivery options. Currently shipping anything large and bulky is also very expensive and only a very limited number of overland/truck shipment options are available with COD. This makes selling heavy items such as Air Conditioners or 20kg packs of dog food to places such as Rahim Yar Khan very cost prohibitive.

  3. Predictability: all the major COD providers give tracking numbers and these are updated fairly regularly at least for deliveries in all major cities. The update cycles for second and third tier cities however needs to be increased immediately given that over 50% of all orders are shipped outside of Karachi, Lahore and Islamabad/Rawalpindi, the three main cities of the country. Furthermore customers want the flexibility to have deliveries made at a time that is convenient for them. 3PL’s need to start offering solutions such as deliveries within 1 hour time slots for the foundations of eCommerce to be strong enough to achieve its maximum potential.

  4. Integrations with Ecommerce Stores: Given that today we have major eCommerce stores still manually creating AWB’s for their shipments and doing manual reconciliation, running integrations between 3PL and Online Stores is crucial. Currently the major 3PL’s offer API’s to their systems, however with a massive influx of ecommerce stores with limited resources especially on the software development side, 3PL’s need to start giving stores greater flexibility by offering plugins to stores such as Magento, WooCommerce, OpenCart etc. The ability to auto create AWB’s, and get delivery statuses directly can greatly improve speed and reliability. This will enable stores to become more efficient in their processes and help increase their focus on customer satisfaction.

  5. Open Box Deliveries: With COD set to remain the prevalent payment method for the near future, Open box deliveries could present a solution to help increase the trust levels within the industry. Riders, in this manner, would open the parcel in front of the customer and ask them to ensure the basic quality of the ordered items after which the customer has the option to accept or reject the parcel. Admittedly this operation is a very complex one to run at scale.

  6. Fresh/Cold Solutions: As the eCommerce industry develops, the market will move faster and faster towards food and groceries. Currently the large 3PL’s are not built to cater for such on demand services. Food ordering is already a fair segment of the local eCommerce space, however grocery delivery is still yet to become mainstream. Being able to deliver fresh/cold items will be crucial in this regard and concerted efforts need to be made to open up avenues for these markets.


Pakistan is still at a very early stage in developing its payments infrastructure. In recent months however major activities have allowed this to become a very exciting time for Pakistan’s payment systems. Predominantly COD still accounts for the majority of online transactions and unless legislation, seller responsibility and customer trust do not go hand in hand in the future, this will continue to be the case.

The current payment methods available in Pakistan are as follows:

  1. Cash on Delivery: This covers 90%++ of all orders in Pakistan. It is the dominant method used due to the unavailability of other means of payment. Customers are also generally sceptical of online shopping and COD provides a good starting point for their first few purchases. It allows a degree of confidence to the customer that in these early stages on online sales is extremely important.

  2. Card on Delivery (Swipe on Delivery): Recently launched as a collaboration with Daraz and Monet, the delivery rider reaches the customers doorstep with the parcel in hand and a credit card machine with which the customers credit card is charged and the parcel then handed over to the customer. This method is nothing more than a stop-gap measure to get customers to pay using credit cards without much of the benefits.

  3. Card Online: The traditional method of paying online. Currently these options are present for local eCommerce stores by UBL, HBL, and MCB. However the greatest challenge remains that most debit and credit cards issued by all but one bank in Pakistan are locked from purchasing online. The only way a customer can purchase online is if he or she specifically calls their bank to unlock the facility for a period of 1 hour.

  4. Payment through Wallet: This, in my opinion, is the option with the most potential for the long term. It involves the customer having a mobile wallet with deposited funds, then at the time of checkout, they select the mobile wallet payment option. This connects with the customer’s phone and automatically prompts their M-Pin or Mobile PIN in real time. Upon entering their PIN, the transaction is completed. The greatest challenge facing this options is however the number of active users with M-Wallets.

  5. Payment through Bank Accounts: Certain banks for certain stores allow direct payments for orders any and all placed. This is not a widely used or integrated system and requires the customer to login to his bank’s online banking system and make the payment in a manner similar to paying a utility bill.

  6. OTC (Over The Counter) Payment: In terms of an integrated solution this is the only available option right now via EasyPay by EasyPaisa, which now lets customers pay for their online order at over 65k locations across Pakistan.

Payments however to really get started need to provide customers with a safety net. An independent and trustworthy escrow service which is plugged into all online payment gateways will greatly increase the chances of customer placing orders online and pre-paying. Finally given the wide prevalence of COD — to really convince buyers to prepay you need to provide monetary incentive.


Nothing will take off in the eCommerce industry in Pakistan unless buyers and sellers are informed and educated about their online buying and selling options and the scope that it provides them to enrich their lives as a result of its enormous reach and variety of available options. The major method for creating awareness and driving traffic towards eCommerce companies is by running ads online. Facebook, at this stage, is still the primary channel for such exposure, however over the last year there have been major changes have been witnessed. We have seen a greater influx of other marketing channels being utilised alongside facebook. Some of these have been listed below:

  • TV has been heavily relied upon by OLX and with, Jovago and Carmudi also launching independant ads. Even UMall and TCS Connect have been mentioned in ads by their parent companies.

  • Billboards have been heavily utilised by FoodPanda and EatOye and to a smaller extent by Tohfay,, Daraz, Lootlo, Dekhawa, and TCS Connect.

  • Radio was used by several companies as well with who ran a fairly large campaign on the ariwaves.

In addition to online only stores marketing more aggressively, we have seen a greater influx of large local brands creating online stores to complement their retail outlets as well. The online presence of these stores has led to a greater acceptance of online shopping given the brands are already known physically and command a reasonable customer base as it is.

As we begin to see a greater number of marketing channels being used, the push towards online sales becomes more apparent. As always branding is a crucial first step in creating trust and the foundations for a healthy online market.


It is important to keep in mind that most of the challenges facing the eCommerce industry in Pakistan today are not debilitating to its future in anyway. With due diligence and the proper systems in place our partners in this field can collectively rise over and above current expectations but they cannot achieve this working in isolation from one another. Each section of this industry needs to work hand in hand, from the eCommerce marketplaces, to the sellers, the payment gateways and the logistics providers. If Pakistan’s eCommerce community wishes to achieve its rightful place in the overall scheme of things, all of the components of this industry need to start working together like a well oiled machine towards their collective goals.

f the above mentioned challenges though can be solved in a much more fluid manner by attracting more capital to the industry. Therefore with this I add my last tenant to grow the overall eCommerce industry:


To really push the growth rate the industry we need to start attracting more investors. The overall dynamics of the country are sound and recent growth has been very strong. By investing more money throughout the value chain i.e in 3PL’s, Payments Companies, alongside the eCommerce companies we can grow the entire industry.

With a population of 200m and a growing broadband user base the fundamentals for the country to be a major hub for eCommerce transactions is very large. To attract investors we need to be more transparent and start publishing authoritative numbers on the growth of the industry. This will give any potential investors at every level from Seed to Private Equity insights into the industry and increase chances of investment.

The added investment will only act as fuel to power us into greater adoption and with the market entering its second stage of growth now is the perfect time for investors to gain strong returns with relatively small investment.