E Commerce – a viable commerce channel

Advent of computers and collaborative Internet technologies has changed the ways we do business (also the ways we live). Beyond desktop and mainframe computing, Internet has emerges as a huge market where anyone can sell and buy. Are businesses selling and buying online in Pakistan? My answer is not really. We are only starting to get there, very slowly.

As per the common definition, “ecommerce (electronic commerce) means selling and buying of services and goods over the electronic medium, like Internet and mobile phones”. E-commerce, in theory, is not only a big convenience but also can be a boost to otherwise sluggish economy. From consumers’ point of view, shopping online saves time as well as money. Consumers can see more, compare and find more choices and the best deals with a few mouse clicks while sitting home. That is not possible for those who go and shop on ground. No one can visit each store to find what they are offering and how? Moreover, it is a big hassle going to shop in any of the crowded shopping centers (like Anarkail and Liberty Lahore or Tariq Road, Karachi) with no dedicated parking spaces. Ecommerce makes it easier for consumers to make interactive purchases online. A consumer uses a credit card and make a number of purchases online that will only drives the retail (or virtual) outlets, but also provides indirect business to the delivery channel, packaging companies and other smaller businesses which may be in the middle of the transaction before the delivery is actually made.

From the business standpoint, companies can certainly use analytical tools and have more customized offerings to create not only value addition to the good and services they offer, but also create a stronger and more loyal customers’ base. I am not talking about Amazon or eBay here. I know of at least two local businesses, one based in Chitral and another in Thatta Ghulamka Dheroka – a small village near Okara – that are totally operating online and reaching out to their customers all over the world. There must be more.

That is a theory. In local context, empirical observations paint rather dismal picture. In reality, not many businesses in Pakistan are ecommerce. Many commercial concerns still do not have even a website or any other forms of online presence what to talk of doing business in the cyber world. Physical stores are still trusted ways to reach out to consumers.

Pakistan has a number of barriers to electronic commerce. The biggest challenge is the lack to trust among users to enable them part with money online and place orders for making purchases. This needs a complete attitude change for the users to shift from physically visiting stores for shopping (and window-shopping) to making purchases on a website. Many Pakistanis are using the Internet to communicate and share information, their likes, and dislikes with their friends but there has to be a cultural change to make them use credit cards and click “buy.”

Online financial transactions (to and from Pakistan) are tedious, slow and complicated. Those who are in telecommuting or outsourcing and deals with clients in foreign markets can send the work via email, FTP or a couriers, but the payments are still a hassle with many people depending on wire transfers – relatively expensive procedure. Non-availability of PayPal in Pakistan also adds to the problem. In early 2000, the government started some ecommerce initiatives and the banks were urged to lead the way forward. That did not happen.

Pakistan is a large market where the Internet is available to a very small percentage of the population mostly restricted to the urban areas or some suburbs. Most of the active users of the Internet are young students with not much of a purchasing power. Inadequate infrastructures, insufficient telephone lines, frequent power failures and lack of tech savvy culture and know how are some other factors hindering users to adapt to online shopping. I spoke to different users and non said they shop online as a routine but they all argued that online shopping has a bright future in Pakistan. What should be done?

A lot needs to be done if we have to take advantages of the ecommerce boom. Initially ecommerce was just about building a website and then driving traffic to it. This is not enough anymore. Yes, the importance of a functional website cannot be understated. That is what helps users to make their first impression about business and if the other related processes are good then the users are likely to return to repeat their good experience. The businesses not only have to have functional and users’ friendly websites but also need to advertise extensively about products and services they are offering and how. Consumers need to know about the best place to shop and how credible they are. That makes online marketing, especially international search, within the overall marketing budget as an imperative. As much as the consumer numbers are increasing, it is not worth anything to online businesses if they appear anywhere at the backend of search engine results. Increasing credibility for any online business only comes with increasing visibility.

Government needs to pursue initiatives that were started long time ago and support them legally making clear rules on how to tax e-commerce or determine “electronic residence” in Pakistan. Banks can play a major role in encouraging potential buyers and sellers by certifying websites offering online shopping. This will also encourage an overall constructive use of internet and will accelerate banks revenues as well.

But it is the responsibility of corporate sector to create awareness and literally show people how to use their credit cards and purchase online safely and from where. Only this will help people to adjust to the phenomenon of online shopping. Unless business are able to accelerate rate of change in consumers’ behavior, their ‘shopping carts’ may remain empty.

This article appeared in Profit, Pakistan Today, June 25, 2011 issue.

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2 Responses to E Commerce – a viable commerce channel

  1. Rania says:

    I read this in Pakistan Today. Good article Sir.

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