Setting the Scene
The services sector plays a crucial role in the socio-economic development of a country. Lately, this sector has been experiencing a shift towards digitization globally. Increased internet penetration is modifying the way consumers and businesses exchange information, undertake transactions and manage their daily operations. This holds true in case of Pakistan also where the service sector’s contribution in Gross Domestic Product (GDP) has jumped from 52 percent to 60 percent[1] owing to the growth of e-commerce sector as of 2017-18. Precisely, the sales of local and international e-commerce providers have increased to Rs. 40.1 billion[2] as of 2018 thus exhibiting an exponential growth of 93.7 percent[3] in the e-commerce sector.[4] This has been made possible owing to the convenient and expanding internet penetration resulting in lower transaction costs due to which the consumers and firms have started shifting their transactions online. The business-to-consumer (B2C) side of e-commerce is growing rapidly whereas large-scale investment in the business-to-business (B2B) category is in progress.
As per the State Bank of Pakistan Payment Systems Review (Q2FY18), the number of e-commerce merchants registered with the banks have increased from 344 to 905 as of 2017.[5] Despite the commendable growth, e-commerce providers in Pakistan continue to face numerous challenges. These challenges remain more arduous for those engaged in cross-border trade. In this context, the randomly selected respondents of our survey (e-commerce providers)[6] reported a variety of issues pertaining to policy, rules and regulations in addition to internal and external capacity constraints. Majority of our survey respondents were engaged in web designing and digital marketing (80 percent). The rest reported being involved in software development (13 percent) and travel & accommodation booking (7 percent). Majority of the digital service exports by our respondents were targeted to Middle-East, South Asian and European markets.
