A viable commerce channel

Advent of computers and collaborative Internet technologies has changed the ways we do business. Beyond desktop and mainframe computing, Internet has emerged as a huge marketplace where people 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, e-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 can also boost an 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. E-commerce makes it easier for consumers to make interactive purchases online. A consumer uses a credit card and makes a number of purchases that will not only drive retail (or virtual) outlets, but also provide indirect business to the delivery channel, packaging companies and other smaller intermediary concerns.
From a business standpoint, companies can certainly use analytical tools and have more customised offerings to create not only value addition to the goods and services they offer, but also a stronger and more loyal customer-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 customers all over the world. There must be more.
Pakistan has a number of barriers to e-commerce. The biggest challenge is lack of trust among users to enable them to part with money online. This needs complete attitude change for users to shift from physically visiting stores for shopping to making purchases on the web. Many Pakistanis are using the Internet to communicate and share information, likes, and dislikes with friends, but there has to be a cultural change to make them use credit cards and click “buy.”
Online financial transactions are tedious. Those who are in telecommuting or outsourcing and deal with clients in foreign markets can send the work via email, FTP or courier, but payments are still a hassle with many people depending on wire transfers. Non-availability of PayPal in Pakistan also adds to the problem. In early 2000s, the government started some e-commerce initiatives and banks were urged to lead the way. 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 urban areas. Most active users are young students without much purchasing power. Inadequate infrastructure, insufficient telephone lines, frequent power failures and lack of tech-savvy people are some factors hindering users from adopting online shopping.
A lot needs to be done to take advantage of the e-commerce boom. Initially, it 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 make their first impression. Businesses not only have to have functional and user-friendly websites, but should also advertise extensively about products and services on offer.
The government needs to pursue initiatives that started a 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.
But it is the responsibility of corporate sector to create awareness and educate people on how to use their credit cards and purchase online safely. Only this will help people to adjust to the phenomenon of online shopping. Unless businesses are able to accelerate the rate of change in consumer-behavior, their ‘shopping carts’ may remain empty.

The writer is Deputy Controller Examination, Lahore School of Economics