Financial inclusion, or the lack thereof, remains a threat to any local e-commerce efforts. Despite high interest among consumers and sellers alike, artificial constraints remain for the sector due to the difficulty in conducting online transactions. While banks, cellular providers, and other businesses are trying to bridge the gap, the fact is that the country’s digital payment infrastructure remains weak, and trust issues remain at local and international levels. This is partly why Pakistani e-tailers could not fully capitalise on the opportunities brought by the Covid-19 lockdowns. Even in countries where lockdowns were relatively short, online sales went through the roof thanks to the added benefits of health safety and convenience.
Part of the problem here is that about 90% of online sales are still done using the cash on delivery model. This is inefficient for multiple reasons, the most basic of which is the delay required to complete the financial end of the transaction once a package has been handed off. Meanwhile, the sale of ‘big ticket’ items such TVs, air conditioners, high-end computers and phones, quality furniture, and other things that may cost hundreds of thousands of rupees will suffer as people, and even some vendors, may not be able to make those transactions work with cash on delivery. There are also factors such as the delivery mechanism.
In countries such as the US, even giants such as Amazon regularly use the postal service to deliver products and packages because of the its vast network and ability to provide economical ‘last-mile’ services and deliveries in low population areas where it may not be cost-efficient to expand its own network. While some courier services do provide ‘last-mile’ services in Pakistan, the costs are prohibitively high for small businesses and even online marketplaces. The government needs to look into making the best use of the post office to help vendors make deliveries quicker and more cost-efficient. Improving the post office would also have a reverse benefit as sellers based in rural areas would be able to deliver their wares with lower shipping costs attached, thus keeping prices low for consumers.
Published in The Express Tribune, October 20th, 2020.
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