Gen-Z, digitisation drive Q-commerce

Digital payments surge from less than 10% of retail transactions to around 50%

KARACHI:

Pakistan's quick commerce (Q-commerce) industry is experiencing explosive growth as rapidly shifting consumer behaviour, accelerating digital adoption, and an expanding youth population fundamentally reshape the country's retail landscape.

In an exclusive interview with The Express Tribune, Foodpanda Pakistan's Director of Q-commerce, Taha Maghrabi, described the sector's trajectory as "one of the fastest-growing segments of the retail ecosystem," with e-commerce volumes rising by more than 100% every month.

Although he did not confirm reports of a €3 million investment by the company in Q-commerce alongside other verticals, he acknowledged that the company is aggressively expanding because "we are getting the results and the market is responding."

Maghrabi said Pakistan's digital transformation accelerated dramatically after COVID-19, shifting what was once a marginal corporate function into a central pillar of business strategy. Before the pandemic, multinationals operated small, isolated e-commerce departments. Today, most companies have fully integrated digital channels into their core operations, recognising that real-time logistics, predictive stock management, and online consumer engagement are essential to growth. According to him, "There were a lot of aspirations before COVID-19, but the business landscape only started taking e-commerce seriously after mobility restrictions forced consumers online."

The shift is also reflected in how consumers pay. Prior to the pandemic, digital payments accounted for less than 10% of all retail transactions. That figure has now surged to around 50%, a remarkable jump in a country where roughly Rs10 trillion remains in physical cash circulation. Pakistan still has one of the world's largest cash-driven economies, yet consumer behaviour is evolving rapidly, especially within the country's growing middle class. Dual-income households are increasing, and with both partners working, sometimes from home, convenience has become a primary driver of online shopping.

Q-commerce is emerging as a major beneficiary of this shift. Maghrabi explained that while the idea of rapid delivery existed in Pakistan as early as the 2010s, it was COVID-19 that gave the model serious momentum. Once consumers realised that groceries, household items, and even perishables could be delivered reliably, a broader mindset shift followed. "Before, people didn't believe these things could be delivered," he said. "Now they have options, and they are choosing convenience." The expansion of product categories further strengthened trust. Items such as apparel, once considered unsuitable for fast or digital fulfilment, have become increasingly common in online purchase patterns.

Despite this progress, Pakistan's retail market remains largely under-digitised. Nearly 90% of grocery shopping still takes place at neighbourhood kiryana stores, around 10% through large modern retailers, and only 0.4% online. Maghrabi described this gap as a "humongous opportunity," but one accompanied by unique local challenges. For example, the average basket size at kiryana stores is around Rs240, while online baskets range from Rs300 to Rs10,000, depending on household income and the time of the month. Around 3% exceed Rs10,000. Salary cycles heavily influence spending: consumers buy more in the first week after receiving salaries and significantly reduce consumption toward month-end, often avoiding crowded markets during peak periods.

Consumer missions are essential for understanding Pakistan's evolving purchasing behaviour, Maghrabi said. Shoppers buy differently depending on the purpose of their trip: planned monthly grocery runs to physical supermarkets for bulk purchases; daily visits to neighbourhood stores for essentials like bread, eggs, and milk; weekly top-ups; and impulse buys such as soft drinks, ice cream, or noodles. Gen Z consumers, in particular, seek novelty, personalisation, and engagement. The company tested stamp-card collection programmes that generated strong interest from younger shoppers. "It made the purchase experience personal for them," he said, adding that this generation values interactive retail experiences alongside competitive pricing.

At the same time, Q-commerce relies heavily on gig-economy labour. Maghrabi said the platform operates as a flexible technology-driven marketplace where riders choose their own hours. A rider working six to eight hours a day, six days a week, can earn between Rs50,000 and Rs60,000, he said. However, he expressed concern about the limited dignity afforded to riders. "These are people working on holidays, in extreme weather and difficult conditions," he said. "They deserve respect."

A pressing challenge for formal Q-commerce operators is unfair competition from Pakistan's vast informal economy. Maghrabi pointed to unregulated imports of consumables entering the country without proper documentation, taxation, or safety controls. Products transported without adequate safety regulations pose health risks, distort pricing, and undermine legitimate businesses that comply with standards. "This disrupts the market and hurts the national exchequer," he warned, calling for stricter government oversight.

Pakistan's young and increasingly connected population remains the country's biggest opportunity. With improved connectivity and increasing smartphone penetration, Gen Z has become a major driver of digital commerce. This demographic seeks speed, reliability, variety, and personalised experiences. As purchasing power shifts toward younger households, Q-commerce operators expect continued expansion.