Retail ecommerce: where do we stand?

Daraz has recently launched the country’s first ecommerce index, and the timing could not have been better. Independent global agencies and researchers have been highlighting how e-commerce sales particularly in the retail segment have been peaking around the world amid the coronavirus pandemic. But little has been known about Pakistan whether about the customer profile, shopping behaviors and patterns and sales in actual numbers because of lack of data for a cash dependent economy.

The index provides insights on consumer behaviour and maps out the growth of the e-commerce industry. Active users on the platform have grown twice, while orders have picked up three times in 2019. Punjab brings in the highest number of orders with a share of 55 percent, followed by Sindh  at 36 percent of which Karachi has a share of 24 percent.

There are two key highlights of the ecommerce index report by Daraz. First, Daraz has market share of 60-70 percent in the e-commerce sector - as highlight by Ehsan Saya in an interview with BR Research (Read complete interview here: “Daraz to have 25 million users by 2022”). This makes the findings and lessons of the report a true representation of the local retail e-commerce space. From data on product category and brands to shoppers’ buying patterns, the index is a guide for smaller players emulating similar models. The index also shows that consumer demand witnessed a change in buying behaviour and pattern in the second and third week of March 2020 following the outbreak of coronavirus in Pakistan; sales of FMCG doubled on Daraz and are expected to grow further to 70 percent of the total sales on the platform in the coming weeks.

And second, digital payments are picking up in Pakistan and could flourish with the right kind of facilitation from the stakeholders in no time. The index shows that the mode of payment has seen a significant shift towards digital solutions offered by Daraz. E-wallet and mobile account payments grew by over 8 times in 2019 versus 2018, while cards and online banking payments grew twice on Daraz platform. These digital payments represented 32 percent of the total customer spend.

This shift towards digital payment is an encouraging trend during current crisis situation. Waiver of bank charges by the banks from internet, mobile and ATM transactions to ensure the safety of customers and employees during the COVID-19 pandemic has also been a push towards digital payments.

The index shows that buying behaviors and attitudes of three types of online shoppers – young, adult, and settle adult, as well as most bought categories like FMCG, mobile top ups and mobile phone accessories.  However, what could have made this index more interesting would be if it showed which segment of the categories of shoppers dominate in terms orders and sales.