The usage of e-commerce has not gained too much popularity in Pakistan in the way it has made inroads into the trade and business sector in the developed countries.
Factors such as, limited access to internet, expensive hardware, complicated software, a low level of computer literacy and reluctancy on the part of customers to use electronic mode of transaction have made it difficult for business to adopt this efficient mode of transaction.
In Pakistan, few industries have adopted use of e-commerce, such as banks, shipping and Airline companies etc, but businesses missing out on an opportunity to use this low cost transaction medium are huge in numbers. Besides, e-commerce in Pakistan is mainly used for B2B (business-to-business) transaction.
Low internet penetration is one of the biggest barriers to non-utilisation of B2C (businesses-to-consumer) applications. There are around 20 million internet users in Pakistan, according to CIA World Fact book 2009. While just 1.2 percent (2008) proportion of households has Internet facilities, which is low compared to statistics of other neighboring countries such as 3.4 percent in India, 3 percent in Sri Lanka, 1.9 percent in Bangladesh, 9.5 percent in Iran and 25 percent in Turkey, according to International Telecommunication Union.
The main culprit behind low internet penetration--- which is closed to around 10 percent--- is high cost of internet and personal computers. At present, only 9.8 percent of Pakistani households own personal computers, a number that needs to grow leaps and bound if internet has to make it mark. On top of that, the growth in internet subscription has slowed down during the past few years, while the majority of users are still using dial up connection.
On the other hand, the broad penetration has started improving, as industry sold a little more than 0.48 million subscriptions in FY10, taking the total subscribers base to around 0.9 million users at the end of the last fiscal year. But, high cost has been keeping users away from this high speed internet facility.
According to International Telecommunication Union, broadband price in Pakistan, as a percentage of GNI, is relatively higher that reflects lower affordability owing to low GNI. However, with the advent of mobile telephony, the next generation e-commerce named as m-commerce (mobile commerce) has been gaining foothold in communication industry.
For mobile users, it is more convenient to avail service through cell phone, rather than other modes of transaction, owing to time flexibility, safety, speed and availability of user friendly software. In addition, payment through mobile is more secure and flexible than cash. Besides, on the back of high mobile density currently hovering around 62 percent in Pakistan , the future of m-commerce, including to B2C and G2C transaction, looks promising in developing countries like Pakistani.
Therefore, market gurus believe that m-commerce will soon surpass e-commerce as medium for transaction as mobile revaluation has much more to offer than other technological inventions in the past. The biggest and most obvious change industry has been witnessing is the rise in new cellular product offerings over the past few months, due to back to back launches of cellular banking facilities by bankers and telecom operators alike.
Bankers are also taking drastic steps to turn m-banking into the fastest growing banking channel in Pakistan, which bodes well for the development of m-commerce infrastructure in Pakistan. A big growth area is likely stem from the country's rural areas, where about 65 percent of the population lives, and where other modes of banking transaction are sparingly available. At present, an estimated 89 percent of the country's adult population is unbanked, as conventional banks haven't been able to penetrate owing to high cost of operations and dispersed population.
Moreover, the payment transaction through mobile is also very cheap, which is nearly 10 and 50 times lower than that incurred for ATM and bank branch respectively, according to various studies. It is also in the interest of the government as m-commerce can provide impetus to increase transaction documentation, primarily, in rural area.
Lately, few mobile operators have also started providing m-marketing services on small scale by offering discounts on various products. While lately, some shop owners have adopted SMS as a new advertisement tool to update customers regarding new offerings, collection, discounts and packages. In this way, companies and business can directly market their product to their target audience at minimal cost.
While a number of mobile companies and banks are offering utility bill payment service through mobile phones. In addition to the great varieties of m-products, like banking to food recipes to news services, currently being offered, there is huge room for m-commerce growth in public service areas.
In many countries, mobile channels are employed by government for delivering important messages to the citizen; such as security and natural disasters alert, notification of license renewal, exam results, parliament notices etc. The government has lately launched pilot project called Benazir Mobile Banking service to facilitate the government to public transactions, such as transfer of grants, using cost efficient technology.
Moreover, a combination of m-ticketing, and m-payment system can be used to streamline public transportation system -- railways and public bus system. Automated process will not only make transaction faster but will also reduce leakages. Given the pace of development of m-applications in Pakistan, in just few years consumers will be able to do shopping and purchasing through mobile phones. Last but not the least, one another major growth driver is supportive regulatory environment as mobile service developers and providers have been attributing growth of mobile services to favourable SBP's policies.