Pakistan eCommerce Market Size (Pre-Covid19)

The eCommerce and digital payments industry has seen tremendous growth in the last 3 years. According to reports from the State Bank of Pakistan (SBP) the ‘digital-only’ eCommerce market size has increased from 9 Billion to 26 Billion rupees (FY17 to FY19). Growth continues to look promising with the current financial year already seeing 18 Billion rupees in transactions in only its first 6 months.

Growth between FY18 and FY19 for prepayment eCommerce transactions was ~40% and without Covid-19 we may have achieved similar growth numbers this year (FY20) already. However, due to fewer opening hours of retailers and a larger shift towards digital transformation we are expecting a much greater rise in PrePayment orders starting from Q3 of FY20.

Overall prepayment transactions in terms of volumes have risen from 1.2m to 5.7m (FY17 to FY19). This has been accompanied by a sharp drop in the Average Order Value (AOV) from 7,800 to 4,600 rupees over the same period. This is a promising sign as it means that prepayments are being used for a greater number of smaller transactions; not just larger ones.

How large is Pakistan’s eCommerce market size though? Unfortunately there is no definitive answer and predicting or rather guesstimating the COD market size is very difficult. While the general consensus seems to suggest that 90% of total transactions are covered by COD, when it comes to total revenue, COD more realistically accounts for 60% of all eCommerce transactions.

If we take SBPs numbers for domestic prepayment value and work out 60% for COD value then the total domestic eCommerce market size comes out to about 65 Billion in FY19, which is a growth of 40 Billion in 2 years. In the current financial year until December we have already achieved a value of 46 Billion rupees which is the same as we did in a full year in FY18.

With this article we are also releasing our data set that we have been curating for the last few years. You can download a copy for yourself from this google sheet. All eCommerce data is currently up to date and over the next few weeks updating the rest of the sheets with the latest available numbers as well.  

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Next Steps for Pakistan’s Ecommerce Policy

The eCommerce policy framework of Pakistan was passed and approved by the cabinet in October 2019. A lot of hard work has gone into the policy from both the private sector and several public sector bodies, however I believe there is no time like the present to start working on potential improvements.  There are three key ways that I believe this can be done. 

Rebate on Foreign Transactions

Firstly, the goal of the policy is to help grow the overall eCommerce sector and as a secondary goal it is to help exports. I believe that a monetary reward in the form of a rebate or tax credit should be given to all eCommerce merchants who are focused on selling Pakistani products abroad. A rebate of this nature can be very easily implemented and verified as it will only be applicable if a customer who holds a non-Pakistani credit or debit card, places an order on a Pakistani website using a Pakistani payment gateway. The Pakistani internet payment gateways can easily be used to verify these transactions. 

For example, if a US based customer uses their Citibank Visa card to purchase a dress on Khaadi for PKR 5,000 and the payment is processed through HBL’s credit card gateway, then Khaadi would get a rebate/credit of 50 PKR or 1% of the total value.  (Values are for illustrative purposes only)

One of the advantages of this method is that it focuses on small orders for as little as $10-$20 but the potential volume of orders that eCommerce retailers such as Khaadi, Gul Ahmed and others may potentially get would be large. Currently some of these fashion retailers prefer to use foreign payment gateways therefore the money never enters into Pakistan. 

The reward for the eCommerce merchant should be a few dollars or upto 10-20% of the total sale all of which many eCommerce merchants could use towards subsidising their customer acquisition cost. This policy could also benefit SaaS companies in Pakistan and push them to build world-class product businesses such as Zoho out of India.  


Banning COD in Pakistan

The eCommerce policy bans all COD transactions in Pakistan over the next few years. 

“To promote financial inclusion and digitization, COD mode of e-Commerce will be gradually discouraged through special incentives for consumers and merchants with an objective to use digital devices for payments. (Within three years of the launch of this policy, maximum COD transaction amount will be PKR 10,000. Efforts will be made to convert all COD payments into e-Payment preferably within 10 years (2029).” Section II, Recommendation I of the eCommerce Policy

While focusing on digitisation is a worthy goal, the potential for this to be a death nail to the eCommerce business is high. My recommendation is to tie the COD limit to the number of active unique mobile wallet/card users in Pakistan. 

COD Limit Active Mobile Wallet or Online Card Users
Rs 50,000 5 Million
Rs 40,000 10 Million
Rs 30,000 20 Million
Rs 20,000 40 Million
Rs 10,000 60 Million
Rs 5,000 100 Million
Numbers are for illustrative purposes only


So every 6 months we review the total number of active mobile wallets in Pakistan and the active online cards being used in Pakistan and based on that data we set the maximum COD limit for the upcoming 6 month period.

A policy like this encourages banks and fintech’s to work hard to on-board and activate customers, with a reward for the COD market being limited because of their actions. Rather than the eCommerce players finding themselves in a position in 3 years where the move to digital money is still slow, but the COD limit is enacted, which would hurt the overall eCommerce market. 

Increase Internet Users in Pakistan

This might seem like a simple one, but it’s critical, and while I don’t have any specific policy recommendations, the entire digital economy is dependent on the growth of the total active internet users in Pakistan. To grow this we need to be more inclusive and affordable both in terms of data cost, but also taxes on smartphones. 

In addition to smartphone and data costs, mobile manufacturers and telcos should work together and focus on bringing in products built on KaiOS within the feature phone category as well. KaiOS is the 3rd largest mobile OS in the world after Android and iOS and Reliance Jio has sold over 60 million KaiOS phones which are capable of running whatsapp, google maps and other web features, products such as these can help greatly in introducing web products to the massives who are not interested or do not see the value of smartphones just yet.   


The Future of eCommerce in Pakistan (Part 2)

Originally published in Profit Magazine

In our last article we discussed how Pakistan’s retail e-commerce sector has not expanded as rapidly or as widely as one might have expected it to. This rings particularly true when you compare its growth to other e-commerce verticals in similar regional markets like India, Indonesia, Philippines and Thailand.

We therefore continue our analysis where we will look at the challenges that the retail e-commerce sector faces, understand the potential solutions and strategies enemies at the gate may use to dis-intermediate marketplaces altogether.

Current Challenges

At this moment, there are a number of challenges that face e-commerce players. While the list can be fairly detailed and granular, we will focus primarily on the core challenges that affect both customers and e-commerce merchants on a day-to-day basis.

Product information

Customers visit e-commerce sites for multiple reasons. These may range from pre-purchase research, comparison shopping, discovering new products, to directly purchasing a specific item. Regardless of what brings the user to the website, what they seek before all else is product information. Unfortunately, in Pakistan this vital part of the user experience has been given the least amount of attention, where today, the majority of marketplaces are not able to provide customers with little more than basic product information. Whatever information does exist on most product pages does not exceed that which you get from viewing a singular image on the website.

When shopping online in Pakistan, most of the time you will only find the product name, its price, and one photo. This negligence towards product content exists primarily because priority is given to getting as many products online (a.k.a growth in assortment) and at the lowest possible cost. The examples below show the difference between good and bad product descriptions. Keeping in mind that good product content drives sales and poor content will likely kill them, it is perplexing that marketplace leaders bemoan poor traffic conversion rates but persist with providing poor product content. Enriched product descriptions are a core component of the user experience and a building block of sales and marketing functions.

Enriched product data has been proven to increase the conversion rate of e-commerce stores. However good product data is tough to obtain and expensive to create at scale. Some studies have found that 20% of purchase failures are potentially a result of missing or unclear product information.


If a customer does end up purchasing a product and adding it to their cart, then the primary decision they need to make is their payment method. While the majority of customers choose cash-on-delivery (COD), over the last two years we have seen a strong trend towards online payment channels with larger marketplaces doing a large proportion of their sales via electronic pre-payment methods.

With most banks not allowing their debit cards to be used for online transactions (most only allow it after a call to their helpline), most customers see payments online as a hassle in itself. Mobile wallets could remove this hurdle. However, it is not a ubiquitous form of money right now.

In response to the hacking at BankIslami, the State Bank of Pakistan (SBP) has placed overly burdensome security measure on banks. This greatly reduces the chance of Pakistanis converting their cash habits towards the formal banking sector.

Payments are also challenging for merchants who now have a myriad of payment gateways to choose from but not necessarily the time or resources to integrate all of them at once. When EasyPay was launched in 2015, we felt it was a great incremental addition because in one integration an e-commerce merchant could offer a mobile wallet, over-the-counter (OTC) payments and a credit/debit card gateway all at once. However, now with rise of new wallets such as JazzCash, SimSim and services such as Keenu, FonePay etc, the number of integrations required now are much greater. If these gateways are not integrated, then customers who are starting to slowly shift towards online payment methods will not be able to pay with their preferred payment partner.


When the purchase is complete, we come to our vendor base, which in our opinion is the key bottleneck to growth within the e-commerce industry today. The majority of vendors in Pakistan do not have the proper tools for accurate inventory management at the SKU level, let alone being able to connect inventory levels in real time with marketplaces.

In a recent article it was reported that less than 10% of businesses use an enterprise resource planning (ERP) software system. It is because of this lack of real time inventory-level information flowing through the supply chain that a large portion of orders for e-commerce marketplaces go unfulfilled. As is inherent in legacy businesses in the midst of transformation, it is common place for even a brand’s own website to not have visibility of, or connectivity to, their warehouse or retail inventory management solutions.

Having said that, over the last six years, we have seen many vendors, brands and resellers transform themselves very rapidly to cater to this increasing demand for quality information. Many have exhibited the wherewithal and appetite to learn and invest time in making the necessary changes needed to carve a place for themselves on the e-commerce arena. A fair number have set up new divisions specifically to focus on e-commerce marketplaces and have invested in getting the right technology infrastructure in place to make their mark. Brands and vendors have also started to realise that online marketplaces are an inevitability. Like the largest malls, they attract a lot of customers even if it is only to window-shop and brands cannot afford to not have a store to display their products.


If the product is available the next step is to enter the logistics sector and last mile delivery. Pakistan has a large number of logistics players offering package deliveries and COD services. We have one of the strongest line haul and last mile services when compared with countries in South Asia such as Sri Lanka, Bangladesh, and Nepal.

However, the current infrastructure is still primarily built for letter delivery and not package delivery with a cash collection component. Parcel delivery is currently conducted by two types of companies: generalists like TCS, LCS, M&P and specialists like BlueEx and Forrun. Generalists are delivering parcels through the legacy channels of courier riders while specialist companies are not able to scale the market as much as they would like to.

What is shocking as well is that the standards of the industry for delivery is about 1-3 business days. At present 15-20% of deliveries are returned to the sender due to one of two main reasons: the customer did not want the item or was consistently not available to receive the item over multiple attempts.

This inefficiency is partly driven from the fact that planning is still done manually on the ground rather than conducted through dynamic route planning. Picking products from vendors can take 2-3 days and repayment of collected funds between 7-30 days. All of these systems can and should be automated. Otherwise, the e-commerce industry will continue to face significant hurdles in its ability to scale much faster in the future.

The unit economics of parcel delivery is also heavily geared towards the last mile which can take up 50% of the total cost. This can occur due to multiple factors, such as customers not having visibility for when the order will be delivered, or couriers not having the exact change ready to end the transaction in a timely fashion. Incidentals such as these and more have led to a first-delivery delivery success rate of 55-65% and an overall success rate after three delivery attempts of between 70-80%.

With each attempt the cost of fuel, salary, etc. is compounded and this leads to a very high cost rate. New players are looking to scale their unit economics by focusing on the optimization of rides rather than scale. By focusing on giving customers and vendors real time updates on deliveries, dynamic route optimisation and delivery algorithms, they are looking to increase the first-delivery success rate and bring down average delivery times from 12-15 mins down to just a few minutes.

The Future Builders

While there is no doubt, that there are serious challenges that in the industry hasn’t yet even begun to solve, there are plenty of reasons to be hopeful. Firstly, the large marketplaces are still investing within the industry and will continue to do so for the foreseeable future.

Secondly, there are a group of startups that have formed in the last year or so who are working on solving a lot of the problems faced directly by both large and small e-commerce marketplaces. These startups are also by and large funded and have founders who have a lot of experience within their respective sectors.

These new startups that are coming up are aiming to become aggregators and consolidators within the e-commerce industry which has the potential to help both the large and small e-commerce ventures across the country.

Vendor management

Technifai, a startup focused on providing close integrations between a brands e-commerce site and marketplaces. The integration works by taking all product data from a brand store such as Ego, including images, product name, price, stock quantity, etc. and then sending it to marketplaces such as Daraz and Yayvo.

When marketplaces get an order for Ego’s products, Technifai sends the order details to Ego’s brand store who then process it like any other order and send a confirmation of dispatch to the marketplace all the while keeping inventory levels and prices synced between all other marketplaces that might have the same product listed.

The key challenges that Technifai solves is the issue of brands having to update their product and stock details to multiple marketplaces, multiple times a day. And marketplaces love it as their inventory is then a live replication of the brand’s store meaning they are able to market the products with minimal chance of order cancellation.

Product information management

Product information management (PIM) is a major challenge for any e-commerce company, and one that is generally ignored due to the large investment and complexity required to get it right. At its core, retail e-commerce is about selling a product without being physically present. In the absence of the physical product, enriched and accurate content is essential.

Brandverse is a product information management startup that will be going live in the first quarter of 2019. They will work directly with providing brands, and with retailers, to create, maintain product information data. Marketplaces and anyone else who requires it will be able to get fully enriched product listings including its volumetric weight, content description and high resolution and 3D photographs.

As it scales, the service will start to become invaluable to all ecosystem players, from marketplaces, to concierge e-commerce and logistics providers. Customers will benefit from the enriched content to help their purchase decisions, brands will gain consistent representation of their products across all digital touchpoints, webstores will benefit as their conversion rate will increase as will their assortments, at incrementally lower costs, fulfilment will become more accurate, and sellers across the country, whether they are online or offline sellers, will be able to sell their products online without creating content.


While e-commerce payments are still primarily processed through COD, over the course of the next 2–3 years we predict a much faster shift towards electronic pre-payments within the industry. There are now too many payment providers, and it is difficult for an e-commerce merchant to incorporate all of them.

Kuickpay is one payment service that has already integrated with over 14 banks and offers their customers the ability to pay for ecommerce orders, bills and more directly through their bank account. They are currently also working on the ability for customers to pay for orders on ecommerce stores directly on the checkout using their bank account.

APPS is one startup that is working on creating a master payment gateway for e-commerce merchants. With one integration merchants will be able to offer their customers payment options ranging from credit/debit cards, Easypaisa Wallet, JazzCash Wallet, SimSim, Bank Transfer, Keenu, and so on.


While the typical logistics letter delivery services are very strong within the country, their services are still not optimised and geared for e-commerce deliveries.

Logistics companies do not provide open box deliveries, scheduled deliveries, or live updates on deliveries. Where these services are attempted, they are not integrated directly into web-stores with application programming interfaces (APIs). For a large number of store owners, plugins are also not available by which merchants can in one click start printing air-way bills to dispatch orders and hence this requires lengthy processes.

E-commerce requires a much greater degree of logistics support than is fully available right now, and some local startups such as TPL Logistics and Trax are attempting to overcome some of these challenges directly.

The Future Builders we mention will all go on to support both large and small e-commerce companies and help them become more customer centric. However, the traditional e-commerce marketplaces face a potentially very large and dangerous challenge in the years to come by fintech and banking plays that aspire to seamlessly combine payments and retail, much like WeChat & Paytm.

The biggest challengers to the marketplaces will most likely come in the form of fintechs such as SimSim & FonePay, telco-backed wallets such as EasyPaisa & JazzCash, or from bank-led apps, such as Alfa by Bank Alfalah, HBL Konnect, DigiSilk from SilkBank et al. All of these companies are looking to create Pakistan’s first SuperApp.

The SuperApp challengers

The SuperApp is a concept that began in China with the development of TenCent’s WeChat. This revolutionary app has reshaped the entire country’s digital landscape ushering in unprecedented change in the economy both in terms of scale and speed of business. At its core it is just an instant messaging app, however, with microservice architecture built into it.

The app can serve as a payment portal as well as provide lending, ride-hailing, and food delivery services, including many others. It can even book your doctor’s appointments for you. This and so much more has been built right into the app.

In Pakistan, three names stand out right now when it comes to creating a SuperApp: EasyPaisa, JazzCash and SimSim.

China’s Ant Financial, owned by TenCent’s main rival Alibaba, recently made a massive $184 million investment in EasyPaisa, to grow the overall financial base in Pakistan and bring them onto their app.

JazzCash is vying for a competitive position in creating the SuperApp through its parent company Veon which does not want to be left behind in this race. They are investing a large sum over the next few years to expand their services.

Meanwhile SimSim is the fintech challenger who wants to move fast and make all consumer payments free. They were the first to incorporate a marketplace within their app and have plans to include food delivery and other services as well.

What makes each of these challengers a threat to retail marketplaces is that both EasyPaisa and JazzCash have a huge lead already in terms of their customer base when compared to Daraz. With an active customer base which is already more than ten times greater, the ability to sell products directly to them can be achieved without much effort. SimSim has already proven this as they have over two hundred thousand products on their app.

While SimSim might not have the customer base that the telco-backed wallets do, it has the ability to move quickly and by attracting customers to their wallets thanks to its always free promise. By offering free banking facilities, it is able to attract customers who are tired of paying fees at the traditional banks. It then uses its marketplace model and payroll systems it has developed as a way to build on its revenue model of providing payday loans and short-term credit to wallet holders.

The fintech marketplace

Being a nimbler startup, SimSim has already created a marketplace product using Technifai’s API’s. They have over two hundred thousand products available for any of their customers to purchase using their SimSim balance. Non-wallet holders can make their purchases with a credit card. The entire purchase journey on banking applications has the potential of being much faster given that payments methods are integrated and the customers names and home addresses are already saved within the Bank’s information vaults.

Even though SimSim has launched their marketplace service, it is not expected to be their core business. They are using the marketplace as means to attract and own customers attention by bringing them to their platform. Their strategy is to own the customer channel and then monetise them with multiple other services such as micro-loans in the future.

All banks need to look at diversifying their revenue models for the future. A large chunk of their current profitability stems from investing deposits and interest earned on loans. For instance, in China customers use their banks primarily to receive their salaries. After this they quickly transfer all their money into AliPay or WeChat for spending or investment purposes.

Banks most definitely need to rethink their business models for millennials. A new age of banking could provide all these services on a unified platform, ensuring their customers not only bank with them, but shop, eat, and travel through their own portals.

Bank Alfalah provides a great example as they are pursuing an aggressive digital strategy to offer multiple services directly within their app. In the last six months, they have integrated Yayvo, Eat Mubarak and directly into their app and will continue to build out their platform in the months to come.

Fight for revenue or customers?

One of the key differentiators between all the fintech players and marketplaces is that the marketplaces that SimSim, JazzCash etc. will create will not end up being their key revenue driver. Instead they simply want to keep customers active on their app. Daraz and other marketplaces, on the other hand, derive key revenue and potential profitability primarily from their marketplace transactions.

We can already see the start of this battle as this year Pakistanis have been pushed towards more and more app download campaigns than ever before. Daraz and EasyPaisa are currently leading the pack with roughly 5 million and 3.5 million downloads each.


Globally the e-commerce sector accounts for ~10% of the total retail sector. In Pakistan this figure stands at less than 1%. Even though e-commerce revenues are doubling annually, the retail e-commerce sector in particular has a lot of challenges that need to be addressed now. With all the difficulties currently faced by the sector, its ability to scale while keeping customers happy will be a tough journey but one with unfathomable rewards at the end of it. Many new startups which have recently launched are luckily addressing a lot of these challenges head on. By focusing on creating local solutions for local problems, the future could still be bright for the industry.

Even though no one can say for certain what the retail e-commerce landscape will look like two years from now, we do know that the SuperApp contenders will play a major role in in its development. Not only will they push the marketplaces to improve their service quality as a result of the increased competition, but they will also create customer awareness. By educating their considerably large customer base and bringing them on board towards e-commerce they will greatly increase the number of first-time orders and in doing so will expand the entire industry itself.

We, as an industry, need to focus on prioritising the customers’ needs first and more specifically on increasing the number of return customers. This will only happen if customers enjoy their online shopping experience and find it rewarding and meaningful. One fulfilled customer can provide immeasurable positive and, more importantly, free marketing for their e-commerce provider. Positive word of mouth marketing will be a key ingredient for the industry to take on a life of its own and grow at the 5-10x speed that it is easily capable of achieving.


The Current State of eCommerce in Pakistan (Part 1)

Originally published in Profit Magazine

This article is the start of a series which will aim to provide the reader with an understanding of the e-commerce industry in Pakistan, with a special emphasis on the online retail market.

We will start by looking at the genesis of the industry, its key players and where all of them stand today. We will continue on to analyse why certain sectors seem to be doing better than others. In part 2 we will focus on the retail e-commerce sector in much more depth and look at the challenges they are facing both internally and external threats that may arise in the near future.

History of e-commerce in Pakistan

The e-commerce market in Pakistan has existed for nearly 18 years. The first online store named Beliscity started in 2001 and even though it no longer exists today, other early stores such as Shophive (2005), Symbios (2006) and HomeShopping (2008) still do. While each of these websites continues to serve its customers even today, none of them have blossomed into homegrown successes stories as the likes of Flipkart or Coupang.

In 2012 Rocket Internet decided to enter the Pakistani market. Within the first 6 months they had already launched three ventures namely Azmalo, Daraz and FoodPanda. Azmalo shut down within its first 2 months but was later re-envisioned as a drop-shipment site that too eventually changed its name to Kaymu. Kaymu then went on to be acquired by Daraz in 2016. Daraz started as a fashion focused portal and in early 2015 transitioned to a managed marketplace focused on all categories and was subsequently acquired by AliBaba in the summer of 2018. They also subsequently launched 5 other ventures which were eventually shut down.

The oldest foreign entrant is OLX, which started its operations in 2010 and continues to operate today. Other large global startups include Careem and Uber in 2015 and 2016 respectively. In the ride-hailing category, the largest local player is Bykea, and you have regional players such as Cheetay in Lahore.

Other large Pakistani startups of note include, which started as side project of Naseeb Networks in 2006, and, Pakistan’s largest property classified player, which also started up at around the same time in 2007. The oldest however is PakWheels which started in 2003, initially, as a community forum for automobile enthusiasts in the country.

E-commerce landscape

E-commerce is an all-encompassing term incorporating multiple verticals or sectors within it. For this article we have focused on the largest of these verticals to give a sense of the depth and kind of services that are offered.

  • Retail e-commerce is defined as the online sale of physical goods and consumables. These can be subdivided into two sectors: marketplaces and brands. An online marketplace can be described as a virtual mall hosting and selling numerous different brand offerings. Online brand stores, on the other hand, only deal in products they themselves produce. Marketplace competitors include names such as Daraz, Yayvo, HumMart and others while the list for brand store competitors include Khaadi, Ego as well and various other Facebook stores. Our primary focus for this article will be on the marketplace competitors.
  • E-ticketing includes startups such as, Easytickets, and Sastatickets. It’s important to note that this sector also comprises of owned & operated, online ticketing businesses built for large transportation service providers such as PIA, Daewoo, and Pakistan Railways.
  • Ride hailing has been overtaken mostly by the global and regional giants Uber and Careem. A local player has also emerged under the guise of a startup named Bykea which takes a much more indigenous and hyper-local approach to product development and marketing, and has seen fast growth in its key motorcycle-powered ride sharing and parcel delivery business.
  • Classifieds cover a wide range of verticals from real estate, to human resources, to used cars. Sites such as OLX act as a marketplace offering all these services and more. Other sites such as Zameen, PakWheels, Rozee, on the other hand, have placed their focus on specific verticals and in doing so have successfully created a niche for themselves.
  • Food Delivery service providers include startups such as FoodPanda (an acquisition of FoodPanda and local startup, EatOye) and Eat Mubarak.

To analyse and compare the market we will be using several data points, combining both anecdotes and expert opinion. We will compare each of the verticals in terms of their fulfilment speed and accuracy, their payment methods, the share of mind they capture amongst the customer base and what the alternatives were before they arrived.

Current Scenario

The e-commerce market has changed rapidly in the last 5 years. With big funding rounds for the largest players, most have made a sizeable impact on the internet economy.

Sectors such as classifieds and ride hailing are fairly saturated right now. OLX globally has close to no competitors. A few years ago Schibsted entered Pakistan with However, OLX soon bought them out. In the property, automobile and jobs space there is Zameen, PakWheels and Rozee, all of whom have a very high brand recognition in their respective categories. Both Zameen and Pakwheels have also enjoyed the validation of outliving the Rocket Internet funded startups such as Lamudi and Carmudi.

Ticketing we believe is still an open field because even through there are three viable competitors in the market, no one has really managed to dominate the space yet. This is also due to the fact that many direct carriers have still not opened their sales to online channels. None of the ventures in the industry have received any major funding as yet also, with the largest funding announced to date being $1.5M into Sastaticket. A Rocket Internet company by the name of Jovago was also competing in the hotel booking market, but they shut down after 3 years.

Retail e-commerce is an anomaly in that it has received a lot of heavy funding especially Daraz, Kaymu and Yayvo, yet the market is not as saturated as one might expect.

So why does retail e-commerce seem to be lagging behind the other e-commerce verticals? This is even more surprising given that in more established markets, after classifieds, the retail e-commerce market always exhibits the strongest growth.

Each of these verticals have their overall customer service challenges as well. However, the general consensus seems to be that customer complaints within the retail e-commerce sector are much higher than those registered in all the other sectors.

We will explore each of the verticals one by one against their offline competitor to get a full answer.

Detailed Analysis of Sectors

To do a full comparison as to why the retail marketplaces might have not grown as rapidly, we take a look at a multitude of variables including cultural factors, fulfillment rate, and payment methods. We start by noting how each of these services was delivered before e-commerce players entered the market.

Ride hailing

The ride hailing sector is the one that has probably enjoyed the most growth within Pakistan. Uber, the global leader and Careem, the regional leader, are competing aggressively to win their share and stake of the market. Bykea, a local startup focused on motorcycle rides and deliveries, has also done well to carve out a niche for itself as the first online company to introduce motorcycle rides in the country.

Once the average fulfilment time for taxis was 45–90 mins. The startup market has successfully managed to bring this down to just a few minutes while simultaneously making the rides much cheaper on average. This is the primary cause of this tremendous growth. Mobility has always been a challenge in Pakistan, especially for the underserved and female population. By bringing air-conditioned cars at multiple price points, the market has grown tremendously over the last 3 years.

The biggest challenge still facing the ride hailing market is accessibility. Their addressable market is currently limited only to those customers who have a smartphone and an internet connection. While internet penetration is growing, there is still a lot of opportunity to solve the mobility problem of the population that remains online. .

Food Delivery

The food ordering sector has also done well, even though its growth hasn’t been as swift as that of the ride sharing sector. Online food ordering companies have had no competitors for the last three years after Foodpanda bought out EatOye. However, August witnessed the launch of Eat Mubarak, a new service that offers for the first time offer a viable alternative to FoodPanda that seems to be gaining traction. Cheetay, a startup focused on the Lahore market, also offers food delivery alongside groceries and other commodities. Competition in the market will increase in 2019 with Careem and Uber also launching their food delivery services in the first quarter.

As you can see, although online food apps have drastically increased the ease of ordering(bringing it down to just a few short clicks), the overall fulfilment time is still the same. This might be one of the reasons why the market hasn’t matched up to the break-neck speed of ride-hailing startups. Nevertheless, it does continue to gain strength.

Typically, the food culture in Pakistan differs from city to city. The online food market is much larger in Karachi than in Lahore. Apart from its market size, one of the cultural reasons for this is that in Lahore dining out is more of a preferred experience whereas in Karachi ordering in is far more widely accepted.

Retail e-commerce

The retail e-commerce market has the greatest revenue generating potential within the entire e-commerce sector.

The biggest differential between all the verticals is that the fulfilment time in the retail e-commerce sector is far higher than what is expected from the other sectors, averaging 3–5 days as compared to less than an hour for all other verticals. The fulfilment success ratio is also lower with on average less than 80% of customers ending up actually receiving the order they place.

The above table makes a very vital case for fulfilment time being a major impediment in the growth of online retail. Even though e-commerce provides the convenience of not having to leave your house to place an order, there are other deterrents which stem from traditional and cultural factors. E-commerce could never replace the experiential element of families going to the mall together where impulse led shopping is a powerful tool. Traditional shopping methods also allow one to see the product being bought and prices can be haggled down. One also knows exactly where to go to return or exchange a product, an issue which in traditional shopping can be dealt with on an immediate basis. These factors have contributed to be a huge impediment to online shopping and unless they can offer a more reliable and quick service, they will forever play second fiddle to brick and mortar retail.


While the overall e-commerce market has doubled in the last year alone and many of the large retail e-commerce ventures will have also grown at this rate or higher themselves, we believe that if retail e-commerce ventures had addressed their fulfilment challenges earlier, their growth rate might have been closer to 5-10x per annum rather than 2-3x. This growth would have been possible as returning customers would have helped spread the word and there would be a lot more trust overall within the retail marketplace vertical.

It is for these reasons that we believe this market segment is still open for disruption and believe that this disruption could potentially come from the upcoming super-apps or the growth of direct-to-consumer (D2C) business models within the next two to three years. I discuss these business opportunities and how the retail e-commerce vertical can secure itself against such threats in part 2.

Slowing Down Digital Banking in Pakistan


After the infamous Bank Islami Hacking incident, that took place in October, the State Bank of Pakistan’s Payment System Department (PSD) released a circular last week in a concerted effort to fortify the security systems under which all banks in the country operate. As well intentioned as these new measures may be it is the belief of many in the industry that they will slow down the growth of the banking sector; specifically in terms of customer growth and its pace of innovation.

The full circular can be read here.

Positive Elements

Let us begin by first discussing the positive elements of the circular which indeed will strengthen the integrity of banks and offer customers more protection. The PSD is to be commended on its actions regarding the following concepts.

Undeniably, measures had to be introduced to protect banks and their customers and the PSD has done very well in enacting article 3 stipulating free transactional sms and emails to be sent to all customers. This will greatly help in the detection of fraud on an immediate basis. It also promotes a constant dialogue between the banks and their respective customers reducing any existing barriers between them.

In the same spirit article 17 stipulates that banks should inform customers within 48 hours of any breach and make reparations within the same timeline. This ensures that no bank could ever try to hide any possible breach from its customers therefore complete transparency will be the norm for the future.

Both of these measures will help establish a strong platform of trust and provide customers with the rights they need in order to further their existing financial service requirements.

Articles 6 states that the majority of plastic cards in the country be replaced with new cards supporting an EMV chip and pin complaint system. This will be a major breakthrough as current magnetic based cards can be duplicated while chip and PIN formats cannot. This will also replace the act of requiring a signature at the point of sales with the requirement of typing in a PIN number instead. Many believe this to be a far more secure method of payment and it provides customers with the confidence that their cards are less likely to be misused if lost.

Finally, article 13 states that banks must submit an implementation plan for 3D Secure protocol on online payments. If implementations for all banks are completed within the next 2 years, this could be very helpful for the growth of the eCommerce market in Pakistan.

Catch 22

As commendable as their efforts have been the PSD has in all earnest implemented a few troubling measures which could seriously threaten the future development of Pakistan’s financial sector.

Article 4: Activating mobile banking at branch offices

iv) Henceforth, banks/MFBs shall activate/reactivate online banking services including internet/mobile banking for their customers after biometric verification at any branch of their bank. At the time of activation of online services, banks’/MFBs’ relevant staff shall educate customers about various types of online banking frauds as well as the corresponding preventive measures. Banks/MFBs shall be solely responsible for ensuring customer authentication for activation of any ADC and any loss of customer funds due to false activation of any ADCs shall be compensated by the respective bank/MFB.

This paragraph alone will hurt a lot of the micro-finance banks and large banks that were doing online activation of customers to create accounts without the need of visiting a branch. How are digital banks supposed to operate when such a stringent requirement is put on activating customer accounts? Small banks that do not have a large footprint in terms of branches have now also been put at a severe disadvantage.

** Correction. Wallets which operate under the branchless banking regulation’s are not specifically mentioned as having to comply with these regulations. Therefore wallets such as SimSim and others are not required to enact these measures. This might even give them an advantage in the short run, and in the medium term we might see the larger banks opting to create wallets under the branchless banking act. **

̶W̶a̶l̶l̶e̶t̶s̶ ̶s̶u̶c̶h̶ ̶a̶s̶ ̶J̶a̶z̶z̶c̶a̶s̶h̶ ̶a̶n̶d̶ ̶S̶i̶m̶S̶i̶m̶ ̶w̶h̶o̶ ̶w̶e̶r̶e̶ ̶o̶n̶b̶o̶a̶r̶d̶i̶n̶g̶ ̶f̶u̶l̶l̶y̶ ̶w̶i̶t̶h̶i̶n̶ ̶t̶h̶e̶i̶r̶ ̶a̶p̶p̶s̶ ̶w̶i̶l̶l̶ ̶n̶o̶w̶ ̶h̶a̶v̶e̶ ̶t̶o̶ ̶t̶e̶l̶l̶ ̶c̶u̶s̶t̶o̶m̶e̶r̶s̶ ̶t̶o̶ ̶g̶o̶ ̶t̶o̶ ̶a̶ ̶b̶r̶a̶n̶c̶h̶ ̶t̶o̶ ̶c̶o̶m̶p̶l̶e̶t̶e̶ ̶r̶e̶g̶i̶s̶t̶r̶a̶t̶i̶o̶n̶.̶ ̶J̶S̶ ̶B̶a̶n̶k̶ ̶w̶h̶i̶c̶h̶ ̶h̶a̶d̶ ̶v̶e̶r̶y̶ ̶i̶m̶p̶r̶e̶s̶s̶i̶v̶e̶l̶y̶ ̶i̶n̶t̶r̶o̶d̶u̶c̶e̶d̶ ̶a̶n̶d̶ ̶d̶e̶p̶l̶o̶y̶e̶d̶ ̶f̶i̶n̶g̶e̶r̶p̶r̶i̶n̶t̶ ̶s̶c̶a̶n̶n̶i̶n̶g̶ ̶v̶i̶a̶ ̶s̶m̶a̶r̶t̶p̶h̶o̶n̶e̶ ̶c̶a̶m̶e̶r̶a̶s̶ ̶f̶o̶r̶ ̶i̶d̶e̶n̶t̶i̶t̶y̶ ̶v̶e̶r̶i̶f̶i̶c̶a̶t̶i̶o̶n̶ ̶w̶i̶l̶l̶ ̶n̶o̶w̶ ̶s̶a̶d̶l̶y̶ ̶n̶o̶t̶ ̶b̶e̶ ̶a̶b̶l̶e̶ ̶t̶o̶ ̶c̶a̶p̶i̶t̶a̶l̶i̶s̶e̶ ̶o̶n̶ ̶t̶h̶e̶i̶r̶ ̶i̶n̶n̶o̶v̶a̶t̶i̶o̶n̶.̶ ̶T̶h̶e̶s̶e̶ ̶a̶r̶e̶ ̶j̶u̶s̶t̶ ̶a̶ ̶f̶e̶w̶ ̶e̶x̶a̶m̶p̶l̶e̶s̶ ̶o̶f̶ ̶a̶ ̶f̶i̶n̶t̶e̶c̶h̶ ̶s̶e̶c̶t̶o̶r̶ ̶t̶h̶a̶t̶ ̶w̶a̶s̶ ̶o̶n̶ ̶t̶h̶e̶ ̶v̶e̶r̶g̶e̶ ̶o̶f̶ ̶b̶l̶o̶s̶s̶o̶m̶i̶n̶g̶ ̶t̶h̶a̶t̶ ̶i̶s̶ ̶n̶o̶w̶ ̶b̶e̶i̶n̶g̶ ̶h̶e̶l̶d̶ ̶b̶a̶c̶k̶ ̶b̶y̶ ̶t̶h̶e̶ ̶s̶h̶a̶c̶k̶l̶e̶s̶ ̶o̶f̶ ̶p̶r̶o̶t̶e̶c̶t̶i̶v̶e̶ ̶m̶e̶a̶s̶u̶r̶e̶s̶.̶ ̶L̶e̶g̶i̶s̶l̶a̶t̶i̶o̶n̶ ̶n̶e̶e̶d̶s̶ ̶t̶o̶ ̶w̶o̶r̶k̶ ̶t̶o̶g̶e̶t̶h̶e̶r̶ ̶w̶i̶t̶h̶ ̶t̶e̶c̶h̶n̶o̶l̶o̶g̶y̶ ̶i̶n̶ ̶o̶r̶d̶e̶r̶ ̶f̶o̶r̶ ̶P̶a̶k̶i̶s̶t̶a̶n̶’̶s̶ ̶f̶i̶n̶a̶n̶c̶i̶a̶l̶ ̶m̶a̶r̶k̶e̶t̶s̶ ̶t̶o̶ ̶b̶e̶ ̶t̶r̶u̶l̶y̶ ̶e̶f̶f̶e̶c̶t̶i̶v̶e̶ ̶a̶n̶d̶ ̶p̶r̶o̶d̶u̶c̶t̶i̶v̶e̶ ̶i̶n̶ ̶a̶ ̶s̶a̶f̶e̶ ̶a̶ ̶s̶e̶c̶u̶r̶e̶ ̶f̶a̶s̶h̶i̶o̶n̶.̶

Article 10: Banks to decide daily spending limits

x) All payment-card issuing banks/MFBs shall immediately set reasonable per-day transaction limits commensurate with their risk appetite and transaction volume with the Payment Schemes especially for cross-border usage. Banks/MFBs shall ensure that their risk exposure remains within the pre-agreed limits set with the international/domestic payment schemes through legally binding contractual arrangements.

Article 10 should be a concern for customers because it takes rights directly away from them. Why can a customer not decide and set their own limits on their daily spending. Why must it be dictated to them as if they were children unable to know what is best for them. Surely this disregards the customers’ rights to the amount he or she wishes of his or her own money on a daily basis if it, perchance exceeds the dictated norm. The daily limit is not set to the customers’ requirements but instead in order to comply with the risk appetite of the bank. This is a perfect example of institutional dictates which hold a market back from prospering to the level of success it could naturally attain. The implementation of spending limits will be a huge impediment to future growth and should be seriously reconsidered by existing authorities.

Smarter options are available which have been employed by multiple fintechs in Europe. It is the hope of many in our industry that Pakistan will follow the examples of success stories where banking systems worked closely with new technologies to bridge gaps in security and verification methods. In this highly competitive era if we are to see Pakistan achieve it’s true potential as the financial giant it could very really be, we need to learn from the best.

Examples of great digital banks

Challenger banks which are emerging in the UK and Europe are some of the most user friendly, interactive and secure financial service institutions currently in place. They allow a whole host of security features that not only make transactions more secure but they also empower customers at the same time.

The offer very in-depth security features and all of them are available directly to consumers through their app. Features which allow you to freeze your card, set spending limits, allow ATM or online transactions are available as options directly to the customer without the need to call their bank.

We should be using these as examples and asking our banks to be innovative and customer oriented while also ensuring that their database security features are top notch. Pakistan’s financial sector can not risk hampering its development at this crucial stage when on the sheer size of it population alone we could stand to be at the forefront of technological innovation. We need to get more and more customers onboard with online financial services in the best most effective and secure methods possible.

Example of how Revolut gives its customer power over features
Security settings for each card within Revolut
Additional spending restrictions per card and instant notifications on payments


Successful companies do not have to choose between customer security and ease of use; they do both. The best of companies are those which are able to reduce the friction a customer feels when interacting with their products, while at the same time ensuring a high level of security and data protection.

When problems do come up, we should not look to over-regulate but instead use it as way to foster innovate change and move forward with smart solutions. Only then will our un-banked and under-banked populations come to trust the industry and use the banking channels available to them more regularly and with greater ease. We are a nation of more than two hundred million minds and we need to create a digital infrastructure that will ultimately lead to a safer and more secure future together – with customers and financial service providers alike!

The Digital Rupee

Today, Pakistan is one of the least developed countries in terms of financial literacy and inclusion. While I won’t go into the reasons behind it, I want to discuss how we can advance our financial inclusion numbers quickly and substantially by creating a cryptocurrency out of the Pakistani Rupee (PakCoin or Digital Rupee).

I also fully understand that for an initiative like this to be pulled off would require an immense amount of political capital — — eeee-

Why Create a Crypto Asset

We need to create a cryptocurrency out of the rupee for three main reasons:

1. The ability to deploy smart contracts will be crucial in increasing adoption in the early stages (more below), while later on, it can be used to create a smart government.

2. The ability to be globally traded with minimal fees in the long-run will help with the inflow of capital into Pakistan (consequently outflows will also become easier, and I will address this later on)9

3. Have the PakCoin become a reserve currency in the future, the same way as the USD or the Yuan is today

In this article, we will not go into the details of the technical elements, but I will use a subsequent article to cover those topics. However, just to give you a rough idea; we will be creating a coin on top of an already existing protocol such as Ethereum, Neo, Stellar or others. We will also want to list the coin for direct trading on exchanges at some point in the future. One topic that this article will also very briefly touch on is the miner fees, which could become crucial to any large-scale implementation.

Key Objectives

• The coin must help in making Pakistan more financially inclusive

• The coin must be backed by PKR i.e. as a store of value

• The coin must be used regularly and become a medium of exchange

• The coin must be accepted by merchants, banks, and all govt. institutions

• Coins can be kept in a wallet or be deposited in a bank account

• The protocol must maintain the privacy of the users

The PakCoin Wallet Requirements

While the PakCoin will be built on top of a protocol like Ethereum, I also envision a PakCoin Wallet to be created in parallel to give additional features to Pakistani citizens.

The PakCoin wallet will be built for primarily Android and iPhone users. However, certain features will also be available for feature phone users via USSD.

The requirements include:

  • Ability to create a wallet using NADRA (National Database and Registration Authority) verification
  • Creating and issuing 3 types of public keys (Long alphanumeric string, e.g., 0x562bb56de196bcd30dac3835055316078733fb83; Verified phone number, 03008561123; Domain name similar to ENS, e.g., adamdawood.eth)
  • The private key will also be created and held within the wallet
  • Simple QR code features to receive and send money from wallet to wallet
  • Money transfer facility via IBFT to local bank accounts
  • Receive money via IBFT (pull & push) from local bank accounts
  • Access dApps (eventually)

Becoming a Medium of Exchange

For the PakCoin to become a medium of exchange, I propose the following:

  1. The SBP to issue newly issued coins to all registered wallets (1 wallet per CNIC) every X period
  2. The newly issued coins to be available in the individual’s wallet for a period of Y days
  3. For every newly minted PakCoin that is transacted within the Y days’ period, it should be converted into a permanent coin
  4. All coins that have not been used in a transaction during the period to be destroyed
  5. After all unused coins are destroyed, a new round of coins to be issued. However, a greater portion of coins should be given to those who are doing a larger number of transactions with the largest number of people or those who have more coins stored in their wallet. This will incentivise people to spend their coins.

Doing this for a period of 6–9 months should result in high levels of adoption. Also, those who directly credit more coins into their account via their bank account should also be given a large subset of coins during each free coin distribution.

The Cypto Bank of Pakistan

The Crypto Bank of Pakistan (CBP) will be a new Bank that will be incorporated and run by the State Bank of Pakistan. Its primary purpose will not be to do any conventional banking for customers (i.e., loans/savings accounts, etc.); instead, it will act as the custodian for all coins that are issued and will hold an equivalent amount in its reserves to maintain the parity of 1 PakCoin to 1 PKR. We will in effect be creating a stablecoin or an IOU coin as commonly referred within the crypto space.

The bank will also provide a mechanism whereby coins from customers’ wallets can be moved into traditional banking channels, hence facilitate IBFT movements to other banks as well as from the banks to customers’ wallets.

However, one crucial issue that needs to be discussed further is the question of who will decide on the issuance of new coins should there be any. I think we could set up a standard formula such as Milton Friedman’s k-percent rule to determine growth in the increase of the money supply by a fixed percentage each year.

While I understand the logic behind having a fully decentralised currency, I feel a larger debate would also be necessary to determine whether a nation should have some powers to shore up the currency when required.

Default Currency for Global Exchange (slowly)

When we create the Digital Rupee, it will end up being a link between the world of fiat currencies and digital currencies. Being a potential go-between will also mean that the currency can quickly flow out of the country causing a major problem in our already large deficit.

To counteract this, we will take a measured approach to making the PakCoin a global standard with some of the key points being:

  1. At launch, only those possessing a NIC card will be able to buy/hold/sell the coin.
  2. We will then open it up for purchases by non-Pakistanis who can hold the currency in CBP denominated wallets only.
  3. In addition, we will gradually open up the currency for active trading on third-party exchanges such as Binance. We will only open up the currency to global exchanges slowly.

Major Questions

  1. Will the state bank be allowed to print more money (quantitative easing) or should we let the money supply be locked in perpetuity like bitcoin after the initial growth period?
  2. How many coins will we need to issue in the growth period to ensure a large number of the population actually start using the wallets?
  3. Will the wallet be available only to smartphones, or should we create a feature phone equivalent as well?

Using Smart Contracts for a Smart Government

We can use smart contracts to create a smart government.

  • For all local taxes that are paid, the taxpayer can directly deposit a percentage of their taxes to a government department of their choice
  • Auto-deposit 10% of all parking tickets into a driver training program
  • Auto-depositing 50% of littering fines as an added budget for local maintenance/clean-up teams

References & Reading Material





A Napster in the Blockchain age

Imagine if Napster was built today, but this time it was legal and used blockchain to create a decentralised platform to share and sell music.


Napster was a roaring success when it first launched due to its easy ability to share music (illegally) and more importantly get music. It has since been overtaken by iTunes initially and now through subscription music services such as Spotify and Apple Music.

With services such as iTunes and Spotify however, you cannot share your music like you could back when you had cd’s, and although I subscribe to many services, I’m not a fan of the model as in the long run you never end up owning anything.

What follows are my thoughts on what a decentralised music platform could look like in today’s world and how it would benefit both music lovers and those who create music also.

Customer (Music Owner’s) Journey:

  1. First step purchase a song or album and enjoy it.
  2. You want to share it with a friend. So you send it to them. The copy leaves your collection and arrives in theirs. You cannot listen to it, the same as if it was a physical cd.
  3. But let’s build in a smart contract. The album/song you have given has a smart contract built in saying it will be returned back within 7 days. Boom, never have to worry again about losing my “cd” and I own the music too rather than subscribing to Spotify where I lose my entire music collection the minute I end my subscription.

Customer (Music Borrower’s) Journey:

  1. Sign up and find my friends on the platform.
  2. Request the rights to a song/album they have (borrowing from friends has a $1/month subscription, to borrow music directly from artists is free)
  3. Once rights given, listen to the music. After 7 days the music is returned back to the owner.
  4. Buy the album from the artist directly and listen to it permanently.

Musicians Journey:

  1. Upload latest songs/album
  2. Create 1,000 copies of it. To reward most loyal fans the first 10 copies are given for free to whoever downloads it, next 90 are given at $2, the next 400 at $5, finally last 500 at $10.
  3. The artist can issue copies of his album to prospective fans for 7 days as well to see if they like it. If they do, they can purchase it, if not its feedback for the musician.
  4. Start marketing their music via the platform. The more fans and listens you have the greater the chance of getting discovered.

Platforms Journey:

  1. For every music album that’s sold they make a cut of the revenue.
  2. For every song/album that is listed on their platform they take a small listing fee that is tied to the number of copies created.
  3. For every customer on their platform that listens to borrowed music from friends a nominal $1 per month subscription fee to cover costs. First 5–10 albums borrowed would be free to listen.


For Music Lover’s

While the overall market for subscriptions is growing rapidly, soon customers will realise that the cost of subscriptions is much higher in the long run. Imagine running into some financial trouble or if prices are raised, and realising the Spotify monthly cost is far greater than you can afford. You automatically then lose access to your music collection.

With purchasing you at least know that you own the music forever, and regardless of your circumstances in the future, you will be able to listen to your favourite music however you choose to and wherever you want to.

For Musicians

The life of a musician is very tough. In the US musicians receive only 12% of industry revenue, with the industry heavily geared towards megastars. The long tail of musicians simply do not end up making a sustainable income.

By creating a platform where musicians can offer discounted rates to loyal fans, and offer their music album for free, with the knowledge it cannot be replicated by the customer they will be able to create and generate a very loyal fan base while giving customers the ability to purchase from them directly as well.

Other potential markets where this could be replicated:

  • eBooks
  • Movies/TV Shows
  • Apps and or subscriptions e.g Medium, the Economist, Games
  • Airline Tickets and other tickets in general
  • Credit Cards ( share with a person to spend a specific amount at specific stores)

Pakistan’s eCommerce Market Size to Cross $1.2 Billion in 2018

Pakistan’s E-Commerce Market Size Exceeded $600 Million in 2017

The State Bank of Pakistan has released their official numbers showing the actual size of the e-commerce market. Before delving into its analysis, let us first take a look at the numbers in full.

Data Sources

The two primary sources of the data are:

  1. Annual Performance Review (APR) 2016–2017 — Payment Systems — link
  2. First Quarterly Report (FQR) 2017–2018, Special Section 2 — Online Payments Platform — link

Quick Analysis

Based on the report, we can deduce that, on average, every prepayment order in Pakistan had a basket size greater than Rs. 8,000 and each of the 571 merchants processed about Rs. 17M in prepayment orders on average.

Judging the “Cash on Delivery” Market Size

Not all e-commerce transactions are done through pre-payment. For instance, in the large marketplaces and brand stores, most of the payments are made via cash on delivery terms. To accurately gauge the e-commerce market size, we have to make an assumption on the volume of transactions processed via Cash on Delivery (COD).

Most of the other industry professionals claim that payments made through Cash on Delivery account for about 90% of all e-commerce transactions. However, that figure represents the number of transactions rather than the volume of transactions.

In my analysis, I have found that customers are more likely to pay for higher value orders via prepayment rather than COD. Yayvo, for example, had 76% of its orders below Rs. 1500 paid via COD, while 60% of its orders above Rs. 5000 were paid via prepayment.

I still believe that during the Fiscal Year 2017, the market was still very nascent to the idea of prepayment. I would estimate that COD was at minimum 85% of the total market for payments. This means that the e-commerce market size in Pakistan is ~Rs. 65 Billion or ~$620 Million.

Other Assumptions

Not all e-commerce sites process their online payments in Pakistan. Within the fiscal year ending in 2017 (July 2016 — June 2017), large e-commerce players such as Careem, Uber, and FoodPanda processed their payments via international gateways. Their prepayment revenue is unlikely to be counted within the local e-commerce market size but is counted in the international volume of transactions instead.

I am assuming that there was no duplication of the online acquirers when the State Bank was collecting this data. For example, JazzCash and EasyPay both used the MCB e-Gateway to power their platforms during this period. I am assuming that the State Bank did not count these numbers twice when collecting the figures submitted by EasyPay/JazzCash and MCB respectively. This is especially important given that EasyPay had over 350 merchants and JazzCash over 150 merchants by June 2017, which possibly makes them the largest online acquirer’s in Pakistan.

E-commerce Merchants

According to the State Bank, there are 571 e-commerce merchants in Pakistan. Typically, the e-commerce merchants that come to mind are players such as and We have to dismiss players like FoodPanda, Careem, and Uber because their payments are not processed in Pakistan.

Other large merchants include ticketing platforms such as Pakistan Railway and PIA, amongst others. Pakistan Railway, in its first two months, reported a revenue of Rs. 100M from online sales. In addition, an article in November 2017 stated that UBL had made more than Rs. 1 Billion from online sales through Pakistan railway alone.


The overall e-commerce market size is much bigger than what many industry insiders estimate. After reviewing and examining the numbers, my conclusion is that the e-commerce market size transcended $600M in the 12-months period between July 2016 and June 2017.

I believe the number will be much higher in the current financial year (June 2017 to July 2018). A case in point is Yayvo, which is on course to grow their revenue by at least 3x this year. Therefore, the overall market, even with 2x growth, would rise to approximately $1.2 Billion. This means we will be crossing the $ 1 Billion e-commerce revenue mark two years before the 2020 deadline we had set.

[1] There is a difference in the volume of transactions indicated in the two reports. I will be taking into account the numbers given in the FQR because those stated in the APR are provisional. However, the FQR does not show the number of transactions (my assumption is that they would have risen). Therefore, since the FQR does not give full information, I will use the APR numbers.

Using A Data Driven Approach to Upgrade the Yayvo Website

Originally published on ProPakistani

When Yayvo launched in September 2015, we inherited our website from our past moniker, TCS Connect. That site, though functional, was not considered visually appealing or user-friendly.

Since December we have started to place a lot of emphasis on our UI (User Interface). Being an e-commerce company we wanted to be fully data driven and over the course of the last three months, we have made some impressive strides. This article aims to share some of our learning experiences in the hope that you may also be able to start your journey to providing a bigger and better user experience for your customers.

Typical journey for an eCommerce customer

Yayvo’s integral aim has always been to provide their patrons with as seamless a customer experience as possible, helping them through each stage of their journey while showcasing Yayvo’s strengths in terms of delivery and customer experience.

Before we discuss the aspect of data, it is important to give credit to the Product, Design and Technology teams at Yayvo, who have put in many hours into what will be just the start of our User Experience (UX) journey.

Data Driven Design

Our team began with having to make an extremely important decision — which A/B or Multivariate testing tool to employ. We considered two options: Optimizely or Visual Website Optimiser (VWO). Due to its user-friendliness and simple technical implementation, VWO came out on top. (Tip: Don’t directly trust the data provided by VWO, verify the results by checking them within Google Analytics as well.)

Test 1: Product Page Call To Action

Our first major task was to see what portion of our product page attracted of the highest Call to Action (CTA).

End Goal: A better CTA

  • Describes Next Action vs. End Result (e.g. — ‘Add to Cart’ vs. ‘Buy now’)
  • Must contain a trigger word (e.g. — “Buy” or “Add”)
  • Gentle Nudge vs. Commitment Requirement (e.g. — ‘Add to Cart’ vs. ‘Buy now’)

Hypothesis: Instead of using the simple word ‘Buy’ as the CTA in product pages, use variations which contain the aspects mentioned above.

  • Control — Buy
  • Variation 1 — Buy Now
  • Variation 2 — Add to Cart
  • Variation 3 — Order Now

After running the test with 2800+ users, we determined quite conclusively that “Add to Cart” was the best conversion-driven CTA. Its conversion rate was 2% greater than the incumbent CTA, with a 100% degree of certainty.

The winning variation, ‘Add to cart’, has the following characteristics:

  • It indicates the exact event that happens after the click.
  • It does not rush the user (less commitment than having ‘Buy’ or ‘Buy Now’).

Test 2: Color of the Call to Action

We then decided to run a test on the CTA color of our product page. We wanted to test variations based on our research about the strongest colors for CTA’s. The existing red was our control and we added green as the variant. Green was selected because we felt it was the tone that contrasted most against red. This was important as our website has red as its primary color.

The results showed that the green button led to a higher conversion rate over the red button.

The fact that Green was the highest converter contradicted three studies we came across that seemed to show that red was a much better converter: DMix, HubSpot, VWO.

If Red was such a good converter, then having a website with numerous red elements could potentially be a distraction to users which may result in a lower overall conversion rate. Our team also felt that the overtly red overtone of the website was overpowering. This led to our decision to reduce where possible the red elements of the website.

Reducing the Red Impact

Yayvo from the start has always had a red theme associated with it. However, from a personal perspective and comments from users we knew it had to be re-evaluated.

At this point, we decided to take a visceral approach to design rather than conduct tests. Our goal was simple — keep a customer’s focus only the essential task at hand on every page by limiting distractions.

We made the following changes on the homepage:

  1. Replaced the red color in the category header bar with Grey, while making the category drop down red.
  2. Removed the partner websites from the header and placed them below the fold in the footer.
  3. Changed the red color of the category selector (just below the sliders) to orange.

After the changes the tone of the overall website changed quite dramatically.

Product Page Overhaul

The product page also underwent a fairly large change. We conducted focus groups and internal surveys that led to the realisation our product page needed to become more convincing in pushing users to purchase. Further still we conducted heat map tests on our product page to identify the most used features and those that were surplus to requirements.

Design Principles: Focused Push Towards Conversion

  • Show the customer as large an image as technically possible.
  • Show a clear CTA.
  • Make it straightforward and intuitive to choose options.
  • Easy and precise identification of mistakes.

Checkout Overhaul

The checkout page is the final hurdle a customer has to face before they commit. Given the sheer amount of information required at this phase, customers can easily bounce off the page and not complete their transaction.

Design Principles: A Simple & Intuitive Process

  • Keep information requirements to a minimum.
  • Guide the user through the next steps
  • Limit distractions
  • Easily identifiable any mistakes in input

Design Changes:

  • Removed all elements of the Header and Footer except the logo and the Contact Number Bar
  • The logo is no longer clickable to the homepage thereby reducing to three the ways in which you can move away from the page:
  • The back button;
  • Edit Product Option in Section 4 and;
  • Close the Tab/Browser.
  • Clear CTA — “I Confirm My Order” — which due to its size and color is the most prominent element of the page.
  • Reduced number of fields required in the shipping and billing option.
  • Hide the booking code requirement — which is only used by a tiny subset of users.

Performance & Results

With each major change we also monitor our overall conversion rate after implementation. While it is difficult to attribute any increase or decrease in conversion rate directly to any one change, factors such as marketing campaigns, exclusive stock availability, new product launches all can affect the overall conversion rate in a significant way, however we try and control for these by filtering down to the most common attributes when we measure the results.

To check the success of the overall checkout page we created filters so that only direct traffic and desktops views would be counted. When we did this we noticed that our conversion rate had increased by a significant 31–54% over 2 weeks.

direct and desktop traffic

Next Steps

The changes and tests we have run is just a first step for us. While we have decided to start with the overall UI of the website, what is far more important is the user experience we can create. More than color testing the buttons on the online portal, we feel that creating a sustainable business is about providing a good delivery experience.