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Challenges in E-commerce logistics, cross-border exports and system automation highlighted in USAID’s collaboration with Pakistan

KARACHI: The Ministry of Commerce (MoC) organised a two day workshop to overcome the challenges faced in ecommerce logistics, cross border e-commerce exports and system automation in collaboration with USAID’s Pakistan Regional Economic Integration Activity (PREIA).

The workshop was attended by over 65 key stakeholders, bringing together organisations from the public and private sector, including the MoC, State Bank of Pakistan (SBP), Revenue Authorities, Pakistan Single Window (PSW), Pakistan Post, and Pakistan Customs.

Private sector participationin facing challenges that included representation from online marketplaces, e-commerce merchants, logistics companies, commercial banks, women entrepreneurs, and Chambers of Commerce and Industry.

Welcoming the audience in her inaugural address, the Executive Director General of the MoC, Aaisha Makhdum apprised participants about the promising growth witnessed in the nascent e-commerce sector.

She emphasised the importance of public-private collaborations in achieving e-commerce policy objectives. She also highlighted the government’s initiative to facilitate B2C e-commerce exports through the SRO 14 that enables Small and Medium sized Enterprises (SMEs) to export varied goods in small quantities.

The Director General (Services) of the commerce ministry, Muhammad Suleyman Khan also presented the findings of a survey conducted earlier this year by the ministry to solicit key challenges in domestic and cross border e-commerce logistics.

The survey respondents included challenges of ecommerce sellers, online marketplaces and companies providing logistics services.

Regarding the challenges faced by courier companies, PentaExpress Chief Executive Officer (CEO) Aamir Q Basrai told that, “One of the biggest challenges faced by the courier industry is that there are no barriers to entry. There is no system to manage the number of courier businesses entering the market”.

“For the sake of competition, we witness price cutting wars that only benefit the end consumer. Due to this, we see many startups and courier companies on the verge of closure,” he lamented. The Pakistani e-commerce industry stands at $5.9 billion and is expected to grow by approximately 6.09% annually, added Basrai.

“The need of the hour is to have responsible sellers and strong consumer behaviour not only to sell genuine and rational products but also to gain consumer confidence which has the potential to mature and grow by over 10% annually. The ecommerce industry provides a big market to multiple businesses across sectors to perform with new avenues,” suggested the PentaExpress CEO.

Daraz Pakistan Managing Director, Ehsan Saya said, “In terms of logistics, the areas of improvement in our country are the low adoption of digitisation and lack of physical infrastructure.”

“Status updates in smaller cities and rural areas for instance are usually recorded manually on paper, which makes it harder to track and circulate information in a timely manner.

Whereas in urban cities, these records are now being kept digitally which helps with real-time tracking. Secondly, roads and highways in rural areas are not properly developed in certain localities, which hikes the cost for delivery in those areas,” he added.

“Over the years, we have partnered with approximately 10 industry experts and worked closely with them to bring efficiency in the ecosystem as a whole. One would have noticed that many new players have emerged in this space in the last 18 months to solve issues related to scale and digitisation.

There is still room for more companies to come in to fulfil the growing demand, especially those who bring innovation in logistics,” Saya explained.

With regards to the challenges of cash-on-delivery (COD) orders, Saya noted that the “Success rate is lower than those orders which are paid through digital means. Digitally paid orders have a failure rate of 1-2%, which with COD stands at around 12-14%. We have worked very hard over the last few years to make it easier for customers to pay for orders using digital payment methods. We work with schemes and banks to educate, incentivise and encourage customers to use their cards and wallets. Besides offering discounts, we try to make the experience easier when customers pay digitally.”

“The third challenge is that customers are still starting to trust ‘online shopping’. Covid definitely expedited this journey, however, it’s crucial for all online marketplaces and sellers to provide customers an exceptional experience,” he further explained.

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