E-commerce in Pakistan: What’s in it for the supply chain and logistics market

The e-commerce landscape in Pakistan is rapidly evolving, presenting exciting opportunities and unique challenges for the logistics sector. As of 2023, Pakistan stands as the 46th largest market for e-commerce globally, with revenues reaching an impressive US$5.2 billion, notes the International Trade Administration. This growth signals the need for efficient and responsive supply chains and logistics to support the expanding e-commerce sector, ensuring businesses can thrive in this digital era.

The e-commerce boom in Pakistan

According to the Pakistan Institute of Development Economics, 58.4% of internet users now make online purchases weekly. This upswing in e-commerce can be explained through several factors, including: 

1. Rise in contactless shopping during the pandemic

The lockdowns introduced many Pakistanis to the convenience of online shopping, a paradigm shift in consumer behaviour as they sought safe, contactless purchasing options. Even as restrictions eased, the habit of purchasing online grew since many appreciated receiving products at their doorstep. 

2. Government initiatives to build a digital-forward economy

Launching the E-commerce Policy Framework in 2019 has been instrumental for the Pakistani government in creating an enabling environment for growth. This policy aims to simplify taxation, improve logistics infrastructure and support e-commerce entrepreneurs.

3. Increasing mobile app purchases

Consumer spending within mobile apps has also seen a notable increase, rising by US$11 million in 2023 compared to the previous year, as revealed by Pakistan's Digital 2024 We Are Social report. Even as the United Nations highlighted challenges like low digital development in half of Pakistan's districts, the increasing mobile app penetration locally points to a growing acceptance of online transactions and a potential catalyst for e-commerce growth.

4. Wider availability of goods online

According to the aforementioned We Are Social report, Pakistanis shopped across a range of products online, including (based on 2023 annual spending):

• Electronics: $3.22 billion
• Fashion: $1.06 billion
• Beauty and personal care: $321.6 million
• Food: $168.4 million
• Toys: $139.9 million
• Household essentials: $130.2 million
• Over-the-counter pharmaceuticals: $111.2 million
• DIY & hardware: $104.3 million
• Furniture: $84.64 million

This diversity offers a broad spectrum of opportunities for businesses looking to capitalise on the growing e-commerce market and its trends, whether the products are made locally or imported from global markets.

For e-commerce delivery partners, then, this variety opens up new avenues for service verticals. For instance, offering businesses cold chain logistics can help keep food and pharmaceuticals in shape down the supply chain. Special care for heavy shipments will appeal to businesses importing and transporting furniture and electronics.

Opportunities for the e-commerce logistics market in Pakistan

With an expanding e-commerce industry, Pakistan’s logistics sector can consider enhancing delivery and fulfilment strategies to address new customer needs.

 1. Increased demand for logistics services

According to Statista, the third-party logistics market in Pakistan will reach a volume of US$5.95 billion by 2028. In the same year, logistics costs will hit US$71.67 billion.

These figures are not surprising, given that increasing online spending will naturally create the need for efficient supply chain and logistics solutions in the country. E-commerce logistics providers will be tasked with expanding their last-mile delivery networks to meet this growing demand. 

In Pakistan, where urban centres are densely populated and rural areas often challenging to access, this presents unique opportunities for innovation to optimise supply chain and delivery processes. It also opens up new opportunities, such as value-added solutions, which can include same-day or pre-scheduled deliveries. 

2. Technological advancements

As more Pakistanis connect to the internet and become increasingly savvy with smartphones, it becomes easier for logistics providers to introduce digital tools for tracking and managing deliveries. For example, customers can access real-time shipment tracking on the go via a specific app or URL. They can also use smart lockers at convenient locations for secure, contactless pickup by scanning QR codes, and retrieve their orders at a time that suits them. 

On the operations front, supply chain and logistics providers can use artificial intelligence (AI) and predictive analytics to make sense of troves of delivery data so that they can optimise routes, and reduce the time and costs incurred on the last mile. In warehouses, teams can benefit from better inventory management through automated warehousing systems that reduce manual errors during fulfilment and speed up order processing. It also ensures improved stock management across diverse geographical areas, from the busy hubs in Karachi and Lahore to other logistics nodes along the industrial belt, such as Faisalabad, Multan and Sukkur.

3. Market expansion

The increasing reach of the internet and, consequently, social media means e-commerce businesses can expand their brand footprint to further parts of Pakistan. For logistics providers, a parallel expansion to underserved markets can make them favourable to businesses that require logistical support down the supply chain and on the last mile.

Offering integrated logistics solutions, including specialised services for niche markets or product categories, can help providers position themselves as preferred vendors for e-commerce retailers locally and those abroad looking to export to Pakistan.

4. Social media influence

Pakistan’s social media penetration is notable: The country has 44.5 million Facebook, 54.38 million TikTok and 71.7 million YouTube users, with its Instagram reach hitting 17.3 million. Logically, businesses can jump on live and social commerce to reach their target audience faster. For logistics service providers, this trend means integrating with social commerce systems to offer seamless delivery solutions directly linked to social media platforms.

What are the logistics issues in Pakistan?

While opportunities abound, it is important that the logistics sector prepare for potential challenges, including:

1. Scalability issues

In peak online shopping seasons in Pakistan, such as during Eid, logistics providers must be able to scale operations to meet the high demand for their services. Setting in place contingencies for resources such as manpower and fleet, as well as warehousing space, will help them keep pace with the growing volume of online orders. 

2. Customer expectations in delivery and fulfilment

A 2023 Statista report indicated that global online shoppers expect to receive their parcels within 24 hours. A third of the shoppers surveyed said they want couriers containing pharmaceutical, alcohol and financial products delivered within two hours. 

Considering that the rate of online shopping in Pakistan is only going to rise, consumers will begin to expect faster deliveries of their items. However, managing timely deliveries, including handling returns, in the face of urban traffic congestion and inadequate road networks can be a hurdle for logistics service providers in Pakistan. 

Identifying these infrastructural challenges ahead of time can help route planners optimise delivery operations, even in densely populated or remote areas.

Strategies for overcoming logistical challenges in Pakistan

Here are some ways e-commerce logistics players can stay ahead:

1. Optimising supply chain

Logistics providers can take a proactive step by first optimising their supply chain with the best technologies they have access to. While leveraging artificial intelligence and data analytics can help plan routes better, such insights are equally critical in forecasting demand.

For example, service providers and their business-to-business (B2B) clients can study month-to-month variance to anticipate peak e-commerce shopping seasons, and ensure products are pre-ordered and stored in warehouses for immediate dispatch. They can also account for high-volume delivery periods in manpower and fleet management to ensure that there are enough resources available to execute operations during busier months.

2. Enhancing delivery networks

While the Pakistani government rolls up its sleeves to modernise transportation and regional connectivity in its Vision 2025 plans, logistics providers can work parallel by improving their delivery networks. Some of these strategies include expanding delivery fleets and establishing more distribution centres. Additionally, investing in last-mile delivery innovations, such as drone deliveries, could solve the challenges posed by traffic congestion and difficult terrains, ensuring that customers receive their orders promptly.

3. Focus on customer expectations

Understanding the changing needs of customers helps both logistics providers and their e-commerce retail clients stay competitive and responsive. According to Salesforce’s State of the Connected Customer report in 2023, two key attributes stand out:

• Connected journeys: Close to 80% of customers expect consistent interactions across departments. This means that delivery partners working with e-commerce retailers can help extend the latter’s reach by adopting consistent branding even on the last mile. Whether as a white-label service or otherwise, such an offering will appeal to businesses who want to connect and retain customers at every stage of their consumer journey.

• Personalisation: As technology advances, about 73% of customers want better personalisation, and 65% expect companies to adapt to their evolving needs and preferences. Providing customers with an intimate experience, even on the last mile, can, therefore, make a huge difference in how they perceive the brands they are engaging with. Some ways that logistics providers can provide a more personalised last-mile service include offering customers flexible delivery options, such as on-demand delivery, where customers can choose where and when to receive their parcels, for instance.

Future trends in e-commerce logistics

E-commerce in Pakistan is only set to grow in the coming years. Logistics providers can continue to stay ahead by keeping up with possible market trends. These include:

• Sustainability initiatives: Eco-friendly consumption has already taken off in Pakistan, with the fashion apparel industry adopting more sustainable methods. Likewise, logistics providers can jump on the same trend with green logistics, such as deploying electric fleets and using recyclable materials in their packaging.

• Artificial intelligence and automation: PwC anticipates that the global economy would benefit with up to US$15.7 trillion in 2030 with the help of AI. The logistics industry could see the application of such new-age technologies in various aspects of operations, such as AI-driven sorting systems and issue detection in warehouses, and automated order processing.

• Global expansion: By leveraging the internet and social media, Pakistani e-commerce businesses have plenty of opportunities to set foot beyond borders, setting up shop in a global marketplace of consumers – whether they sell on global e-commerce platforms like Daraz and Amazon or adopt more localisation strategies in their global expansion. Logistics providers, then, have a growing market to cater to, ensuring they can oversee all aspects of cross-border shipping, from customs clearance to last-mile delivery, when exporting goods from Pakistan to global markets.

Reach great heights in e-commerce logistics

As Pakistan's logistics sector advances, businesses must adapt their shipping strategies to the rapidly evolving e-commerce landscape. In this dynamic market, partnering with experienced logistics providers offers a competitive advantage. These entail cutting-edge technologies, extensive networks and specialised services designed for online businesses so that they can focus on core operations and drive growth.

If you are an e-commerce retailer looking to future-proof your business right down the last mile, open a business account with us today and let us help you grow your brand in this increasingly digital world.