Amazon Comes To Pakistan
The US e-commerce giant Amazon, one of the best online marketplaces that you can use to sell and buy products, recently added Pakistan to its approved Sellers’ List. It opens the door to SMEs and individuals across the country to engage through a variety of online business models to serve hundreds of millions of online consumers on the largest marketplace of the world. This is, indeed, a major development for an economy that is aspiring to grow. Pakistan was the only South Asian nation not included in the list of 102 countries on Amazon’s platform, despite being one of the biggest manufacturing economies in the region. With the arrival of Amazon in Pakistan, job opportunities in Pakistan will increase and small and big business owners will be able to benefit from it, which is a welcome development.
E-commerce growth in Pakistan has been rapid in the last few years and the lift that Covid-19 pandemic has brought to e-commerce and online marketplaces has made them crucial for businesses and brands. Pakistan’s e-commerce market size posted a growth of over 35% in the first quarter of the current fiscal year to Rs96 billion, compared with Rs71 billion over the corresponding period of the previous year. Hence, Pakistan is also speedily becoming a hub to enable the growth of this sector. Meanwhile, the National Institutional Facilitation Technologies (NIFT) is in the process of developing a payment solution for international payments in collaboration with the State Bank of Pakistan (SBP).
Amidst these developments, Pakistan has been added by Amazon to its seller’s list which essentially means that local Pakistani sellers can now list and use Amazon’s platform to sell globally. Amazon has a gross merchandise volume (GMV) of over $450 billion, which is almost twice that of Pakistan’s GDP, and several companies have registered four to five billion dollars in sales at Amazon. For context, Pakistan’s IT exports amount to less than two billion dollars. In contrast, India’s exports are valued at two billion dollars per annum through approximately 70,000 unique sellers; anywhere between 750,000 and one million people are deriving value from these exports be they direct employees, premises rentals, transporters, small services providers for whom these 70,000 businesses are customers.
Getting listed among sellers on Amazon could not have come at a better time as it could be a massive boost to the country’s e-commerce landscape. Mind you, this opportunity is only for sellers; buyers will have to wait till a time the e-commerce giant sees a potential market in the country for opening offices officially.
Nonetheless, the benefits of being able to sell on Amazon are vivid and many. Apart from a boost to the general e-commerce segment, the move is expected to open doors to new opportunities from increasing market size, diversifying markets, increasing revenue potential to a boost for local brands, local manufacturers, SMEs, startups, entrepreneurs, and exports. Not only that; local platforms are also expected to improve once the floodgates of competition open. Also, selling on Amazon is much easier than setting up your own website and selling online; it offers the benefits of an online platform with access to a global consumer base along with tools and infrastructure needed to so.
And then there are affiliate benefits; local banks, fintechs logistics, distribution etc. also stand to benefit from the expanding global exposure.
However, this global opportunity comes with challenges that very few are aware of – or are pointing it out. Despite the ease it offers, selling on Amazon is not as simple as majority is portraying – at least for a country like Pakistan where e-commerce is still in nascent stages and sellers are unsophisticated.
Amazon’s addition of Pakistan in their sellers’ list will go a long way in growing Pakistan’s small-packet micro-exports by SMEs, women entrepreneurs and start-ups. Sellers and exporters now need to add a B2B2C element to their business models and sharpen their skills for online selling with a very data-driven scientific approach. The government should start capacity-building programs for the youth so that they can learn how to use Amazon in the best possible way. There are different on-going youth development programmes, and with this great change, it is the right time to add Amazon selling tricks & tips as a normal course. Universities need to add entrepreneurship and e-commerce selling on Amazon to their curriculum. These initiatives will undoubtedely serve as the stepping stones for the success of our youth and the economic development of our country.
The writer is a student of Punjab College of Commerce, Lahore.