Opinion

How COVID-19 is Impacting Interest in E-commerce in Pakistan

Pakistan has seen strong e-commerce growth in the past 3 years. According to Google Trends, traffic for online shopping related keywords that include the phrase “price in Pakistan” have shown an approximate 2.6 fold increase during this time. The “Price in Pakistan Index” is a good metric to determine the health of the e-commerce sector in Pakistan, particularly in relation to electronic goods, due to its large sample size (millions of searches per month) and targeted buying intent.

The plot below from Google Trends shows how interest in the phrase has increased over the past 3 years.

Interest in “price in Pakistan” over a period of 3 years – Google Trends

This growth has led to interest from major international players, resulting in Alibaba’s acquisition of Daraz, Pakistan’s largest e-commerce marketplace, for an undisclosed amount (rumoured to be around $200 million) in 2018. The growth potential and acquisition has helped spur startup and investment activity; a glimpse of the light that lies at the end of the tunnel.

Immediate Impact of COVID-19 on E-commerce in Pakistan

But how is e-commerce fairing in the time of COVID-19? A plot from Google Trends of the same search phrase (price in pakistan) for the past 3 months, shows a huge dip on the 22nd of March. Almost 25-30% of search traffic related to the phrase was wiped out within a few days.

Interest in “price in pakistan” over a period of 3 months – Google Trends

This dip in search traffic correlates perfectly with the date the first lockdown was imposed in the country and is in line with the traffic drop observed by us at Shopsy.pk. As a shopping search engine with over 3 million products spread across hundreds of categories, our search traffic correlates well with online shopping trends in the country.

The lockdown prevented items from being delivered to customers due to which many e-commerce sites paused new orders. Interestingly, or rather expectedly, the search volume for “online grocery” and “hand sanitizer” shot up to record levels during the same time.

Interest in “online grocery” over a period of 12 months – Google Trends

Interest in “hand sanitizer” over a period of 12 months – Google Trends

Long Term Consequences on Pakistan’s E-commerce Sector

Traffic for “price in pakistan” has since gradually recovered to near pre-lockdown levels. Our data of over 200 shopping websites shows that nearly 625,000 products became inactive within a few days of the lockdown being imposed but are now gradually starting to come back in stock since 27th April.

More importantly, not only are products coming back in stock, interest in “online shopping” in Pakistan is at the highest level ever recorded by Google Trends.
Interest in “online shopping” over a period of 12 months – Google Trends

Due to physical distancing precautions, I expect this trend to continue. Just like video conferencing, edtech and fintech, it seems the impact of the pandemic is going to have a positive effect on the e-commerce sector, not just in Pakistan but likely across the world. Higher usage rates will accelerate user adoption and whilst this increased adoption will eventually decline once the pandemic subsides, some of this growth will be retained.

E-commerce in Pakistan faces a significant trust deficit. Never has there been a better time for online stores to rise to the occasion and bridge this deficit between the consumer. Not only will this boost business for individual stores but for the sector as a whole.

Usama Arjumand, Co-Founder & CEO, Shopsy.pk

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