Pakistan’s retail sector is on its way to induct new technology in daily operations in a bid to modernise the conventional back-end operations and processes in the manufacturing, warehousing and distribution value chains.

According to retailers, the need to upgrade the system by adopting cutting-edge technology is the only way they can grab a larger slice of the rapidly growing e-commerce ecosystem.

As e-commerce transactions increased manifold during the lockdown, many retailers realised the operational deficiencies present in their e-commerce platforms.

“When the lockdown was imposed, many retailers were forced to enter the e-commerce arena and they were not ready for it,” said Chainstore Association of Pakistan’s E-commerce Committee Convener Asfandyar Farrukh while talking to The Express Tribune.

“A handful of them had upgraded their front-end operations beforehand as they anticipated the imposition of a nationwide lockdown in view of stricter movement restrictions in many other countries.”

He added that ever since the lockdown was imposed, businessmen had voiced a greater need to automate their back-end and front-end operations because a retailer could not meet customer expectations without automating operations and taking more stakeholders on board.

“We are now collaborating with the local technology providers as they can provide us with indigenous solutions which we can use to retain our traffic that spiked during the lockdown period,” Farrukh said.

Recently, the Chainstore Association of Pakistan inked a memorandum of understanding with the Pakistan Software Houses Association (P@SHA) for timely execution of actions deliberated as part of the national e-commerce policy.

P@SHA E-commerce Committee Chairman Badar Khushnood told The Express Tribune that local technology companies could provide modern solutions to the retailers and other industries with which they were unfamiliar or which were considered costly by them.

“There are many products available locally which can aid retailers in their front and back-end operations,” he said.

Khushnood added that large-scale industries had information technology wings which regularly updated their operations but small and medium-scale businesses lacked such facilities and the primary reason was that they were not tech-savvy.

“Organised retailers are taking this step because they have to maintain their presence in e-commerce markets,” he added. “Without automation, it will become increasingly difficult for businesses to meet customer expectations.”

Pakistan’s retail sector has been booming for the past one decade and according to the Pakistan Bureau of Statistics, its trade during financial year 2019-20 was estimated at Rs7 trillion or 16% of the country’s gross domestic product (GDP).

At present, the organised retail sector accounts for approximately 8-10% of the entire trade and it has been growing at a pace of over 20% per year for the past one decade.

With a teledensity of 82% coupled with 95 million internet users, it is expected that the traditional commerce and retail will significantly shift towards e-commerce and modern retail.

According to recent figures of the State Bank of Pakistan (SBP), the total value of domestic e-commerce transactions has risen to over Rs350 billion in the last four quarters up to the first quarter of 2021 with 35% growth over the previous period.

E-commerce as a proportion of total retail in Pakistan is estimated at 0.55% compared to the global average of 15%.

Independent retail analysts said that the retailers had failed to sustain the traffic that they attracted on their e-commerce platforms during the lockdown days.

“The biggest issue for the retailers now is how to keep their existing customers engaged for growth in online sales,” said LXY Global Director Yousuf Jamshed.

“Upgrade to new technology is a good attempt because the retailers are not that tech-savvy,” he said. “Had they upgraded some time ago, they might have sustained the increased traffic which they attracted during the lockdown in a much professional way.”

Published in The Express Tribune, February 5th, 2021.

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