E-commerce and its future in Pakistan

E-commerce is a very hot issue these days. After the revolution of Internet, more and more countries are getting involved in it.

However, in general, if we use any type of electronic devices in getting orders and sending catalogues, like telephone, fax or any other such instruments, we are supposed to be applying electronic business techniques. However, the real sense of e-commerce is the business on the internet of which there are different modes, like opening a retail store on internet, where all transactions are done on line, from selection of product to payment of bills.

The over-all volume of e-commerce is more than $4 billion annually. Doing business on internet is not a very costly investment. It is estimated that in near future, almost 25 per cent of the traditional business will be converted into internet business.

Trends: E-commerce is an information technology trend developing fast in the business world. The corporate and the business world, aptly supported by the IT industry, already stands transferred, which by recent estimate will exceed $400 billion this year.

As we start warming up to global e-commerce in Pakistan, we must understand that almost 78 per cent of the e-commerce activity takes place in the USA, obviously driven by the use of internet in that country. As the January 2000,over 110 million people have internet access there compared to 279 million the world over.

Nevertheless, Pakistan can make good use of this opportunity with proper planning and execution. To begin with, let us focus on the domestic front before going all out for the global market.

Domestic activity: Offer for improving and productivity to bring it to the excellent level. It also allows our entrepreneur to test their web business and marketing skills before taking on the international markets. E-commerce is not for all but for those who understand it. Yet, e-commerce is not a technology.

The issue at the individual level, it is purely a business matter. At the govt level, it is a matter of providing infrastructure for transactions on internet. E-commerce or business through internet is becoming very popular mode of trading around the world particularly in the developed world. E- commerce is a broad term used to quantify the trading taking place on the internet.

Most studies, however, suggest that e-commerce runs through four steps. The very first step is, to build a website to let the world know about your existence. The website contains information about the company, product/services and other related information, which can help visitors to learn more about the hosts. The second step involves asking customers to loose their pockets and buy on line.

This step requires adopting advance level of software capable of handling orders. In the third stage inventory, management adds to the system and lastly, providing provisions of payments through online banking partnership between buyers and sellers, the most difficult and complex part of e-commerce.

The most common and popular forms of e-commerce are business-to-consumers (B2C) and business-to-business (B2B). Business-to-government (B2G) and government-to-citizens (G2C) are other forms, running on the internet but with low steam. However, the use of former two still dominates the internet.

However, Pakistan is still far behind in chasing the west in this regard. Entrepreneurs in Pakistan are of the opinion that e- commerce means being able to make and receive payments through internet and any other activity through internet is not considered as e-commerce. This low level of understanding has led many Pakistani firms to give low priority to e-commerce due to unavailability of proper framework for the internet in the country.

In Pakistan, e-commerce is still in its infancy and faces many barrier to grow. The notable barriers are: unavailability of proper infrastructure [telephone line of stem lines of steam age, frequent failures of power] limited user of internet hardly one per cent of the entire population have access to the internet], the issue of security of transactions on the internet, high bandwidth rates, and last but not least the rigid and monopoly role of the PTCL.

However, the SBP has recently put a crack on the barriers when it approved the merchant ID accounts to facilitate online transactions. But there is still a long way to go and requires government to continue to grease the wheels of e-commerce to speed up the process.

Prospects: Those who create, distribute, and sell goods and services to consumers also have reason to look forward to this new mechanism. All enterprises, including the small and medium sized can reach customers throughout the world instantly and comparatively inexpensively. Many vendors can sell globally without the costly infrastructure of worldwide retail stores, sales offices, distributors, or warehouses.

Greater sales and inventory efficiency maybe possible through the increased interaction with prospective customers that electronic commerce can afford. One to one marketing becomes possible on massive and global scale. Active and alert supplier will also benefit from the new structure of product and service distribution likely to results from electronic commerce. With conventional distribution ,a manufacturer must reply to wholesalers and retailers to serve customers in large volumes. E-commerce's automated customers self-service capabilities can eliminate the need for these intermediaries .The manufacturer no longer has to share profit with others. In addition, the manufacturer gains direct contact with consumers that can facilitate future sales.

With this, as the role of conventional intermediaries-such as retail store clerks, travel agents, bank tellers, and wholesale representatives may diminish or end, new intermediaries have started to appear.

Electronic commerce connects manufacturers directly to consumers. The consumer gets product information directly from the ultimate source. The manufacturer can get customer preferences and needs directly from the ultimate source. Each consumer's physical location no longer determines whom the consumers contacts to purchase a product. With the purchase of intangibles that can be delivered electronically, physical location becomes irrelevant to product delivery as well. The internet makes the connection between a French consumer and an Egyptian supplier virtually indistinguishable from the connection between a Persian consumer and a Parisian consumer and Parisian manufacture.

It can be concluded that there is a lot of scope of e- commerce in Pakistan, and most companies are eager to going to the digital world, but at present due to absence of any policy framework and limited internet market, companies are holding their plans to start e-business until clouds of barriers as discussed are disappeared.