Pakistan’s e-commerce sector was valued at $7.7 billion in 2024, with retail e-commerce accounting for $5.4 billion, according to Payment and Commerce Market Intelligence (PCMI), a subsidiary of America’s Market Intelligence. Despite a projected compound annual growth rate (CAGR) of 17% through 2027, small and medium-sized enterprises (SMEs) are facing significant challenges as they attempt to tap into the growing global e-commerce market.
While the sector has seen some growth, with non-textile exports and online businesses slowly gaining traction, fundamental obstacles like unreliable internet, digital payment barriers, and lack of consumer trust are slowing progress.
Pakistan’s digital payment adoption has improved, with figures showing 84% of in-store mobile payments in FY24, but online transactions remain a challenge. Most Pakistani online shoppers, especially those in urban areas, continue to prefer cash-on-delivery, reflecting deep-rooted skepticism about online shopping. This has been compounded by several high-profile cases of undelivered products, which further erode customer confidence.
Experts argue that the absence of secure, user-friendly payment systems and proper infrastructure is holding Pakistan’s e-commerce potential back. Countries like India and Bangladesh, with strong mobile payment systems such as UPI and bKash, have seen substantial growth in their digital markets.
In addition to payment system issues, Pakistan’s internet infrastructure is another major hurdle. Ranking 97th globally in mobile internet speed, Pakistan’s connectivity is far behind its regional counterparts, with rural areas suffering from even worse connectivity issues. This not only affects website access but also delays product uploads leads to lost sales and cancelled orders.
Despite government initiatives like the Digital Pakistan Policy and the National E-Commerce Council, which are aimed at bridging these gaps, progress remains slow. The country’s tax incentives for IT exports and new conversations with global payment platforms like Google Pay have seen limited success. The lack of access to digital marketing workshops and e-commerce tools outside major urban centers further limits growth for rural entrepreneurs.
Experts agree that, for Pakistan to capitalise on the global e-commerce boom, basic infrastructure improvements such as reliable internet access and affordable logistics must be prioritized. Without these foundational changes, SMEs will continue to struggle in an increasingly digital world, risking their position in the growing global market.
