In Pakistan the size of E-commerce is small and uncertain at the moment.

The one reason is that the amount

involved is very critical and the credit card penetration in Pakistan is very low. Yet as in most developed
countries of the world, it is expected that with the realization of full potential of this new mode of commerce
in future, it is bound to gain a sizable amount of business in Pakistan as well, due to the several potent
advantages that E-commerce enjoys over the conventional mode of commerce like its open structure that
surpasses all geographical barriers, low costs of transactions, low barriers to entry and improved access to
information, besides more efficient management of supply and distribution.
However, currently the growth of E-commerce in Pakistan is vulnerable by a number of factors, which are
discussed below. These barriers must first be removed for E-commerce to grow in the country.

Major Barriers For An Organization:-

Before Introduction Of An E-Commerce:-A major barrier in the introduction of e-commerce technology

in any organization:
1. Companies were not convinced with the benefits of E-Commerce
2. It was difficult for you to change your mind for this change.
3. Financial burden
4. Enough advice was not available
5. Internal (Top/Middle/lower Management) and External (Government Policies, Legal Regime etc.) were
not looking very supportive.
After The Introduction Of E-Commerce:- Study also revealed the problems after the introduction of e-
commerce technology in any organization. These are:

1. Lack of knowledge and poor understanding of e-commerce

2. Budgeting constrains viz. low investment in IT
3. High setup cost of e-commerce system
4. Low level of PC/Internet penetration
5. Security and privacy concern
6. Long implementation time
7. High cost of Internet usage
8. Poor legal regime for e-commerce
9. Difficulty in keeping pace up with changing technology
10. Difficulty in shifting mindset in resonate e-commerce technology
11. Wide gap between users and IT skills
12. Overall poor IT infrastructure
13. Not enough customers/suppliers have Internet access
14. Difficulty in assessing tangible benefits accrued by e-commerce mode of transactions
15. Low level of readiness of major e-commerce/EDI

Major Barriers For A Customer:-There are some questions arise in the mind of customer, which are
basically the obstacles for the e-commerce.
Whether payment system is secure?
Is the product delivery is fast?
Whether the modes of payments are convenient or not?
Whether the internet services are accessible or not?
Does the transaction is legal?
And is there any kind of fraud involved in it?
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Lack Of Awareness And Understanding Of The Value Of E-Commerce:-

Most people in Pakistan have developed wrong conception of E-commerce. They take a very limited view
of E-commerce, restricting it to only those products which may be transmitted online through internet and
the payments for which is also made online through credit cards.
Most SMEs(small and medium enterprisers) in Pakistan have not taken up e-commerce or use the Internet
because they fail to see the value of e-commerce to their businesses. Many think e-commerce is suited only
to big companies and that it is an additional cost that will not bring any major returns on investment

Lack Of ICT Knowledge And Skills.

People play a vital role in the development of e-commerce. However, technology literacy is still very
limited in Pakistan. The literacy rate of the country, according to official figures, is around 54 percent. Out
of these 54 percent literate people at least 50 percent are computer illiterate. Thus, with around 75 percent of
the population without computer literacy, the growth of E-commerce in the country cannot be expected to
progress at any faster pace

There is a shortage of skilled workers, a key issue in moving forward with using information technology in
business. There are also doubts about whether SMEs can indeed take advantage of the benefits of accessing
the global market through the Internet, given their limited capabilities in design, distribution, marketing, and
post-sale support. While the Internet can be useful in accessing international design expertise, SMEs are not
confident that they can command a premium on the prices for their goods unless they offer product
innovations. They can, however, capitalize on returns on the basis that they are the low cost providers.

Infrastructure.

The national network/physical infrastructure of many developing countries is characterized by relatively low
teledensity, a major barrier to e-commerce in Pakistan. There are also relatively few main phone lines for
business use among SMEs. The two main infrastructure constraints are:

• Inability of the local banks to offer internet merchant accounts and thus reduce the cost of
remittance of credit card payments from abroad into the local accounts of the Pakistani merchants. This
requires electronic banking and funds transfer infrastructure at the branch level in at least 20 major cities
in Pakistan.
• Costly paper documentation and paper-based procedures for clearing large number of small
shipments through customs and ports. This requires electronic trade facilitation from customs, SBP,
Ports, shippers and other stakeholders.

Security.

Ensuring security of payments and privacy of online transactions is key to the widespread acceptance and
adoption of e-commerce. While the appropriate policies are in place to facilitate e-commerce, lack of trust is
still a barrier to using the Internet to make online transactions. How can people be expected to trust the
sellers whom they do not know, and who would deliver goods online/offline after the payment is made.

The issue of trust is further aggravated by the lack of confidence people have with respect to the security
and privacy of their personal information like credit cards, home addresses, phone numbers etc. The
emergence of trustworthy web-based companies, with support/guarantees from Government or trustworthy
multinational companies, in the county is required to dispel these fears of the consumers. Moreover, credit
card usage in Pakistan is still relatively low.

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Financial Costs.
In order to undertake E-commerce transactions, one must be connected to the World Wide Web, for which
possession of a personal computer (PC) or a laptop is a basic requirement. Although the prices of computer
hardware have declined in the past few years, yet a personal computer is still not affordable by vast majority
of the people of the country. Besides a personal computer, a telephone line or cable line are also required for
a user to get connected to the World Wide Web.

The initial investment for the adoption of a new technology is proportionately heavier for small than for
large firms. The high cost of computers and Internet access is a barrier to the uptake of e-commerce and e-
business in Pakistan. Faced with budgetary constraints, SMEs consider the additional costs of ICT spending
as too big an investment without immediate returns. Many SMEs find marketing on the Internet expensive.
Having a Web site is not equivalent to having a well-visited Web site. One reason is that there may be no
critical mass of users. Another reason is the challenge of anonymity for SMEs. Because of the presence of
numerous entrepreneurs in the Internet, it seems that brand recognition matters in order to be competitive.
Moreover, it is not enough that a Web site is informative and user-friendly; it should also be updated
frequently. Search engines must direct queries to the Web site, and news about the site must be broadly
disseminated. One solution may be to encourage several SMEs to aggregate their information on a common
Web site, which in turn would have the responsibility of building recognition/branding by hyper linking or
updating.

Access To Internet Services:

It is true that in the past few years there has

been a significant increase in the number of
internet users in Pakistan, with some observers
claiming that in Pakistan the internet access is
now available to 800+ cities, towns and
villages covering almost 97 per cent of the
population. Pakistan is at number 7 among top
ten internet countries. Even if this, seemingly
exaggerated, estimate is accepted, the per hour
cost of internet use in Pakistan, along with the
common problems of low speeds and getting
disconnected frequently, render this wide
accessibility of internet useless. For e-
commerce to flourish we need high speed,
cheap and reliable internet connections
available to the vast majority of the population.
Lack Of E-Transaction Support In Pakistan:

Online payment systems are an essential part of e-commerce, which require, inter alia, possession of
personal credit cards by consumers. However, few people in Pakistan have personal credit cards. Among the
various reasons people avoid getting credit cards from banks include possibility of unnecessarily getting into
the debt trap.The unpopularity of personal credit cards in Pakistan is responsible for the weak e-support
infrastructure, forcing the use of old mechanism of money transfer like, cash payments, cheques, and postal
orders which may work as viable substitutes to credit card for a short term to accommodate limited existing
commerce of the country but cannot be relied upon for long.

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 Poor Transportation/Distribution Channels :-
An essential part of e-commerce is establishment of cheap, quick and reliable transportation channels for the
physical distribution of those products which cannot be digitised and distributed online. In Pakistan, the
Pakistan Postal Service, despite its extensive network and large number of employees is inefficient, to say
the least; hence, unreliable. The private courier services, on the other hand, are expensive.In the absence of
any reliable and economical distribution channel, the web-based companies in Pakistan will be faced with
the challenge of delivering their products at the doorsteps to their consumers without adding to price of the
product.

The Role Of Government In The Development Of E-Commerce:-

It is the leadership that is required to implement E-Commerce in Pakistan with commitment and conviction.
While it is generally agreed that the private sector should take the lead role in the development and use of e-
commerce, the government plays an instrumental role in encouraging e-commerce growth through concrete
practicable measures such as:
1. Creating a favorable policy environment for e-commerce; and
2. Becoming a leading-edge user of e-commerce and its applications in its operations, and a provider to
citizens of e-government services, to encourage its mass use.

E-Commerce Example:- One

of the more innovative of recent e-commerce initiatives in Pakistan is Thread Net Hunza
(www.threadnethunza.com.pk), an e-commerce site spearheaded by the Karakoram Handicraft
Development Programme (KHDP), a community-based enterprise system. The project promotes
culture-sensitive and environmentally sustainable micro-enterprises, thereby creating village-
based income and employment opportunities for artisans, small producers, women, disabled
members of the community, and other disadvantaged groups. At present, around 3,000 women
artisans are working from their homes under the Thread Net Hunza project. Another 60 women
work at seven workshops daily and produce finished products that are marketed under the brand
name of Thread Net Hunza by local and national retailers. Tourists are the prime market, and
local and national exhibitions are held to promote the products. The site has generated over PKR
3.5 million in sales. As E-commerce is not widely adopted by the people of Pakistan, Some big
companies are still doing a successful business in e-commerce. Some of them include:
• MallBazar Private Limited
• Beliscity.com

Suggestions:-
The rapid changes in technology, the labor cost for application development, integration, customization,
installation and daily operations for an e-commerce infrastructure requires developing countries like
Pakistan to understand how these technologies work. Pakistan has several adverse factors in the
government, organizations and human resources, however, urge for development can step on any hurdles. A
mechanism is needed to train engineers, programmers and other ICT professionals so that they actively
participate in implementing these technologies. Decision-makers need to be aware of the importance of
information and communication technologies in the economic, social, education and health sectors. Policies
need to be adopted to encourage the access and use of e-commerce. Though conditions in Pakistan are not
much promising but they can be so by getting more familiarity with the nature and intensity of appropriate
background. .E-commerce has many components the basic component is the Gateway. Gateway is only
available with the city bank at this moment in Pakistan. The Government of Pakistan should introduce
several projects including Gateway to be utilized by nationalized commercial banks so that SME’s can use
Gateway for selling their goods and services.

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Government is also spending unprecedented amounts on telecommunication infrastructure thereby
improving the work conditions at national level. If genial environment is created then e-commerce can
flourish in Pakistan.