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Thursday, February 15, 2024

Can Amazon’s entry really benefit Pakistani sellers?

Amazon's decision to add Pakistan to its registered sellers' list is a huge economic success for the country. However, in order to fully benefit from Amazon's esteemed economic platform, local sellers need to ensure top-notch service.

A major boost has been handed to the business community in Pakistan with the announcement coming from Amazon’s Eric Broussard that Pakistani sellers can now sell their products across the globe through his company’s platform. Razak Dawood, Adviser to Prime Minister of Pakistan for Commerce and Investment, declared it a ‘big accomplishment’.

Founded in 1996, Amazon has emerged as the leading E-commerce facility across the world offering a wide range of services. Pakistani officials, especially those based in the United States, have been pursuing this task for over a year and their efforts have finally been rewarded.

Read more: Pakistan is now a part of Amazon’s approved selling countries list

 

In terms of Pakistan’s economic progress, this is a huge development. For years, Pakistan has struggled with low export volumes and lost share to its regional competitors in the global markets. One major obstacle has been the lack of access to global markets for local producers. Many local businessmen resorted to using Amazon through third parties or through overseas offices which were not cost-effective.

With this development, young entrepreneurs and small and medium-sized enterprises across the country can also avail the benefits offered by the platform which will widen and diversify Pakistan’s export basket. This will not only enhance their revenues but also help the government in improving the macroeconomic outlook of the country.

Read more: Pakistan’s economic turnaround attributed to improved business confidence: Report

Growing e-commerce

One of the major reasons behind achieving this status has to be the potential of Pakistan’s e-commerce industry which has grown rapidly in the last few years. Earlier this year, the Ministry of Commerce revealed data that showed 35 percent growth of e-commerce market size in the first quarter of the present fiscal year as compared to the previous corresponding period.

Rising costs of doing business had pushed Pakistani traders against the wall. The emergence of e-commerce platforms in the country provided them a way out by lowering their cost of doing business and increasing their market accessibility.

Read more: Pakistan’s online shopping frenzy: e-commerce set to cross $ Billion mark

In addition, many online-based businesses have been able to expand their operations on the back of impressive sales. For such businesses, scaling up is also more economical as they do not have to purchase and maintain physical shops and hire people to run them.

For a country of 220 million with a growing youth population and middle class, affordability is obviously going to play a major role. Both sellers and buyers look to minimize their cost and online platforms offer both these players certain advantages. Buyers have a wide variety to choose from which allows them to select their desired product without having to travel from one shop to another.

On the other hand, online shopping provides sellers useful information regarding consumers in the form of their contact details and preferences to target them specifically through marketing campaigns. Accurately assessing consumer preferences helps sellers in maximizing their profits.

Read more: E-commerce: Massive potential but least development?

Challenges ahead

Now that Pakistani sellers are eligible to be listed on Amazon, their operations are likely to expand but they need to pay much more attention to marketing and distribution because they will be competing against sellers from all over the world. This will be a huge challenge for new entrants against the already established businesses.

Another crucial thing to look out for is quality management. Pakistani exporters in the past have faced criticism and even suspension due to below-par quality of their delivered orders. Unlike local platforms, Amazon has a strong compliance mechanism for sellers and the products are returned back if they do not meet the expectations of the customers.

Joint Secretary Commerce, Ayesha Humaira warned that products will be returned in case of complaints and sellers may also get blocked from Amazon if they do not ensure quality.

Amazon has a comprehensive code of conduct for the sellers to follow. It strongly opposes unfair practices that include: providing misleading or inappropriate information; artificially inflating web traffic; attempting to damage another seller’s ratings and attempting to increase the price of the product after its order is confirmed. Violation can also result in the suspension of payments.

Read more: Now that it is here, here’s how Pakistanis can start selling on Amazon

A beneficial venture for Pakistan

Due to its strict mechanism, Amazon is regarded as a very trustworthy platform for buyers. A survey of 5400 Americans in 2018 revealed that Amazon is the most trusted institution for democrats in the country. Amazon had a better perception than courts, philanthropy work, and universities.

Pakistani online shopping platforms unfortunately do not enjoy such a reputation. There have been regular complaints against their services and they often remain unaddressed.

Another advantage of Amazon’s entry into Pakistan will be the rise in competition which will force local platforms to improve their quality control mechanism. Moreover, the present online sellers looking to benefit from Amazon’s worldwide reach would have already been encouraged to improve their services and quality of products.

Read more: Pakistan Economy: History and Required Reforms 

Becoming eligible to trade via Amazon in Pakistan is indeed a promising development that will have multiple benefits. The platform can help generate economic opportunities in the country and improve the lifestyle of the people. During these uncertain times, innovative solutions have been badly required.

Amazon has stood up and helped many businesses remain afloat. It has also helped consumers under lockdown to cover their essential needs. This year’s first-quarter results released by Amazon show an increase of 44 percent in net sales compared to the first quarter in 2020.

The government of Pakistan deserves credit for providing a much-needed opportunity for local businessmen and now the next target should be to enhance the market share of Pakistani products in international markets.

Read more: Pakistan has an untapped export potential of $66.1 billion

Author, Ali Haider Saleem has worked with the Institute of Strategic Studies Islamabad (ISSI) and National Defense University (NDU). His research interests lie in sustainable development, regional integration, and security cooperation. He has studied public policy at Queen Mary University of London and economics at NUST, Islamabad. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.