May 18, 2024

Written By: Hamza Hasan

Hello everyone, so when it came to startup and how businesses are run, everyone has their own unique way and opinions on running and operating businesses. Let’s discuss some of the startup culture present today:

The problem I have with the entire startup culture is that they’ re not sustainable enough (well most of the startups) especially when it comes to places like Pakistan. Also, the most startups run by not what they are providing right now but over a vision of 30 to 40 years’ time frame on what they would be in the future. An example of this is Uber or Careem which is a consistently loss-making entity but still being backed by investors, one might ask why? Because once one of the companies survives and takes over the local market, and when everyone will convert to using internet for such services, they will be huge. Imagine 240 million people out of which 200 million are using Careem or uber, imagine their profit margins. Still for a Country like Pakistan, it is still very far away, and this wouldn’t be used soon but in the distant future.

I am mentioning Pakistan because I live here and am familiar with the demographics of the country. Some of the things Pakistan currently lacks when it comes to startup infrastructure is:

Limited Market Access: Pakistan’s retail market is estimated at the value of USD 42 Billion, 1% of that is what have been Capitalized by E-commerce stores so far, almost 90% of that 1% so far is capitalized by Daraz.PK. So, in other words, there is a very small capacity of the local market we are trying to maximize via e-commerce, which means the possibility of success in the e-commerce business is very low.

Payment methods: Another problem with the entire infrastructure in Pakistan is the payment method, is Cash on Delivery which gives consumers the added advantage, which may sound like a good thing if we look at it from a consumer centric perspective but for a ripe e-commerce market like Pakistan, it is not as advantageous from the sellers perspective, as one of the key pain points in e-commerce market is the return of ordered goods, for instance, a consumer ordered a trending product, a call center confirmed that order, that order was dispatched, and when it reached the consumer, he decided not to buy that product, hence he returned the product to the delivery rider. This problem can only be resolved via advanced payment, where a person orders online pays online and then a product is delivered to the consumer for his handling.

Limited Internet Penetration: 5G is around the corner in Pakistan, most of the countries have already converted to the new technology but we are still unable to penetrate Internet through the length and breadth of this country. Our rural areas still don’t have access to the internet, if we cannot penetrate Internet in the rural areas, then how can we make sure our E-Commerce segment will grow? As whenever we talk about the few advantages, we have in this Country that is our large number of populations, larger the population, larger the market, more the profits, provided the fact if basic facilities are provided to the people, like internet.

Lack of Digital Literacy: Pakistan has a lot of problem related to digital literacy as the people who owns resources are mostly the ones who are not comfortable with using digital platforms. Secondly most of the people of Pakistan lack education due to which some may find it difficult to navigate “online internet related convenience”. So, there should be a plan to overcome at least petty challenges like Internet provision and digital literacy.

Trust Problems on both ends: Another barrier faced still today is the number of scams there are in the name of e-commerce, there are countless complaints on both ends of the spectrums facing challenges and scams which is something that needs to be addressed. There should be some consumer protection laws, some more regulation of whatever company is currently running so it’s easy to track their activities and catch them if they get caught up in malicious activities.

A problem from the consumer end is if for instance a company is interested in improving its consumer relations by facilitating them and giving them flexible return policy, then that policy will be abused by the consumer himself as we have encountered countless cases doing so.

Unstable political- economic situation: No Prime Minister has completed his term since the inception of this country in 1947, additionally the people of this nation have been blessed with not one, not two but a grand total of 4 Marshal Law administrators which has added more fuel to fire.  Amid political chaos, I personally don’t see any investment coming in Pakistan during the next 1.5 or 2 years (at least). After the Nawaz government, when Imran Khan and his tabdeeli were selected, tax rates and inflation went through the roof and entire sectors, especially the construction sector, were in tough circumstances financially and economically. Time passed some investment came to Pakistan; Khan Sahab’s government were slowly trying to manage the tight economic situations but our establishment realized that they needed to go back to the purana Pakistan and soon overthrew the Khan Sahab’s regime like they did to the Nawaz regime and planted a coalition of People’s Party and PML-N mix representatives which led to more and more IMF loans and more instability.

What these musical chairs have caused during the last 6 to 7 years is:

  1. Reverse all the progress made by Pakistan all the digital progress all the economic progress everything.
  2. Caused some investment that came to Pakistan to go to waste.
  3. Caused most of the startups go Bankrupt in the Country like Airlift.

Startups and investments are backed by Investors and if we as a nation want to attract investment to our country, the last thing an investor wants is to put his money in a country in which the safety and security of his finances are not guaranteed.

The bright side is that if we as a nation overcome these challenges, there is no stopping Pakistan to becoming the one of the biggest Startup and ecommerce ecosystems in the world. We have all the ingredients, a young population, adequate amount of skilled and unskilled labor, sincerity and willingness to change as a nation. A very big Market. All we need is the right type of tools, vocational centers in Urban and rural areas and we might reach the heights that we hope as a nation.

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