Ecommerce Boom in Pakistan Hindered by Logistic Failures

E-commerce in Pakistan is growing rapidly, with more and more businesses going online to reach customers across the country. From big brands to small businesses, everyone is now selling online 24/7. However, while the e-commerce industry is booming, there’s a major issue that every online store owner faces: logistics.

Logistics, a fundamental pillar of ecommerce, is critically flawed in Pakistan. As online businesses, from major brands to small startups, expand their reach, they rely heavily on courier services. Unfortunately, the current landscape is dominated by companies that are ill-equipped to handle the demands of modern ecommerce. Despite the industry’s growth, logistics providers continue to operate in a traditional manner, incapable of addressing the needs of a 24/7 online market.

NewsTech Pakistan’s investigation into the logistics sector has revealed a host of issues plaguing ecommerce businesses. Major players like TCS, Leopards, BlueEX, PostEX, Trax, FastEx Daewoo, M&P, along with TPL Rider, Insta World, Courier Next, The Quick Service (TQS) and many others have failed to deliver the quality of service that ecommerce operators require.

The Major Failings:

• Fraudulent Returns: The issue of fake returns is rampant. Riders often claim returns without actually handling the parcels properly. This leads to significant losses for ecommerce businesses, as they are forced to handle unnecessary returns.
• Payment Delays and Holds: Courier companies frequently hold onto collected payments for extended periods. In a market where cash on delivery (COD) remains prevalent, delays of 2 to 5 days in transferring payments are common, putting additional financial strain on businesses.
• Inconsistent Payments: Many courier services delay the transfer of funds even after payments are held. This bureaucratic red tape only exacerbates the financial instability for ecommerce stores.
• Return-to-Shipper Issues: When customers return items, there are frequent failures to send these returns back to the seller. This problem further complicates inventory management and increases costs.
• Overweight Charges: Overcharging for overweight shipments is another significant issue. Some companies levy excessive fees for overweight packages and then take months to settle disputes, causing financial distress for businesses.
• Rural Delivery Failures: The delivery to rural and smaller cities is often inadequate, leaving a significant portion of the market underserved and frustrated.

Pakistan Post: A Missed Opportunity

Pakistan Post, the largest network in the country, continues to operate as if stuck in the past, with little understanding of the potential it holds for the ecommerce industry. Despite having an extensive reach with their DAAKIAs familiar with every area, tehsil, and village, the institution lacks a modern system. There is no online portal for booking or transactions, and payments are still made in cash through outdated methods like money orders. Pakistan Post remains without a proper ecommerce system. If they could modernize their operations, no other company would stand a chance, as they have everything needed to dominate the market.

The Resulting Impact:

The cumulative effect of these logistical failures is a considerable burden on businesses. Ecommerce operators face mounting costs related to returns, stock management, and customer dissatisfaction. The flawed logistics network not only hinders growth but also damages brand reputation. Customers, unaware of the underlying issues with logistics providers, often blame the brands themselves for delivery problems, compounding the issue.

The current state of logistics is particularly problematic for small businesses. Many are forced to switch between multiple courier services to mitigate these issues, often resulting in inconsistent service quality and increased operational complexity.

What Can We Do for Now?

Experts suggest that in this challenging situation, it’s wise to use at least two courier companies simultaneously: one for major cities and another for nationwide coverage. Some smaller companies perform well in terms of delivery but are limited to KLIR (Karachi, Lahore, Islamabad, and Rawalpindi). Many store owners point out that most of their shipments are within these cities, so this strategy can help mitigate problems by 50 to 60%.

The Need for Reform:

The solution is clear, Pakistan’s logistics sector needs a significant overhaul. There is a critical need for a courier company that can address these issues head-on by:

• Ending Fraudulent Returns: Implement strict measures to prevent fake returns and ensure parcels are handled properly.
• Timely Payments: Ensure prompt and full payment transfers to ecommerce businesses.
• Fair Charges: Implement fair pricing and settle disputes swiftly.
• Reliable Returns: Guarantee that returned shipments are sent back to the seller efficiently.
• Accountability: Take responsibility for delivery issues and ensure commitment to service standards.

The dissatisfaction of ecommerce businesses with courier services in Pakistan reflects a deeper systemic issue. Despite charging upfront and securing their earnings, courier companies often fail to meet the basic expectations of timely deliveries and effective communication. According to store owners, this situation leaves both customers and sellers frustrated, as the financial burden of returns and delays primarily falls on them. It is particularly disheartening for small businesses that heavily rely on these services to maintain their reputation and customer satisfaction. The current practices not only hinder the growth of ecommerce but also erode the trust that is vital for sustaining this rapidly growing sector.

Ecommerce owners consistently report on social media that their concerns and complaints are dismissed or inadequately addressed. Screenshots of waiting customers are met with empty assurances, and in many cases, shipments are returned due to sheer negligence. According to store owners, this lack of responsibility not only damages the seller’s business but also contributes to a negative customer experience. The absence of a reliable logistics solution in Pakistan is a significant barrier to the country’s ecommerce potential, raising serious concerns about the industry’s future if these issues remain unaddressed.