Pakistan has been finally added to the list of countries that are allowed to sell on Amazon. Previously, a user could not even create an account of Amazon in Pakistan. It was not even in the drop-down list of countries while registering on the site. Reportedly, it will be added soon so the only question that people have right now is how they can become an Amazon seller in Pakistan.
Certainly, there will be a lot of international products to buy from but it is also an opportunity to sell Pakistani stuff globally. Many experts are hoping that Pakistani businessmen would utilize this platform to reach new heights.
However, it is important to learn how to do business on Amazon from Pakistan before getting too excited.
Challenges for New Amazon Seller in Pakistan
Amazon is not an alien concept for many eCommerce sellers. Before getting added to the list of approved countries, many Pakistanis sold their stuff on Amazon through different channels. They had to use illegal means or create offshore companies to sell on Amazon. Others worked as background sellers who sent their stock in bulk to Amazon and Amazon sold it for them. Some also provided services as Virtual Assistants to many other Amazon sellers around the world.
Still, this is very big news for the Pakistani eCommerce community which has been working hard to achieve this milestone of making Pakistan recognizable for Amazon. However, the recent development would probably change the dynamics for every Amazon seller in Pakistan.
If the country can avoid certain issues, then obviously it can grow collectively but even if one Pakistani falls to his inbred problem of corruption then it would only make Pakistan a laughing stock again. Amazon would surely regret allowing Pakistan in its approved list of countries, so to become an Amazon seller in Pakistan, one might want to keep few things in mind.
Unforgiving Market Competition
Amazon’s market is bombarded with manufacturers and suppliers from India and China, while very few from Pakistan. A battle with its Asian counterparts would be interesting to watch but will Pakistan able to hold up the competition? It is not clear until Amazon releases proper instructions for authentic Pakistani Amazon sellers.
An Amazon seller in Pakistan must focus on building a name for his brand rather than just focusing on making money by selling whatever. A store is successful only when a customer receives what the customer desires. Unfortunately, in Pakistani internet shopping, customers usually become a victim of fraud or a scam. Last year, some Pakistani kids ordered a drone from a popular online shopping website, Daraz, and got rocks in return.
Such incidents do not make Pakistanis a reliable seller. So, one needs to be careful while fulfilling orders. It is not Daraz and one simple mistake (or switch) can result in the account getting blocked permanently.
A rather troublesome point is about the tax laws which are never defined explicitly. According to Income Tax Ordinance 2001, the current tax rate on commissioned income is 12% and 5% for online marketplaces. It is not clear how FBR will charge those who start selling or shifting their business to Amazon. This opens up a lot of windows for corruption for example a tax agent can misrepresent the actual tax rate to extort more from the new Amazon seller in Pakistan if the actual tax rates are not mentioned explicitly.
The Shipping Industry of Pakistan has to play a prominent role if they want to see this country flourish in eCommerce quickly. Each Amazon seller in Pakistan would want to deliver international orders on time. There are mostly single parcel carrier services in Pakistan unlike Amazon’s variety of vehicles in other countries. These carriers would have to come up with realistic solutions so the delivery can be faster. Amazon evaluates businesses based on how quickly they are fulfilling the orders of the customers.
Another huge challenge for the eCommerce industry in Pakistan is the weak online infrastructure for processing payments. Plenty of times the bank cards do not work on online shopping websites. If Pakistan is planning to use Amazon’s platform, its online payment function must be fast and accessible to every bank account holder.
As there is official access to PayPal, the users would have to depend on Pakistan State Bank and how it would handle the international transactions through Amazon. Moreover, there are various costs related to the Amazon store that can offset the profit margin for the seller.
These costs usually include reviews, feedbacks, product and customer management, inventory management, and order and delivery management.