Introduction Pakistans Retail and Wholesale sectors account for 17.2% of GDP (SBP, 211, !."#$ %hich is e&ui'alentto (S)"7.1* +illion. ,he do-estic -arket is ranked "1 in the %orld (W./, 20 !.21$ in ter-s of si1eand at a fairl2 lo% ".** out of 1 ratin3 %ith res!ect to the Di3ital .cono-2 Ratin3 (D.R$ accordin3 to.4(. 5ll these indicators su33est that althou3h, Pakistan has tre-endous !otential for e6tailin3 as %ell asthe o!!ortunit2 to ca!ture online +usiness around the %orld, 'er2 fe% transactions are currentl2 settledthrou3h the internet.Pakistan -ade (S)7 -illion transaction in o'erall e6+ankin3 (SBP, 212$ e6,ailin3 has +eco-e a ra!idl2 3ro%in3 !heno-enon for trade and co--erce in the %orld. 5s the internet3ets u+i&uitous -ore and -ore retailers setu! their stores online. 7enturin3 an online store is -ore eas2,afforda+leand-ana3ea+leasco-!areto+rickand-ortarstore, %herelar3esalesforceishiredto3eneratecon'ersion.Reco3ni1in3this, -an2e6co--erce fir-s e8!loit thenotionof 9infiniteshelfs!ace,9e8!licitl2toutin3selectionasthe-ost i-!ortant 'alue!ro!osition'is6a6'istheir traditionaloffline counter!arts. (S-ith, Baile2, and Br2n6:olfsson 2$.5ccordin3 to a recent census, *.1% of totalretail salesinthe(S%ereachie'edonline((S;B, 212$. (, !. 1"2$B 9Bill Gates laid it out ina -a3a1ine inter'ie%. Ce said, A4 +u2 all -2 +ooks at 5-a1on.co- +ecause 4A- +us2 and itAs con'enient.,he2 ha'e a +i3 selection, and the2A'e +een relia+le.A ,hose are three of our four core 'alue !ro!ositionsBcon'enience, selection, DandE ser'ice. ,he onl2 one he left out is !riceB %e are the +roadest discounters inthe %orld in an2 !roduct cate3or2. ,hese 'alue !ro!ositions are interrelated,and the2 all relate to theWe+.4n order to understand e6tailin3 +etter, it is i-!erati'e to understand the historic !ers!ecti'e. e6,ailin3initiated in late 7s %hen s-all and +i3 co-!anies use to !rint catalo3ue and !ost it to 1s of custo-ersfor free. ,his 1s of !a3es catalo3ue offerin3 1s of !roducts 3i'es con'enience and sa'in3%orld%ide.5 +u2er in Pakistan can order a nail6cutter fro- @a!an throu3h catalo3ue.B2 100* it %asine'ita+le that internet %ill not onl2 re'olutioni1e the su!!l2 chain for-ulated +2 catalo3ue industr2 +ut,it %ill also decrease the order turno'er ti-e, increase the in'entor2 turno'er and !roduct to -arket ti-e.,he chan3in3 !heno-ena forced or3ani1ations to ado!t .RP (.nter!rise Resource Plannin3$ u!3radin3fro-traditional .D4 (.lectronic Data 4nte3ration$ in order to-ana3e such'elocit2of consu-erinteraction. Fan2 successful case studies started !o!!in3 +2 100* like 5-a1on,Gahoo and =etfle8 in1007. 4n(S, e6tailin3%asinfull s%in3durin3these2earsandall re&uiredtrust, infrastructureandtechnolo32 de'elo!ed, %ere at its -ature sta3e, %hich hel!ed (S to succeed in e6tailin3 arena. 4n 1000,the con'entional +ricks6and6-ortar stores ran3 u! 0"% of (nited States retail sales re'enueH e6co--erce,+2 contrast, accounted for a+out 1%, and catalo3 sales the other >% (;ollett 1000$. e6,ailin3 not onl23a'e -ore con'enience to the custo-ers and sa'in3 +ut also hel!ed co-!anies to reach -ore audiencethrou3hinternet %hich%as not !ossi+le durin3catalo3ue era as it has its o%nli-itation. 5s anillustration, I4GC,=4=G 4nstru-entation S5, a S%iss net%orkin3 e&ui!-ent -anufacturer, %as a+le toraise its sales +2 a+out 2% after esta+lishin3 a We+site, all of %hich ca-e fro- outside its do-estic-arket (Juelchand$.B22+i3+randslike=ike, @;Penn2andSon2startedofferin3!roducts and ser'ices throu3h their %e+site.9Fore and -ore custo-ers are co-in3 to the We+ to learna+out !roducts +efore the2 3o to a retail store,9 sa2s 5nne Fulcah2, !resident of Kero8 General Farkets?!erations (GF?$. 5 -a:or focus for GF? is con'incin3 account sales!eo!le to re!resent Kero8As totalsolution, e'en thou3h so-e of those !roducts, such as !rinters, are t2!icall2 fulfilled throu3h an indirectchannel (;ohen 2, !.1"$. 5ccordin3 to one sur'e2 re!orted in ,he =e% Gork ,i-es (,edeschi 2$,a+out #2% of to! su!!liers (e.3. 4BF, Pioneer .lectronics, ;isco S2ste-, .stee Iauder, and =ike$ in a'ariet2 of industries ha'e +e3un to sell directl2 to consu-ers o'er the 4nternet.,his ne% !heno-enon of-ulti6channel sales +2 so-e +rand i.e sellin3 directl2 online and throu3h reseller had +rou3ht ad'erseeffectsonresellers!erha!sH thedirect channel adds!rofitsindirectl2. ,hethreat tosell inthedirectchannel induces 3reater sales in the traditional retail channel (+2 >%$, and this -ore than -akes u! forthe lo%er unit !rofit -ar3ins (""% lo%er$. ,he -anufacturerAs !rofits 3ro% +2 7% e'en thou3h nothin3 issold in its direct channel (;hian3 et al., 2"$. (nlike offline retailin3, %here consu-er can feel and test the !roduct +efore +u2in3 it, online sho!!in3e8!erience is still ne% to -an2 consu-ers as the2 %ouldnt 3et o!!ortunit2 to feel the !roduct +efore+u2in3 it. ,his is the reason %h2 -an2 +u2ers does sho% roo-in3 and ulti-atel2 +u2 the !roduct online.,here are -an2 +enefits of +u2in3 !roducts and ser'ices online as it 3i'es an o!!ortunit2 to +u2er toco-!are 'arious -odels and +rands of a !roduct +efore settlin3 for final !urchase. ?ffline searchin3 is-ore e8!ensi'e and ti-e consu-in3 as co-!ared to online, %here a consu-er can lo3 into sho!!in3.co-andfindout the+est !ricefor thesa-e!roduct offered+2'arious 'endors, !lus it also3i'es ano!!ortunit2 to co-!are the !roduct %ith +rands and -odels too, usin3 co-!are o!tion a'aila+le in P;.(!rice co-!arison en3ine$ like Goo3le Products. /or -arketers, e6tailin3 is still in trial6and6error sta3e after t%o lon3 decades, as it doesnt hel! the- toe'aluate +rand lo2alt2, +u2ers -ood and +eha'ior and other critical factor re&uired for -arket anal2sis.Without ade&uatedatait isdifficult to-easurethecusto-er e8!erience. Ste'enRi33io, the;.?ofBarnes L =o+le, o+ser'es (/ortune 1007, !. 2#M$B?n the other hand +ased on 2ears of e6tailin3 data,or3ani1ation can -easure the i-!act of online ad'ertise-ent, +u2in3 trend, !roduct !o!ularit2 and otherfactors in real6ti-e %hich are not !ossi+le in offline retail en'iron-ent. e6,ailin3 %orks aroundtechnolo32 and inno'ation to reach and ac&uire custo-ers +e2ond traditional +oundaries. Businesses kee!the-sel'es a%a2 fro- e6tailin3, +ecause it is assu-ed that i-!le-entin3 and -ana3in3 e6,ail is a costl2affair for +usiness. 95n2thin3 5-a1on.co- can do on the 4nternet, so, too Barnes L =o+le. ,here %as a-2sti&ue a+out ho% difficult it %as to 3et started on the %e+, +ut it is &uickl2 fadin3. Cirin3 hot desi3nersfro- Silicon 7alle2, Barnes L =o+le no% offers a %e+ sho! front thatAs :ust as in'itin3 and useful as5-a1on, %ith eas26to6use su+:ect inde8es, online author e'ents e'er2 da2, +ook foru-s, +ook re'ie%s,andother features9We+site. ;usto-ers are dra%ntoa site +ecause of its outstandin3of !roductinfor-ation and selection (FcWillia- 2$.Ian3ua3e is one of the +arriers +lockin3 e6tailin3 !o!ularit2.,his ina+ilit2 in .n3lish lan3ua3e hence+eco-es a -a:or inhi+itor a-on3 non6.n3lish6s!eakin3consu-ers, es!eciall2the older 3eneration(Gi++s et al., 2"$. ?nl2 M% of Pakistani s!eaks (rdu %hich is official lan3ua3e. Research sho%s thathalf the !o!ulation of de'elo!in3 countries is una+le to s!eak their o%n official lan3ua3e countr2 ( selected criteria i.e. connecti'it2,+usiness en'iron-ent, social and cultural en'iron-ent, le3al en'iron-ent, 3o'ern-ent !olic2 and 'ision,and ;onsu-er and +usiness ado!tion. 5n in6de!th factorial anal2sis of Pakistans di3ital infrastructure re'eals so-e !ositi'e and so-e ne3ati'efactsB 1.1 Connectivity EI! score: ".#$%Pakistan, ranked #thonthe +asis of Point,o!ics World Broad+andStatistics 2M in +road+and!enetration, %ith " international undersea connecti'it2 ca+les na-el2 S.56F.6W.6", /I5G and ,W1,0*, +road+and users (P,5 21 Stats$ and 1> Fillion 4nternet (ser or 0% of the !o!ulation (WB,211$, thissho%sthat, Pakistanisontheri3ht trackforra!idde'elo!-ent inlocal andinternationalconnecti'it2. ,he Ci3her .ducation ;o--ission has initiated a !ro:ect to connect all uni'ersities %ithfast +road+and. (ni'ersal Ser'ice /und (an initiati'e to !ro-ote teleco- ser'ices in un6ser'ed and under6ser'ed areas N %%%.usf.or3.!k$ is %orkin3 to s!read teleco- and internet connecti'it2 across the countr2includin3 in re-ote areas.1." &usiness Environ'ent EI! score: $.#1%Pakistan -aintained ".*% 3ro%th rate durin3 2M612 (WBD4, 20$ des!ite of the 3lo+al financial crisisand, in a+sence of an2 financial or ta8 relief !acka3e fro- the Go'ern-ent.Pakistan is ranked M* out of1M" countries for the 2ear 211 +2 Doin3 Business 211 Rank, 4/;. ,his indicates that Pakistan has a3ood en'iron-ent to conduct +usiness. 5lthou3h +ein3 a de'elo!in3 econo-2, Pakistan -aintains 'i+rantstock e8chan3e, de'elo!-ent !ros!ectus and 3ro%th o!!ortunit2. 4t is e8!ected that the +usinessen'iron-ent %ill 3et +etter in the co-in3 2ears. 1.# (ocial and cultural environ'ent EI! score: ".)*%Social andcultural en'iron-ent inPakistanto%ards4;,is&uitelo%as!er.4(%hichisa!!arentthrou3h 'arious factors. 5lthou3h 'arious indicators such as 4;, related education in acade-ia and RLDa%areness a!!ears to +e 3ro%in3, !erha!s it is not reachin3 the desired le'el and is concentrated in ali-ited se3-ent of !o!ulation for se'eral reasons.?ne could +e the lan3ua3e +arrier and another accessto 3eo6de-o3ra!hic di'ersit2. /urther the countr2 has 'er2 fe% !atents in the field, and enforce-ent ofthe la% to !rotect !ri'ac2 and co!2ri3ht is %eak. Due to such factors resultin3 in a !oor socio6culturalen'iron-ent, there is inade&uate ado!tion of 4;, in the countr2 at different le'els.1.+ Legal and Policy Environ'ent EI! score: $.,*%Pakistanscored*.0inter-softheIe3al andPolic2.n'iron-ent underthe.4(Di3ital .cono-2Rankin3s. ,his sho%s that the le3al and!olic2en'iron-ent is in!lace +ut consu-ers ande'en+usinesses are not a%are of it or it has -issin3 ele-ents in ter-s of assurance or i-!le-entation at the3rassroots le'el. ,here are three %a2s for enforce-ent 'i1. a$ +2 force +$ +2 facilitation and c$ +2 offerin3incenti'es. 7arious 3o'ern-ents around the %orld use a -i8 of these o!tions to achie'e +etterenforce-ent.?n other hand the State Bank of Pakistan can !la2 a 'ital role +2 draftin3 a -onetar2 !olic2 so that e6co--erce transaction co-!anies like Pa2!al and 5uthori1e.net can setu! their offices in Pakistan andfacilitate trade +et%een local and 3lo+al +usinesses.?8le2andGeun3, (21$ statethat Otheinte3rit2of theinstitutional en'iron-ent, !articularl2%ithres!ect to the 9rule of la%,9 is i-!ortant for the de'elo!-ent of e6co--erce. ?nl2in such anen'iron-ent can!artici!antsine6co--ercetransactionsde'elo!confidenceandha'eade&uatele3alrecourse should the transaction +reak do%n.P1.$-overn'ent .olicy and vision EI! score: +.#*%5t the -acro le'el Go'ern-ent Polic2 and 7ision are as 'ital as +usiness readiness at the -icro le'el toada!t to a di3ital econo-2.Pakistan has clear 'ision for !ro-otin3 di3ital econo-2 %hich is reflected in'arious!oliciesandactions, %hichincludeco-!uteri1ationof thenational identit2card, +ranchless-o+ile +ankin3, e6,a8ation, settin3 u! of the e6Go'ern-ent directorate, and -uch -ore. Due to e8cessi'edela2s in !ro:ect a!!ro'als the results fall short of e8!ectations and the o'erall strate32 3ets derailed,addin3 to the cost of i-!le-entation. 1./ Consu'er and 0usiness ado.tion EI! score: ".$1%?n the consu-er side, there has +een 1.* Fillion de+it and credit card in transaction (SBP, 21 !.>0$,%ith Rs.7*.# Billion P?S (Point of Sale$ +ased transaction (SBP, 21 !.7$. Fore and -ore +u2ers areacce!tin3 the !lastic currenc2 as it is con'enient and safe. 4t took so-e ti-e to acce!t this nor-, si-ilarl2online +u2in3 is an e'olution !heno-enon %hich %ill take so-e ti-e to +lend %ith the econo-2.4t is 'ital that consu-er and +usinesses +oth -ust seek to ado!t e6transaction. So-e of the lea! ste!s thatcould chan3e the !aradi3- area$ 4n order to attract custo-ers to +u2 online, it is 'ital to ha'e ecos2ste- for e.3. cro%d6sourcin3sites like ne%s site, discount cou!on sites, etc %hich can redirect traffic to e6,ailers. 4nitiati'e +2dealstoda2 (online deal distri+ution site$ and olround (re%ards %ith !unch to custo-ers that can+e redee- at an2 other -e-+er restaurant$ are 3ettin3 !o!ular and are +rin3in3 real ad'anta3es toonline and offline custo-ers.+$ Retailers are 2et to +eco-e technicall2 ad'ance, in order to fill in this 3a!, %e+sites like dara1takes the lead %here the2 -arket, dis!la2, sale and deli'er !roduct on custo-er +ehalf. c$ .lectronicriskisal%a2sa!ointofconcern, too'erco-ethis, +randlikedara1offers7da2s-one2 +ack 3uarantee if an2 !roduct didnt satisfies the +u2ers de-and.d$ 5ftertheclosureof!a2-ent 3ate%a2+2;iti+ank, (BI startedofferin3!a2-ent 3ate%a2at-ore rela8ed ter-s to the e6,ailers, startin3 fro- @an 21".,he a+o'e factorial anal2sis reflects that Pakistan has ade&uate infrastructure i.e. -ulti!le internationalconnecti'it2, -arket si1e, internet su+scri+er, face+ook users and 3o'ern-ent !olicies (Pakistans ;2+er;ri-eBill 27$, that can!ro!el di3ital econo-2totakeoff. 5lthou3hthereisonl2one3ate%a2!ro'ider on 3round !erha!s, Pakistan has e8cellent ;?D (cash on deli'er2$ !a2-ent o!tion !ro'ided +2Blue.8courier%hich is used +2all -a:oronline retailers.?ther !a2-ent o!tions suchase6Bankin3((BI =et Bankin3$ and -o+ile +ankin3 (o-ni and eas2 !aisa$ !ools the 3a! for !a2-ent %hich is safeand secure. Category": 1actor2nalysis withcountries havingsi'ilar3ERratingtoPakistan .cono-ies %ith lo% Di3ital .cono-2 Ratin3 (D.R$ i.e. around ".M do succeed in e6tailin3. So there ishi3h!ro+a+ilit2for Pakistan tosucceedas%ellif it can cross the".M +ench-ark,a3ainst the currentratin3 of ".**. 5n anal2sis of countries si-ilar to Pakistan in ter-s of e6readiness %ill !erha!s !ro'ideso-e !ointersH.cono-ies %ith ratin3s closer to Pakistan areB a$ 5l3eria "."1, +$ 4ran ".2# and c$ (kraine ".>>. ;ountries at a sli3htl2 hi3her le'el %ith ratin3s +et%een ".M and #.2 are 4ndonesia, .32!t and 7ietna- hassuccessfull2 ado!ted the e6,ailin3 fra-e%ork in their countries. 5 closer anal2sis re'eals thatB 1. ,hese countries ha'e al-ost t%ice the Per ;a!ita 4nco-e of Pakistan.2. ,heir co-!etiti'e inde8 ratin3 is also hi3h. 4n 7ietna- "*% !o!ulation ha'e access to internet %hereas Pakistan has :ust 0% internet !enetration. 4t isi-!ortant to -ention here that (= has announced internet as a +asic ri3ht of citi1ens, si-ilar to %ater andelectricit2.5ustralia is a-on3 countries that ha'e i-!le-ented -ulti6+illion dollar hi3h +and%idth fi+ernet%ork in the countr2.,his -eans that Pakistan has to ad:ust its O-acro6factorsP in order to enter into e6,ailin3 in a decisi'e-anner. (ntil 27 Pakistan %as re!uted to ha'e 1"% internet !enetration +ut suddenl2 it dro!!ed +2four !oints to 0% in 211. So-e of the other findin3s +esides econo-ic data that assist in the ado!tion of e6retailin3 areB1. ;o3niti'e a!!roach to%ards internet +u2in3 6 hi3h in .32!t, 7ietna- and 4ndonesia as co-!aredto Pakistan.2. .cos2ste-suchasGrou!on, Pa2!al, =ielsonandGoo3lethat offers'ariousser'icesforthe+enefit of e6tailers. ". Ci3h nu-+er of startu!s and #. Ro+ust !olicies a3ainst c2+ercri-e.So-e !ositi'e indicators %hich !lace Pakistan ahead of countries like 4ran, (kraine and 5l3eria areB1. ,here are nu-+ers of e6tail stores in Pakistan offerin3 !roducts and ser'ices (see details in Part444$of %orld standardH2. Pakistani e8!ortersha'eastron3!resenceinB2B!ortalsliketrade6ke2andali+a+aontheinternational front. Besidesthat, Pakistanhas,e:ari.co-forlocal B2Bacti'ities, e8clusi'el2desi3ned for the Cotel and 5'iation industr2. 4n addition to this,4ndustrial 4nfor-ation =et%ork(44=$ %%%.iin.co-.!k -ana3ed +2 SF.D5 also !ro-otes local +usinesses internationall2. ". .6tail catal2sts such as dealstoda2.co-.!k and tcsconnect.co-.!k hel! local e6tailers 3etcusto-ers throu3h cro%d sourcin3.#. =earl2 all ad'ertisin3 a3encies no% ha'e a di3ital de!art-ent to !ro-ote +rands and !roductsonline.*. Goo3le 3enerated (S)> -illion in 211 throu3h dis!la2 ad re'enue (5urora, 212$.>. (ni'ersities ha'e started di3ital -edia and eco--erce courses for student as electi'e in FB5and Fedia Science !ro3ra--ers.7. ;redit andDe+it ;ardtransactionsat P?Sareincreasin3%hichsu33eststhat Pakistanisare+eco-in3 -ore co-forta+le %ith !lastic -one2.M. F6;o--erce is +eco-in3 !o!ular ena+lin3 e6tailers, the o!!ortunit2 to recei'e or -ake !a2-entthrou3h online +ank transfer, -6co--erce (eas2 !aisa, o-ni and -o+icash$ su!!le-ented %ith;?D (cash on deli'er2$, %here custo-ers are -ore o!en to the idea or %here a suita+le !a2-ent3ate%a2 is -issin3.0. Pakistan ;usto-s ha'e i-!le-ented electronic filin3 s2ste- at 4ssB 1, (2>$, !!. *1 6 77Pakistan Fo+ile Su+scri+er, P,5, Thtt!BRR%%%.!ta.3o'.!kRinde8.!h!Qo!tionVco-WcontentLtaskV'ie%LidV2>0L4te-idV>*MU 'ie%ed @anuar2 ", 211Paul W. Ballantine, (2*$,9.ffects of interacti'it2 and !roduct infor-ation on consu-er satisfaction inan online retail settin39, 4nternational @ournal of Retail L Distri+ution Fana3e-ent, 7ol. "" 4ssB > !!. #>16 #71Juelch, @. 5., and . ;a-+rid3e, F5B F4, PressState Bank of Pakistan, SBP /G 211 Re!ort, 211, P3 "#, 'ie%ed @anuar2 ", 21"T htt!BRR%%%.s+!.or3.!kRre!ortsRannualRar/G11Rco-!lete.!dfUStross, Randall ..Wh2 Barnes and =o+le -a2 crush 5-a1on. /ortune 1"> (Se!te-+er 20$B 1007. 2#MN#0.,a2lor, Willia- ;. Who is %ritin3 the +ook on We+ +usinessQ /ast ;o-!an2, ?cto+er6=o'e-+er, 100>. !!. 1"26"".,edeschi, B. ;o-!ressed dataH +i3 co-!anies 3o slo%l2 in de'isin3 net strate32. =e% Gork ,i-es (Farch27$, 2. ,i3re, P.B. L Dedrick, @. .6co--erce in Bra1ilB local ada!tation of a 3lo+al technolo32. .lectronic Farkets, 1# (1$, (2#$. ">N#7.(nited States ;enus Bureau, /G 211,Thtt!BRR%%%.census.3o'RretailR-rtsR%%%RdataR!dfRecWcurrent.!dfU P3.1, 'ie%ed @anuar2 ", 21"Wei6Csi Cun3 and Ro+ert @ FcJueen, De'elo!in3 an .'aluation 4nstru-ent for e6;o--erce We+ Sites fro- the /irst6,i-e Bu2ers 7ie%!ointB .@4S., (2#$, 7ol 7, 4ssue 1Wei62u 7, 'ie%ed @anuar2 ", 21"