Pakistan’s e-commerce sector is one of the fastest-moving parts of the economy. The market saw significant growth in 2024, reaching US$7.7 billion in sales, with a 17% CAGR projected through 2027. The market experienced robust growth during 2020–2024, achieving a CAGR of 22.2%, with a forecast to grow at 9.7% from 2025 to 2029, reaching approximately US$20.41 billion by the end of 2029.
Behind the numbers, three forces are reshaping the landscape: digital payment infrastructure led by Raast, a new government policy framework replacing the 2019 e-commerce policy, and new taxation rules that bring online businesses into the formal tax net.
How big is the market now?
Market size estimates vary by methodology. The Pakistani E-Commerce Market generated an e-commerce revenue of US$5,776m in 2025, reflecting an e-commerce growth rate of 10–15% compared to the previous year, with projections for 2026 trending toward a similar 10–15% change.
A broader B2C measure puts the figure higher. The Pakistani B2C Ecommerce Market is valued at USD 14.11 billion in 2025 and is projected to reach USD 20.41 billion by 2029, growing at a 9.7% CAGR.
Despite the growth, Pakistan’s e-commerce is still in its infancy globally, with online retail accounting for only 2% of GDP, compared with 20% in Indonesia. That gap represents both the challenge and the opportunity.
The number of registered e-commerce merchants in Pakistan grew by 427% between 2019 and 2023, and e-commerce volume saw a 457% increase over the same period.
Who leads Pakistan’s e-commerce?
Daraz and the marketplace model
Daraz remains the largest e-commerce retailer, with an online revenue of US$926 million in 2025, followed by AliExpress and Sapphireonline. Daraz has 34,500 sellers, 88 logistics centers, and 48% of transactions are completed through electronic payments.
Temu and cross-border competition
As of November 2024, Daraz had more than 9.4 million active users. Temu, the overseas version of Chinese giant Pinduoduo, rose rapidly and ranked second in active users of shopping apps in Pakistan the same month. Temu’s entry signals that cross-border platforms now compete directly for Pakistani shoppers.
Social commerce and live selling
Social commerce — buying through platforms like Facebook, Instagram, TikTok, and WhatsApp — is expected to account for up to 35% of total online retail sales by 2026. Over 70% of e-commerce traffic in Pakistan comes from mobile devices. This mobile-first reality means social platforms are not just marketing channels; they are storefronts.
Digital payments: the Raast effect
Cash-on-delivery still dominates, but the balance is shifting. Digital payment channels processed 88% of all retail transactions by volume. According to SBP, mobile banking apps, branchless banking wallets, and e-money wallets collectively handled 1.45 billion transactions valued at Rs 24 trillion — a 12% growth in volume and 28% increase in value.
Raast processed 296 million transactions valued at Rs 6.4 trillion during Q2 FY25 alone, bringing its total since launch to 1.144 billion transactions worth Rs 26 trillion.
By October 31, 2025, SBP required all existing merchants to adopt at least one digital payment solution, including Raast QR codes. SBP instructed regulated entities to equip all merchants with digital payment acceptance tools like Raast QR codes, POS systems, and e-commerce payment gateways.
This mandate matters because it pushes even small offline merchants toward digital acceptance, which indirectly supports the broader e-commerce ecosystem.
Read more: Full Guide to Building a $1,000 Per Month Digital Agency in Pakistan From Home
Policy and regulation: what changed in 2025–2026
Three major regulatory shifts reshaped the operating environment for e-commerce in Pakistan.
e-Commerce Policy 2.0 (2025–30)
e-Commerce Policy 2.0 is Pakistan’s proposed lifecycle-based blueprint for building a modern digital commerce ecosystem. It replaces the largely high-level 2019 policy with a more operational plan. Its six objectives: expand participation, accelerate digital payments, build efficient and sustainable logistics, enhance consumer protection and trust, enable cross-border trade, and strengthen adaptive data-driven governance.
Since 2019, Pakistan has onboarded over 8,000 merchants to formal channels and grown e-commerce transaction value by ~1,400% (FY2019–FY2024). But fragmentation, urban-centric logistics, 60–70% reliance on cash-on-delivery, weak consumer redress, and exclusion of underserved groups persisted. Policy 2.0 directly targets these gaps.
Digital Nation Pakistan Act 2025
The Digital Nation Pakistan Act 2025 provides a foundational legal and regulatory framework crucial for e-commerce growth. It legitimises electronic contracts and signatures and establishes a dedicated Digital Pakistan Authority to oversee compliance and innovation.
E-commerce platforms are also preparing for compliance with the anticipated Personal Data Protection Act, which once enacted will require mandatory privacy policies, user consent mechanisms, data processing agreements, and breach reporting obligations.
New e-commerce taxation (Finance Bill 2025–26)
Pakistan’s Federal Budget for 2025–2026 introduced a 5% tax on foreign e-commerce providers through the Digital Presence Proceeds Tax Act 2025, with the tax withheld by banks and payment service providers. E-commerce platforms are required to collect and remit 18% sales tax.
Online businesses and digital service providers earning over PKR 5 million annually will be subject to taxation. Individuals earning below this threshold (or PKR 1.2 million for small sellers) will remain exempt.
The proposal sparked concern over its impact on home-based and small-scale digital sellers, many of whom are women and youth. The tension between revenue collection and ecosystem nurturing will define how these rules play out.
Structural challenges that remain
Growth numbers can obscure real friction. Despite expansion, structural challenges persist, including low online retail penetration and continued reliance on cash payments (75% of transactions).
A wide digital divide remains between urban and rural. Cybersecurity threats including phishing and AI-generated fraud undermine consumer confidence. E-commerce logistics contribute to urban congestion and emissions, while over 500,000 gig workers operate without formal social protection. Fragmented tax structures and customs inefficiencies restrict national scaling and cross-border competitiveness.
Logistics remains the weakest link. Last-mile delivery outside major cities is expensive and inconsistent. Reverse logistics for returns adds further cost. Without addressing these gaps, growth will concentrate in Karachi, Lahore, and Islamabad rather than reaching Tier-2 and Tier-3 cities.
What to watch next
Pakistan’s e-commerce trajectory depends on execution across several fronts:
- Policy 2.0 implementation. The draft exists. Whether it translates into working one-window systems, enforceable consumer grievance SLAs, and real fintech sandbox outcomes is the real test.
- Taxation impact. If the PKR 5 million threshold and 18% sales tax collection requirement pushes small sellers into informality rather than compliance, the formal market could shrink even as the total market grows.
- COD decline rate. Digital payments are accelerating, but COD still accounts for the majority of e-commerce transactions. The pace of its decline directly determines platform economics and fraud exposure.
- Cross-border competition. Temu and AliExpress are capturing share. Local platforms need to compete on price, trust, and delivery speed — or risk becoming secondary channels.
Pakistan’s e-commerce market has moved from “emerging” to “scaling.” The infrastructure, regulation, and consumer behavior are all shifting. What remains is the harder work: making digital commerce reliable, inclusive, and viable beyond the biggest cities.