During the fervor of the 2024 General Elections, Pakistan found itself grappling with a communication dilemma: widespread telecommunication service disruptions, internet blockages and social media blackouts across X (previously known as Twitter), and parts of Instagram, and Facebook. Until recently, fearing moral decline of the youth, the Senate of Pakistan considered enacting legislation to ban all social media platforms.

This narrative of digital disruption is not new for Pakistan. Since 2005, its citizens have been embroiled in a struggle for unrestricted access to social media—a battle against censorship and stifled expression. Yet, the implications of throttling or halting internet services, particularly access to social media, extend far beyond mere digital dialogue. Such sweeping measures can inadvertently cripple the country's economic vigor, disrupting business operations, trade, investment, and exports.

Pakistan has weathered a series of social media bans, including Facebook in 2010, YouTube from 2012 to 2016 and the TikTok saga of 2020. Adding to its tumultuous digital history, the nation faced restricted access to X in February 2024. Figure 1 represents this turbulent timeline, depicting the ebbs and flows of social media bans in Pakistan since 2008.

Figure 1: History of Social Media Bans in Pakistan 
Source: Invest2innovate
 

This blog post aims to explore the impact of Pakistan’s numerous social media bans on e-commerce businesses. Specifically, it analyzes strategies for these businesses to not only survive but thrive amidst these bans, while providing recommendations tailored to the Pakistani landscape.

The Role of Social Media in E-Commerce Businesses 

E-commerce refers to the buying and selling of products through various online platforms. This modern business practice uses social media to establish brand presence, increase online recognition, grow a customer base and even increase sales. In Pakistan’s landscape, several local companies use social media to promote their products and services. Not only does it offer cost-effective marketing solutions, it also bridges the communication divide between businesses and consumers. Several businesses, including small-scale or home-based enterprises, often operate solely through their social media accounts, foregoing physical stores altogether. 

Pakistan's e-commerce sector has witnessed remarkable growth in recent years. From 2018 to 2023, projected sales surged from USD 1.2 billion to USD 2.1 billion, with the number of registered e-commerce merchants rising from 571 to 1,516 during the same period. Accompanying this growth was a notable increase in e-commerce transactions, from 3.4 million in 2015 to 29.7 million in 2019. In 2023, e-commerce revenue in Pakistan reached USD 4,684 million, projected to climb to USD 4,892 million in 2024, with an expected annual growth rate of 5.85%. This trajectory suggests a projected market volume of USD 6,500 million by 2029. Additionally, revenue generated through social media channels, known as social commerce, amounted to USD 11.32 million in 2023 and is projected to reach USD 14.74 million in 2024.

As of January 2024, Pakistan boasts a sizable social media user base, with approximately 71.70 million individuals, representing 29.5% of the total population, actively participating across various platforms. This demographic highlights the integral role that social media platforms play in shaping Pakistan's digital view and serving as a potential consumer base for e-commerce businesses.

Impact of Social Media Blackouts 

 
When subjected to bans, e-commerce businesses face disruptions that impede their ability to connect with their target audience. This results in diminished visibility and sales, and loss of potential revenue. Moreover, such shutdowns exert adverse effects not only on immediate economic output but also on long-term aspects such as investor confidence and the stability of the country's digital infrastructure.
Furthermore, businesses face difficulty regaining market share once social media platforms are restored. They struggle to adapt to sudden changes in their marketing and communication strategies, causing operational challenges and decreased productivity.

The impact of forced social media outage extends across various sectors, affecting countless individuals and industries that increasingly rely on the social media platforms for their day-to-day operations. In 2023, approximately 125 million citizens were affected by the government's decision to restrict access to social media platforms. Nighat Dad, CEO of Digital Rights Foundation, emphasized the significant impact of such disruptions on digital payment systems in Pakistan. She highlighted that major digital payment systems in the country witnessed a 50% decline, with HBL, the largest bank, reporting a 60% decrease in the output of its point of service (POS) machines. These disruptions were attributed to the widespread use of social media platforms for e-commerce transactions, as businesses relied heavily on social media channels for sales and marketing activities. As a result, any disturbances or outages on social media platforms directly affected the flow of digital payments, leading to the observed decline in digital payment transactions.

Telecom operators incurred an estimated loss of USD 5.4 million, while the government experienced a decline in tax revenue of nearly USD 1.9 million. The IT sector also suffered significant losses, estimated at least USD 3 million until the restrictions were fully lifted. On top of that, even a brief 24-hour internet blackout results in direct economic losses for businesses and individuals, totaling USD 4.28 million per day (0.57% of the daily GDP) – an amount that could be used to finance the salaries of over 2,000 healthcare workers, purchase approximately 500,000 kilograms of wheat, or cover the monthly utility bills for tens of thousands of households in Pakistan. These figures highlight the substantial economic repercussions of even a short disruption in social media connectivity, underscoring the critical role of digital infrastructure in sustaining economic activity. 

Pakistan’s use of social media blackout tactics undermines the digital infrastructure crucial for e-commerce business. The approach sends concerning signals to investors, casting uncertainty over the stability of government policies and their enforcement mechanisms within the information technology sector.  Consequently, investors interpret these actions as indicators of regulatory unpredictability and governance challenges, leading to hesitation in committing funds to Pakistani ventures. “These haphazardly imposed shutdowns create perceptions of higher risk associated with investing in and setting up offices in the region among foreign clients and investors,” said Nighat. 

Moreover, many small and medium-sized online enterprises are severely affected by the lack of social media access, potentially incurring losses of up to PKR 50,000 per day. These companies predominantly rely on websites and social media channels for distribution. Consequently, during an internet blackout, they encounter difficulties fulfilling orders, resulting in delays and loss of revenue. 

E-Commerce Survival Kit

In Pakistan's dynamic digital environment, characterized by intermittent social media bans, e-commerce enterprises can enhance their resilience by adopting a multifaceted survival toolkit. Central to this toolkit is the strategic utilization of mobile apps, drawing inspiration from China, where e-commerce thrives predominantly through mobile platforms despite stringent internet censorship and social media restrictions.
 

With a significant portion of Pakistan's population using smartphones for internet access, e-commerce entities can benefit by developing robust mobile applications. These apps provide a direct channel for businesses to engage with their target audience, without depending on social media platforms. Through seamless and user-friendly mobile shopping experiences, businesses can maintain customer engagement and boost sales, even amidst social media restrictions.

Mobile apps offer personalized and interactive shopping experiences to customers, with features like push notifications, in-app messaging, and personalized recommendations, fostering engagement and encouraging repeat purchases. 

The success stories of popular mobile apps in Pakistan, including Daraz, OLX, and Al-Fatah Online, underscore the efficacy of this approach. By embracing mobile app technology and strategically promoting their usage, e-commerce businesses can navigate social media bans with resilience and sustain their operations in Pakistan's ever-evolving digital landscape.

On the flip side, for small and medium-sized businesses, the financial hurdle of developing an app, particularly in the early stages, can be daunting. In lieu of investing heavily in app development, they can opt for a website to establish their online presence. Unlike apps, which often require a substantial budget starting at PKR 325,000/-, a basic website can be developed for a fraction of that cost, ranging between PKR 30,000 and 50,000, amounting to roughly 9% of the expense of app creation.

Websites offer unparalleled accessibility across various devices such as mobile phones, laptops, desktops, and tablets since they don't necessitate downloads. Furthermore, websites can be tailored to cater to a broader audience through effective search engine optimization (SEO) strategies. Integrating features like email and SMS opt-ins can significantly contribute to customer retention and boost sales. By gathering contact information through these channels, businesses can maintain continuous engagement with their target audience, ensuring sustained sales even in the absence of social media platforms during bans or disruptions. Therefore, it's imperative for e-commerce ventures to prioritize website development, recognizing that diversifying marketing channels is indispensable for their survival and growth.

Final Statement from Nighat Dad

“Social media blackouts are an undeniable reality of our economy and therefore, relying solely on social media platforms will be not sufficient for the long-term survival of e-commerce. It is, therefore, imperative for e-commerce businesses to seek alternates that don’t hinder their sales and growth. Websites and mobile apps are promising avenues.”

The writers acknowledge Nighat Dad, Digital Rights Activist and CEO of Digital Rights Foundation for her views and recommendations for Pakistan’s digital landscape, and Maryam Ali Khan, Research Associate at Digital Rights Foundation for her cooperation.

Eeman Qureshi is a Teaching Fellow at the CNM Department of Economics, LUMS.

Rimsha Arif is a Teaching Fellow at the CNM Department of Economics, LUMS.

Yushma Umar is a Teaching Fellow at the CNM Department of Economics, LUMS.