Tell us about your collaboration with Alibaba. How did it occur and what hopes do you have for its future?
There are many reasons why we got together with Alibaba. One of them was that Alibaba wanted to expand their portfolio. When they acquired Lazada, an e-commerce platform in South East Asia, they started thinking that they should do something in South Asia too. After a preliminary discussion, they realized that we met their requirements. They admired the bond that we had with our sellers, our customers, and our employees. Alibaba wanted to invest in South Asia but they did not want to take the pressure of starting a new company. Moreover, we were given the assurance that there would be no change in brand or current role of the employees at Daraz. The only change that will occur however, is a change in technology. A new app is being developed as we speak as well as an updated seller center. I would personally say that this is a milestone for us, since we’re going from getting access to second generation technology to fifth generation, which realistically we would’ve got about five years later if we were on our own.
Who approached who first?
It was kind of mutual. We had partnered up with Lazada on certain occasions, who were under Rocket Internet at the time. After Alibaba took over Lazada, we would come across each other at meetings, so it was indubitable that there would be a collaboration at some point. Also, our goals matched theirs, further ensuring our partnership.
Was there any challenge that you faced from a trade point of view?
Not too many. Alibaba actually bought 100 percent shares of Daraz in its 5 countries of operation.
Although the whole process was a bit time consuming, there was no major issue.
Did you take any help from any of the trade bodies or anyone in particular?
That wasn’t really necessary since our business didn’t change at all. We’ve been here for more than four years now, so we just transferred the shares to Alibaba through the regular process.
How is the collaboration going to benefit the local e-commerce industry?
We created this market in Bangladesh; we defined how e-commerce should be, what kind of technology it should use and what the buyers should see. At least a hundred sellers have been training with us over the past month. They have no restrictions here in Daraz because sellers can use their knowledge and their expertise to work with other companies. I think that is the biggest benefit that e-commerce has – it prepares the market. Using new technology will also improve the service sector. Pretty soon, if someone orders a product from Daraz, they will be able to track their order through GPS, which people in Bangladesh haven’t experienced yet. Anyone who wants to compete in the industry needs to have this kind of technology. We’re taking our e-commerce to another level at one go, and that is how it should be.
Just today Bata told us in a meeting that they’ve significantly increased their digital spending because a lot of people are buying from them online since they’re getting two hundred taka off from there. Getting discounts still moves us. From what you’ve seen, what has been the buyers’ tendency to welcome e-commerce into their lives?
I think it’s pretty positive. The biggest problem we face these days is moving from one place to another because of traffic. Secondly, people are getting very busy day by day with their work, social activities and other things, so they don’t have much time to shop for their daily necessities. I think e-commerce is the solution for them because it gives them the convenience of shopping on the go. That is also another reason why there has been a huge response for our app, because people can shop from anywhere on their phones. When people login to our app, they can compare Bata shoes with Apex shoes and all other shoe types instantaneously. However, if they want to do that physically, they would have to visit numerous showrooms, which is time consuming. They also try to get some advantages price-wise from e-commerce. ButI feel that availability comes first, then convenience to customers. Afterwards comes the fact that they can make comparisons. Even when the price is similar to the price charged in stores, e-commerce is able to sell products more easily.
The first Black Friday sale was a massive hit with an unprecedented volume of sales. But there were also complaints from customers about quality and delivery time. Understandably quality is beyond your control because you are getting products from external sellers. Are you training businesses that you are collaborating with for quality assurance? How are you maintaining the quality of your products?
The first thing we do is a very good screening of the supplier or the vendor who wants to sell on Daraz. We look at their portfolio and what they’ve done in the past. Second, we look at the kind of product they want to sell. For example, no one can sell Samsung phones, because they need to be authorized distributors. We don’t do hundred percent QC (Quality Control), we just do sample QC when the products come through. The sellers do the whole packaging, but we do random sampling and check certain products when needed. Thirdly, we offer our customers a seven-day return policy. If the customers are not happy with the products, there are no questions asked upon return. If there is a misunderstanding and the seller and the customer can’t come to an agreement, we take responsibility to give compensation to the customers. Also, we make sure that the seven-day return policy is valid so that the sellers don’t make excuses when being asked for a refund. We take our customer protection policy very seriously and our main priority is our customers. We currently have about 4,000 sellers with over 450,000 products for sale. There are products that are not up to the mark. There are sellers who don’t deliver on time, process on time or reply to a customer’s feedback on time, hence the reason why there are ratings for both sellers and products. This will help the customers in identifying which seller is more convenient for them. Also, with the new technology, the customers can now directly communicate with the sellers. However, our quality overall is great, issue return rate is 0.8 percent, and our return rate in total is 1.5 percent.
Your collaboration with Alibaba means that there must have been some rebranding in your company. Did this affect the philosophy that Daraz has been following so far?
There haven’t been that many changes. We have a new, more vibrant logo. We don’t think that people should just shop for products online, but services like booking tickets and hotels should also be made available. We want to offer a sort of lifestyle solution. We are soon going to be promoting food recipes along with the tutorials as well as make up tutorials.
What has been the response so far to all the new additions and updates?
People are still taking their time and getting used to the new technology, but overall it has been good. We were expecting drawbacks, but the system has been running smoothly so far. There are still a few things that are expected to be launched by the end of this month. For example, the iOS app is still not available, but it will be starting from 29th September.Within the next two weeks, all of them are going to be live.
I’ve been to the Daraz office several times and it’s a place teeming with energy. But working with so many young people, there must be challenges.
When we launched Daraz in Bangladesh, we looked for people who had very good knowledge of e-commerce. Even now, e-commerce is about selling products, running a Facebook page and creating a website. Running a market place is very challenging. You need to manage the buyers and sellers. You need to have your own expertise on the market because we cannot be dependent on anyone else. Since we were not able to find the right people who were skilled, we gothelp from foreign experts who trained a team. We got very good results out of that. However, when we saw that the people we hired from abroad took nine months to finish their training and the young people took a little over three months to get used to this since they seemed tech-friendly, we felt as if it was better to invest on them and give the younger people the chance to learn. We also believe in giving them the independence to make decisions so that we could make the best out of all of them. Our young employees all have a similar ideology, which is helpful.