Daraz, the largest online shopping platform in Nepal, has been focusing a lot on improving its overall customer experience. After its acquisition by Alibaba in May 2018, Daraz has been learning and benefitting from the proficiency of the Chinese e-commerce giant.With a long term vision to facilitate trade between different countries, the plan of the company is to enable the producers in one location of Nepal to sell their products to buyers in various other locations in the country. Managing Director of Daraz Nepal Lino Ahlering talked to Nikeeta Gautam of New Business Age about the company’s growth, its expansion plans, customer retention strategy and how it is working to bring more people into the fold of e-commerce. Excerpts: 

How have the past 20 months been for Daraz, following its acquisition by Alibaba, in terms of technological innovations in e-commerce and providing unique experiences to the users (both buyers and sellers)?
We have benefitted quite a lot after the takeover by Alibaba. The origins of Daraz are here in South Asia, not in China, but we have now the world’s most successful e-commerce company with us and we share their vision of fostering e-commerce in emerging markets of South and East Asia. We also have become more technologically advanced and our mobile app has been completely transformed - it is now very personalised for each customer. What appears on the screen of your device depends on what you are browsing. Beyond personalisation, our tech systems and processes have changed significantly.  As a part of Alibaba, we are benefitting and learning from their expertise while maintaining our local identity here in Nepal.

How has the user base of Daraz grown during this period?
Our growing number of users shows that we are on the right track. Around 100,000 users use our app every day and last year, our user base has grown by around 200 percent. If you look at the order growth of all our sellers combined the growth is even higher, with rates close to 300 percent in terms of annual volume from 2018 to 2019.

What is fuelling your growth?
Internet penetration is high and it's growing continuously. Mobile phone penetration is also growing very rapidly. As 90 percent of our customers use our platform through an app, we see that smartphone access is one of the biggest factors for the growth in the e-commerce market.

How was 2019 for Daraz? What major achievements would you like to highlight (successful campaigns and overall institutional growth)?
2019 was the first full year for us under the umbrella of Alibaba. Having been wholly integrated into the Alibaba ecosystem, we revised all our past activities. We also organised many campaigns like the 11/11 sale in November where nearly 350,000 visited our platform in a single day. Our sellers on the platform sold more than 150,000 products within just a few hours, which is massive for a country like Nepal. 2019 was also the year we introduced the service of prepayments through debit and credit cards.

Delivery is another important area we have worked on. It used to be one of the weaker parts of our service, considering the infrastructure challenges in Nepal. Therefore, we invested a lot of time and resources to make it faster. As a result, our end-to-end delivery from sellers to all our buyers has improved a lot and is now on average faster compared to our other Daraz markets in Pakistan, Bangladesh, Sri Lanka and Myanmar.

We also focused a lot on expanding our service area this year. We expanded our seller base and are now working with more than 3,000 sellers across the country. Moreover, we also developed partnerships with many logistics and courier companies and have included them into our operational process through our technology.

What plans have you set for 2020?
We will continue our expansion efforts as we want to enable more people to adopt online shopping and get access to products not usually available in the markets around their corner. We also plan to extend our network. We are currently delivering in 26 cities across the country but we are planning to reach customers in other, more remote, areas as well.

We will also continue to focus on empowering more sellers through our technology. Previously, we were only focused on sellers in Kathmandu valley. But now, we have been looking at areas outside the capital to enable sellers of other parts of the country to sell their products through our network, not only in Nepal but also to potential customers abroad. This way, the sellers will also have access to markets outside their immediate reach and our increasing customer base will also have access to more products from all across Nepal.

We will also be launching popular e-wallets to give our customers more convenience while making payments. We will continue to work on developing professionalism in our partners and enhancing the ecosystem here in Nepal. All in all, our focus is on improving the customer experience on our platform.

What is the Unique Selling Proposition of Daraz? How is it distinct from other similar platforms?
Daraz offers a wide assortment of products than any other platform in Nepal. Customers can get access to more than 300,000 products through one app and get it conveniently delivered to their doorstep through our extensive delivery network. This also means that we constantly focus on bringing the latest and most desired products and make them available to our customers. For example, once a new mobile phone is launched, you will very likely find it on Daraz at a very good price. We also offer a returns policy of 7 days on all products on Daraz, which allows customers to return their product if it is not as it was promised and get the full amount back into their bank account. This is something very unique and you would not find this with any other online platform or in the shops around your corner. If you bought something in our premium section called Daraz Mall you can even return your product within 14 days. So overall there is no risk once you shop on Daraz.

How do you view the Nepali e-commerce market?
The e-commerce market in Nepal is still small, but growing very fast. In India, there is stiff competition among e-commerce companies like Amazon and Flipkart. But that is not the case in Nepal. Here, we are leading this e-commerce transformation. However, other smaller players like SastoDeal are also growing which eventually is good for the overall industry. We want the market to be more competitive because competition brings improvement. Companies will try out various models to appeal to the customers and user adoption of e-commerce, as a whole, will improve. So the market needs to grow and it will.

How do you observe the behaviour of Nepali consumers?
If we compare it to other developing countries, the Nepali market is immature. However, people here are adopting quickly. Initially, only people belonging to the age group 18 to 35 used to buy products online. This is the generation that is adopting e-commerce before everyone else. But, in recent years, we have also found that people beyond that age group are also showing a lot more interest in buying online and finding e-commerce more convenient to their regular shopping.  For example, we see a lot of traction amongst corporates and also housewives who use Daraz now to order electronics, fashion groceries and other household items.

At what rate is the e-commerce market in Nepal growing at present?
There is no recent research study when it comes to the market size of the Nepali e-commerce industry. However, when you look at the overall economy, the prospects for Nepal for 2020 are very encouraging with forecasted GDP growth of 6.9 percent, which is higher than India. These forecasts combined with our recent strong growth makes me quite optimistic when it comes to the e-commerce market in Nepal.

An efficient logistics system is one of the most important factors for any online marketplace. How do you ensure that the logistics operations of Daraz are refined and are in line with the best international practices?
Nepal has a challenging topography and a lack of infrastructures. Many places don’t have proper road networks. We work with many partners from all over the country and try to develop a coherent environment with advanced structures and procedures supported by our technology. This supports us in ensuring a quick delivery to our customers. But it is still challenging. We have to keep investing in the network and work very closely with the courier companies on a daily basis.

What challenges do you see for the e-commerce business?
We still need to build more trust, especially among the more mature generation that are not as familiar with digital business models as the younger, more tech-savvy users. We focus on building trust particularly through two major focus areas, education and experience. Our mission has been to showcase the benefits of shopping online specifically the convenience and access to a much wider pool of products by connecting thousands of sellers with thousands of customers across the country on a daily basis through our technology.

Improving the experience, through better delivery and better quality of products is the other focus area. We emphasise greatly on making our more than 3,000 sellers more professional. We acknowledge that the customers in some rare cases receive a product that might have been delivered in a different colour or size than what they selected online. We have our return policy for such scenarios to help the customers and get their money back without any risk. But we still have to focus on making the sellers more mature and preventing such incorrect deliveries. And for this we rely a lot on the feedback we get from customers, which is very important for us to improve.

Another challenge is the bureaucracy of Nepal, which sometimes leads to long processes. When we started, there were hardly any policies for e-commerce. There was no clear system for things to move. But things are improving a lot. The government is very cooperative and has also finalised the national e-commerce strategy. So eventually all stakeholders in this sector are making a move for a better future, which will eventually benefit the customers after all.

What strategies is Daraz working on for customer retention?
Customer retention depends on the trust people have in businesses. When you trust the business model, buy something and have a good experience, then obviously you come back again.

We are always mindful of our customers’ feedback and regularly improve ourselves based on their comments. We are still a young company so we do make mistakes sometimes. But we are also learning as we go, and we rarely make a mistake twice. All the insights and feedback we obtain from customers, delivery riders and customer service teams and through product returns are significant for us and help us improve our processes. Besides that we can’t grow if we don’t improve internally too. So, we frequently conduct surveys among staff to make the work environment better as well. If employees are happy this will have a positive impact on our customers as well.

Our strategies seem to be yielding results because our customer base is comprised of around 50 percent of regular shoppers and do return to buy another product within a month.

The attraction of many Nepali youths has been towards working in tech companies. As the largest e-commerce firm in Nepal, how is Daraz maintaining a sound work environment in the company?
The average age of staff in Daraz is 26 which is very young for Nepali companies. We also have a lot of women in leadership positions. This is not because of the quota system, but because of their better performance in particular positions. No matter what background people have, they can achieve a lot in Daraz through hard work and creativity. Our approach is to keep the autonomy of the staff. We believe that innovative strategies and solutions not just come from the top. It does not matter whether people working with us are delivery riders, customer agents or marketing professionals, they can come up with plans and strategies and execute them as we provide a sense of ownership to people here.