Daraz­ We Made History

Daraz­ We Made History

There was no concept of online shopping in Pakistan before the inception of Daraz. Online shopping in Pakistan was all about buying clothes and accessories from various retailers’ pages on Facebook, most of them owned by individuals with unique ideas and designs. Corruption, misleading information and the worst after sales service were common attributes of e­commerce in our country. Daraz was the first full thought out online store in Pakistan which took these issues into consideration and tried to rectify them.

Daraz.pk: The first E­commerce in Pakistan

Daraz.pk is part of the Asia Pacific Internet Group (APACIG), a joint venture of Rocket Internet and Ooredoo, leading internet platform in Asia, supporting some of the top internet companies in the region. Since the overall shift in the global market about changing trends towards internet retailing (see Exhibit 1
) and e­commerce playing main role in fashion industry (see
Exhibit 2
),
Rocket Internet took advantage of this new need and established different online ventures in different counties of Asia among which one of them is Daraz.
The reason to launch Daraz in Pakistan was based on many facts. Firstly, Pakistan being one of the most populated country in the world holds great attraction for retailers. Also 70% of its population is under 30 years of age (youth majority) which makes it quite lucrative for an online venture as their target market comprises mostly of youth who are tech savvy and willing to try new things. According to a survey there are 31 million internet users in Pakistan with a rising fashion conscious middle class (see
Exhibit 3
), a huge advantage for a company like Daraz and hence Daraz was launched in Pakistan in the year 2012.
Daraz started its operations by selling only clothes and shoes for men and women. It was a huge challenge for the company to spread this total new awareness because a country where people barely knew anything about online shopping, it was hard to convince people as to why they should alter their purchasing habits. Bur Daraz has been quite successful in changing the perception of online shopping in Pakistan by providing an excellent overall experience. It’s now the leader of online retail in Pakistan, offering ecommerce services for apparel, accessories, shoes, beauty products, electronics and general merchandise. Headquartered in Karachi,
Daraz.pk has now over 50,000 sq. of warehousing space across Pakistan and has delivered to over 200 cities in the country. It has a portfolio of over 1,800 local and international brands and has established itself as a notable success story. See
Exhibit 4
.

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Daraz­ We Made History
Daraz has a diverse collection of products and services (
Exhibit 5) hey aim to have the widest
.
T
assortment in almost all possible categories, eventually ending up being the destination for all products searched in Pakistan. As quoted by Co­Founder of Daraz.pk, Farees Shah:

Daraz Competition & Customers Although there have been quite a number of startups in the recent years due to the increasing awareness of online shopping (like shopping.pk, Bytes.pk, Shophive.com, Symbios.pk, Azmalo.pk,


Homeshopping.pk, Chezmall.pk, Myshop.com.pk) but Daraz believes it has an edge over others in terms of quality variety and
. Other online e commerce retailers are nowhere close to the portfolio of big luxury brands that Daraz holds and their yearly turnover. Daraz competes with other online retailers by hosting over 6 million monthly visitors and offering 60,000 products on their portal and these numbers are expected to increase within the next few months.
They do face a huge competition from big departmental and hyper stores (Like Dolmen Mall, Imtiaz, Naheed and many others) which are physically located in the region with the warehouse holding bulk inventory and offering the facility of home delivery as well. One advantage that Daraz has is that they only need to manage inventory in a warehouse and avoid facility costs that brick­and­mortar stores can’t. This allows them to focus on price, as their fundamental operating costs are typically lower. They also often directly order from manufacturers, avoiding the middleman that many brick­and­mortar stores must contend with. One interesting thing which was observed was that b esides three major cities of Pakistan, a huge chunk of Daraz clientele belongs to smaller cities and rural areas such as (Ghotki). Due to the lack of retail infrastructure outside major metros, E­commerce is the only option in the tier 1 and
2 cities for access to new fashion trends. In a 2014 survey, Daraz revealed that around 48% of all orders placed in the first six months of that year were outside of Pakistan’s biggest cities –
Karachi, Lahore and Islamabad. Now the percentage has gone up to 55% in just two years. To see Daraz.pk’s complete target profiling see
Exhibit 6. Marketing Strategies and Value Innovation

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Daraz­ We Made History

Daraz.pk’s Marketing Approach
As the first mover in the online shopping category in Pakistan, Daraz is always coming up with different marketing concepts and ideas. They were first to bring the famous Black Friday sale in
Pakistan which created a great hype and added to the good name, even though it was not as rd successful but their initiatives are praiseworthy. Back to back sale events like 23 March etc are only done by daraz.pk on such big scale.
Daraz.pk, along with Bank Alfalah, Pantene, Bata,
Insignia and MasterCard, is introducing the first ever shoppable online fashion show
,
gathering top fashion designers who will launch exclusive collections on the leading ecommerce platform at incredible price points that are much lower than the normal prices. Their webpage for the fashion week has been streamlined in a way that the shopping experience becomes effortless for the customer, making it a classic example of social entertainment and retail all being rolled into one glamorous event. The collections will prove to be a game­changer for the fashion industry. It will not only provide the fashion fraternity an online platform to grow but also endeavor to promote accessibility. With the Bank Alfalah – Daraz Fashion Week, a woman sitting in Multan will now have access to the same fashion trends as a woman sitting in Karachi.
Daraz always keeps an eye on changing trends in the market and shaping their services around them. Pakistan is the 5th largest mobile phone market with around 125 million mobile phone subscribers in 2013. Among which 30% have smart phones and 11% of internet visitors that year came from mobiles. Also the 3g and 4g technology roll out has been great in the country.
Looking at this scenario, Daraz developed their own obile application m to cater to all the masses. The aim is to target maximum number of online users as best as they could.
As most of its customers come from rural areas, they developed an
Urdu interface for their convenience and understanding. They have an Urdu version of their website for the customers who do not understand English and they are the only ones in the industry who have this option.
Daraz.pk spends heavily on marketing and promotions. They advertise on Google (Google ads), they key word searches. They also advertise heavily on Facebook, through ads, events, suggestions etc. dara.pk sends direct promotional emails to those who subscribe to their newsletter and their existing customer to inform them about new deals, discounts and products.
SMS marketing is also done by daraz.pk but they as yet do not do OOH advertising or tv commercials. For events like Black Friday, Pakistan Day, Fashion week etc they created so much hype on the internet through online marketing that record traffic and sales were witnessed.
Advertising Channels:
To target the right audience, Daraz.pk places a consolidated marketing effort and this has been their strength.They divide advertising channels in to two categories:
Online Marketing which includes:
∙ Facebook Paid
∙ Facebook Social
∙ Google
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Daraz­ We Made History
∙ SEO and SEM
∙ Daraz.pk branded Newsletters
Offline Marketing which includes:
∙ Print (mainly various magazines)
∙ Radio
∙ TV
∙ Joint marketing campaigns with various partners including TCS, Standard Chartered and
Pizza Hut

Culture, Values and Attitudes Daraz corporate culture is based on creativity and teamwork. They do not believe in traditional approach to management with set rules and regulations instead they consider themselves a learning organization where employees help each other and work together to achieve their goals.
Daraz believes in innovation and is always looking for new ideas. They have brainstorming sessions with their employees where everyone contributes equally. Even the CEO sometimes sits together with everyone in a casual setting and they all work as a team. Their office is a reflection of their culture. It is very colorful and centers on a huge room with benches where all their employees sit together on their laptops and work side by side. It is very interactive and emits a Silicon Valley vibe (
Exhibit 7
). Coupled with an excellent customer service section and a lounge where the employees can let off some steam, Daraz seems to have captured the perfect work environment. In terms of attire, they don’t follow any strict dress code.
As long as it's presentable and neat, they don’t mind people wearing jeans and sneakers. A firm’s major asset is their workforce which helps the company succeed. Same is the case with
Daraz. They aim to provide their employees a very relaxed and cheerful environment since it reflects in the productivity of the overall workforce. Employees are given set time frame to meet the objectives and aren’t monitored everyday. It depends on employees how they get their work done without putting undue pressure on them. Daraz does not have a very lengthy and complicated recruitment process. They have a very casual and informal approach when it comes to hiring employees. At daraz, the recruitment and selection process is conducted by the employee under whose control/department the potential candidate has to work. The supervisor evaluates different candidates and select the one who he thinks is suitable for the job. To get a better understanding of how Daraz hires employees, let us look at a practical example: Marketing Strategies and Value Innovation

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Daraz­ We Made History
Our friend Zoya told us about her experience. She said: y experience was truly unprofessional as there were no processed hiring procedures. The
“
M testing environment was extra casual so was the interview where there was neither formal conversation nor any proficient manner of an organization.
”

Daraz.pk is an online company which associates Daraz with the IT sector. There is a lot of competition in the IT industry because every day new technology is being introduced or the existing technology gets modified, which is why Daraz always tries to be updated about new technologies and it always has new software’s lined up due to which employees have to be frequently given training to make them understand the new high­tech world. Daraz has made its environment such that employees are always learning something new every day. Some of the trainings given at Daraz are; innovation training, software training, Sales and Product
Knowledge Training, service training and leadership training.

Black Friday

Daraz.pk is a company which thrives on creativity and innovation hence they are always trying out new concepts and ideas. Black Friday sale is one of the examples of Daraz’s many initiatives.
The Black Friday concept has been incredibly popular around the world. It is the huge shopping day following Thanksgiving Day in the United States (the fourth Thursday of November). Since the early 2000s, it has been regarded as the beginning of the Christmas shopping season in the
US, and most major retailers open very early and offer promotional sales.
What Rocket Internet first tried this new venture in Nigeria it was such a big success that the website crashed due to the response. They then tried in Egypt and since Egypt is a muslim country, they did not know how would people react to Black Friday, so they then termed it as
White Friday and started the event. After that in the second year, they decided to keep it black
Friday only and it did not make much difference. Third time, Daraz.pk launched it in Pakistan on
27th November, 2015. Daraz.pk has been partnered with notable companies in the past and for
Black Friday, the big partners included PTCL, Ponds, Mediatek, InnJoo and the biggest of all
Easypay as they helped in marketing budget and provided with a budget of Rs. 25 million to provide discounts to the consumers. The main aim of the budget was to provide the customers with great discounts.
They did the agreement with all the brands prior to black Friday about the discount and the minimum inventory level that they will have to maintain with Daraz for this three day event. Part of the discount was given by the sellers and part of it was given by the sponsors. As Pakistan’s largest e­commerce platform, Daraz.pk wanted to bring Black Friday to the country with the best possible shopping experience for its customers.

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Daraz­ We Made History Response by people/brands on Blackfriday
Daraz's average amount of daily orders is 2000 orders per day, but during the three day Black
Friday event, the amount of orders on average went to 45000 in the total in the three days. By the morning of Sunday, their marketing budget was completely exhausted that they took from
Easy pay. The stock levels even got exhausted in the event and they called the sellers to increase the inventory level.
To see the different type of responses by the customer see
Exhibit 8
.
Challenges related to Black Friday
Although it was a great initiative by Daraz but they weren’t able to execute it properly. They didn’t forecast such an overwhelming response by people and hence had to face the following issues: Due to high customer traffic, the website crashed within two hours of the event. Since there was quite a hype about the event and a lot of people were looking forward to it, it was a huge disappointment for those who were waiting for the sale to start and didn’t want to miss out on the deals. Delivery part had major problems in Black Friday event. Since, daraz was using third party courier service, the delivery management was one big issue. There were a lot of problems in the order processing which delayed the delivery of the goods to consumers.
Another problem was the shortage of stock. The whole idea of this sale was to provide people with huge discounts but they sold out before the end of the event which made a lot of customers angry and dissatisfied.

Future Growth To remain competitive, a firm is always looking ahead and planning different strategic moves which would benefit them in coming years. The managers of Daraz.pk also have certain considerations and prospects. First one was merging with Kaymu(both are part of Rocket
Internet). This was once in the pipeline for the future growth and they might apply it in the coming future. This was their strategic plan discussed in the board meetings. They are planning to buy out smaller startups and competition in the time span of 2 to 3 years. They are also asking more and more brands to mention in their advertisements that they are available in Daraz. So their future plan is to convince all the brands to mention in their ads as well they are available in
Daraz. They will now focus more on B2b orders such as selling in bulk to the businesses like
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Daraz­ We Made History
Alibaba.com

Recommendation 1. Keep continuous innovation and strong operational effectiveness to ensure an upper hand from rivals (considering the threats from big giants like Amazon and Ebay coming to
Pakistan).
2. Ensure a consistent customer service for all its existing and potential audience because in the e selling business the relationships matter a lot.
3. IT related products should especially have a quality check scaling before the delivery to the end user Few cases of fake techno gadgets been noticed
4. Remain proactive and build competitive strategy to assure an upper hand over the other emerging online businesses
5. Enhance their software and interface to increase the speed and order processing.

References

http://www.indeed.com.pk/cmp/Daraz.pk/reviews?fcountry=PK http://tribune.com.pk/story/1082643/want­to­buy­what­you­see­on­the­fashion­week­runway­thi s­is­how­you­can­do­it/ http://tribune.com.pk/story/962376/daraz­pk­pakistan­to­see­chunk­of­55­million­investment/ https://www.startupgrind.com/events/details/startup­grind­karachi­presents­muneeb­maayr­faree s­shah­daraz­pk http://propakistani.pk/2015/04/21/exclusive­interview­with­muneeb­maayr­co­founder­of­daraz­ pk/ http://www.lxyglobal.com/wp­content/uploads/2014/05/Mr.­Farees­Shah­%E2%80%93­Co­Founder­
Daraz.pk_.pdf

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Daraz­ We Made History

Appendices
PART 1
Exhibit 1

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Daraz­ We Made History Exhibit 2

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Daraz­ We Made History
Exhibit 3

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Daraz­ We Made History
Exhibit 4

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Daraz­ We Made History
Exhibit 5

Products Offered
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Clothing
Shoes
Fashion Accessories Phones
Tablets
Appliances
Home & Living Beauty & Perfumes
Sports & Fitness
Computing
TVs, Audio and Video

Services Offered ●

Free Shipping,

●

7 Day Return,

●

Cash on Delivery (Telenor Easy

Paisa/Net Banking).
●

Gift Cards that carries varying credit limits that could be presented to acquaintances or

loved ones.

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Daraz­ We Made History Exhibit 6

Demographic:

Behavioral:

● Gender: Men and Women

● Usage: People who have smartphones,

● Age: 18 to 55

Laptops, tablets

● Occupation: Working professionals

● Benefit sought: Look for genuine

● Socio Economic Class: A and B

product, Quality, Prefer convenience

over price
● Readiness to purchase: Make frequent online purchases

Geographic:

Psychographic:

● Country: Pakistan

● Personality: Tech savvy, Risk takers,

● Region: urban, sub urban and rural

Quality and Original products seeker,

areas

Early adopters and early majority ,

● Cities: All small and big major cities

Follow fashion/trends

of Pakistan including Karachi,
Lahore, Islamabad, Peshawar,

● Lifestyle: Use social media and internet

Hyderabad, Rawalpindi, Multan,
Sialkot and rural areas like Pasni,
Ghotki, MirPur Khas etc.

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Daraz­ We Made History Exhibit 7

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Daraz­ We Made History
Exhibit 8

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Daraz­ We Made History

Questionnaires Q1­What is your overall objective to be currently and in future? Q2­How much market spending do you guys comprehend? Q3­In how many countries are you operating or have planned for future? Q4­What are the company’s corporate values and how do you incorporate them in the work environment? Q5­What is the overall corporate culture of the company? Q6­Since, E Commerce industry is flourishing, do you face any major competitions? Q7­What are your strategies for future growth? Q8­What is the target market for Daraz? Q9­ How is training and development for the company? Q10­ Is learning environment always beneficial? Q11­What critical performance variables are you tracking?
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Daraz­ We Made History Q12­What is your Unique Selling Proposition (USP)? Q13­Does the quality always meet to what is displayed online? Hurdles from direct consumers?

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Daraz­ We Made History
PART 2 Interview conducted from
Usman Khan and Maheen Yousuf
Position
– Manager Production/Vendor Manager

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