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23 Aug 2019

How rising eCommerce platform Daraz conquered South Asia

James Orme

Jan Philipp Pöter, Daraz’s head of cross border operations and speaker at eCommerce Expo Asia, explains how the eCommerce platform successfully captured new local markets in South Asia

Penetrating new markets is one of the most important but fraught endeavours any company can undertake, no matter what they sell.

Having recently spread its wings from Pakistan into Bangladesh, Myanmar, Sri Lanka and Nepal, South Asia’s leading eCommerce platform, Daraz, is well-positioned to advise on the challenges of scaling up.

At this year’s eCommerce Expo Asia, Jan Philipp Pöter, Daraz’s head of cross border operations, will explain how the company made a success out of its South Asian expansion by harmonising technological foundations, localising business towards specific market needs, and educating those buyers and sellers unfamiliar with eCommerce and digital payments.

Shopping in the spotlight

The region of South Asia is often in the shadow of the dynamic markets of South East Asia. Speaking to Techerati, Pöter, former business development manager at Alibaba (which acquired Daraz in May 2018) says it is important other businesses do not overlook the region’s evolving eCommerce potential.

Taken together, the two regions represent over 1 billion consumers in nations experiencing rising population growth and standards of living. But large Chinese players seeking new growth opportunities have prioritised South East Asia, due to its young population, robust infrastructure and relatively stable political systems.

Although home to a similar sized population, investors have overlooked South Asia due to its lagging economic development. Pöter, who has helped Daraz play a pioneering role in penetrating South Asian markets, expects attention to shift towards the region as eCommerce develops and matures.

Successful delivery

Having nurtured its eCommerce marketplace, Daraz expanded from a domain for buyer and seller interaction into a fully-fledged logistics company, too. Daraz Express operates a fully developed logistics network across its networks, including First Mile, sortation, warehousing, reverse logistics, linehaul and last mile deliveries.

The company also operates a comprehensive eCommerce payment environment, including closed-loop wallets, partnerships with local backs and digital wallets. Since Alibaba acquired Daraz, the number of products on its platform has soared from around 400,000 to more than 4 million and it is adding approximately 2,000 new sellers a month.

Pöter says “harmonising the interplay” of these three technological pillars – seller & buyer, logistics and payments platforms – have been key to the company’s success.

But Daraz also ensures its local offerings are tightly-aligned to the particularities of each market — something particularly important in a region with distinct histories, cultures and religions. Central to its approach is analysing consumer feedback loops and distinguishing local behaviour and patterns.

“We are very sensitive to localising our approach and business operations — a one-size fits all approach does not work for Daraz,” Pöter says.

“All our operations are fully localised, from the legal entities to the staff on the ground. Only a small regional team holds certain elements together while the business happens on the ground with mostly local colleagues running our businesses. Localisation brings significant value to the business and cannot be underestimated.”

Pöter adds that it’s important for cross-border teams to ensure strategies are flexible if realities and circumstances change and credits part of Daraz’s success to its strategic agility.

“Being from Germany, I am often confronted with stereotypes of an overly planning and static German mindset. And while I have to admit that a solid plan is at the core of many of my business considerations, flexibility and understanding that realities change sometimes quicker than you can come up with a new plan, is one of the most successful ingredients [to success],” he says.

Another key pillar of Daraz’s strategy is to build an offline presence with affiliated stores that allow customers to place orders and get them delivered to their home or other stores. For that it has built a network of thousands of affiliated stores across its countries. Additionally, the company has built 46 physical hubs in 19 cities in the past year in Pakistan alone to serve its customers enquiries operationally and commercially.

While this may seem like a backwards-step for an eCommerce outfit, Pöter says aside from building brand awareness, the stores network serves an important educational function in markets where eCommerce is new, and hence where there exists a limited foundation of trust.

“This Daraz Store concept is one way of bringing e-commerce to the people in an easy and accessible way. Distrust in e-commerce and digital payments is a commonly observed pattern in markets that are facing those concepts for the first time. Today we are seeing great progress through these initiatives and a positive adoption is proof of concept and significant contributor to the gross merchandise volume (GMV) we generate for our sellers.”

Looking ahead, Pöter expects Daraz to continue soaring, projecting triple digit growth for the foreseeable future, helped in part by the set of eCommerce and logistics technologies Alibaba now provides.

“We understand that successful sellers and satisfied consumers are at the core of the ecosystem we strive to create. A lot of our focus and initiatives are focused on streamlining the experience and ease of buying for our consumers, while maximising the economic benefit for our sellers when doing business in the digital economy powered by Daraz.”

 

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