Here’s How Daraz is Setting New Standards for Ecommerce in Pakistan

The e-commerce industry in Pakistan is in the process of growing up, and contrary to what most people think, the biggest challenge is not logistics or payment solutions. We are lucky to be in a country where we have a number of professional partners that can provide easy, safe and price competitive solutions.

According to industry experts, the biggest challenge in e-commerce space of Pakistan is education of sellers. This is particularly important as e-commerce stores rely on third-party sellers to deliver products to the end-users.

Only by educating sellers to follow proper operating and quality standards, we can make sure that customers are protected when shopping from “Online Marketplaces”.

An Online Marketplace introduces customers to sellers that maintain digital storefronts on the website – some Online Marketplaces simply make the introduction between the buyer and seller, while others manage the end-to-end fulfilment process and customer service (e.g. Daraz.pk).

If the Online Marketplace does not have solid control systems and seller education programs, then customers may face issues like:

• The delivered product is different from the picture and description displayed on the website
• The product is used or even a replica
•  Sellers increase the original advertised price to show a higher artificial discount %
• The seller cancels orders or delays the delivery

Leading online marketplace, Daraz.pk, has been taking huge effort to overcome these challenges, which is benefiting the entire e-commerce ecosystem.

“Daraz is the leading Online Marketplace in the country, and it is our responsibility to make sure that customers, as well as sellers are always protected and have a good experience when using our platform,” says Bjarke Mikkelsen, Co-CEO Daraz Group.

“We may not be the actual seller of a product, but when a purchase is made through Daraz, it has the Daraz brand on it. Therefore we offer 100% Purchase Protection on all sales from our website” he says.

“Our goal as a true marketplace is to make availability of every product that our customers are searching for, and we already have more than 300,000 product listings from approximately 2,000 active sellers – but we are only just getting started” says Mikkelsen.

In 6-12 months, Daraz aims to have more than 1 million product listings and tens of thousands of sellers. To support this growth, it is investing significantly into its control systems and training programs to make sure customers continue to have a good shopping experience as it scales the assortment.

Interestingly, while the number of sellers on Daraz is growing rapidly, the cancellation rate – i.e. when the seller cannot deliver the product – has decreased dramatically to less than 1%, and more than 90% of marketplace orders are now shipped out on the same day as the order is placed. This shows that the strategy is working and sellers are getting better each month.

According to Mikkelsen, the cornerstone to a healthy online marketplace is an ecosystem of reviews and ratings. Therefore, Daraz encourages customers to write reviews of the products they purchase and will soon display each seller’s operational performance to the customers on the product page, offering complete transparency.

“The bad reviews are equally important as the good ones. We want sellers to really care if they get a bad review because this way they will always go the extra mile to deliver on the customers expectations. Our sellers are learning that the long-term winners are the ones that perform consistently well and build customer trust over time,” says Mikkelsen.

In addition to the reviews and ratings system, Daraz has introduced stricter operating standards in November last year and encourages sellers to comply with the standard by supporting and promoting sellers that perform well.

“When we introduced the operating standards at the last Daraz Seller Summit, I stood on stage in front of 400 sellers and promised that all sellers that achieve a Diamond score for 3 months in a row would enjoy a 50% reduction in commission for certain major sale events. By now, 40 dedicated Daraz sellers have achieved this and will enjoy much higher profits through the entire month of June where we are running some major campaigns. We want to reward the sellers that help us build trust in the industry”.

Training and educating sellers takes time and Daraz is also doing daily screenings in all categories for products that are not priced appropriately or don’t meet the expected quality standards. “We are building algorithms to support us in identifying discrepancies, but to be honest there is also a huge manual effort that goes into this,” says Mikkelsen.

“We are trying to build a culture where every single person in the company spends at least 30 minutes per day on the website, browsing the categories to look for inconsistencies. In the end, we need both super intelligent systems and a strong culture of quality, to ensure that we can continue to meet our aspired standards while we scale the assortment to millions of products.”

There is still a long road ahead to develop the local e-commerce market according to industry standards, but we are reassured that the market leader is taking the right initiatives to make it happen, he concluded.

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