‘Digital payment has become a big focus for us’Daraz has announced its next big campaign—Daraz Nawa Barsha 2078, Nawa Barshako Bhabya Sale—which will kick off on April 11.
Online marketplace Daraz has promised to launch amazing deals, exciting offers, special payment partner discounts, and a chance for its customers to win grand prizes including a brand new Datsun Redi Go. Krishana Prasain of The Kathmandu Post caught up with Lino Ahlering, managing director of Daraz Nepal, to talk about the company’s new promotion and the e-commerce business in Nepal, which has grown rapidly since the Covid-19 pandemic hit the country last year. Excerpts:
How did Daraz perform in 2020?
The first lockdown [from March 24 to July 21] was very strict, and we could not sell beyond essential items that included groceries, masks and sanitisers. Business dropped during the lockdown period in terms of volume, but when the lockdown was lifted, it started booming. Last year, business grew by 60 percent year-on-year. A lot of sellers went online for the first time. The adaptation and awareness of e-commerce changed quite significantly. There were a lot of new sellers going online across the country, and we also saw a lot of buyers online. During the pandemic, buyers above 35 years of age grew a lot.
What is the Nepali New Year 2078 campaign about? What can consumers expect from it, and what is your expectation?
We could not host this campaign last year due to the lockdown. But we did a successful campaign during Nepali New Year in 2019. For us, it’s not only about 11.11 or other big campaigns, but we always want to start Nepali New Year on a positive note. Even this year, it is more necessary because everyone is in the midst of a pandemic state. We have this grand New Year sale now, and this is definitely a huge sale for us as we have a lot more products in line. We have a lot more new products, banks are joining with us to give discounts and in mega giveaways, and we are offering a car as grand prize this time.
Why did you choose the Nepali New Year, going beyond the traditional 10.10, 11.11 and 12.12 campaigns?
11.11 is always huge in terms of traditional shopping globally. We want to launch something at the beginning of the Nepali New Year as well. The 2019 edition was very successful. We are investing lots of money to make this campaign a successful one.
The year 2021 is a fresh start for all businesses. How is Daraz’s planning?
We had to park a lot of projects aside last year, and one of them was expansion. We are delivering to 45 cities, and expanding to other places would have come much earlier. But due to Covid-19, we could not focus so much on our expansion strategy. This year, our focus is a lot more on growth and expansion so that we reach out to more buyers and sellers online. We also have plans to increase our significance from 500,000 products to 1.5 million.
We also want to make sure to make the shopping experience better because that is the most important thing every day. We have to keep improving. We have around 1 million users using Daraz App every month. We need to have a regular dialogue on a daily basis to seek more feedback on what we can improve. The processing and delivery timeline is faster in Nepal and cancellation is also at a much lower rate than Pakistan, Bangladesh and Sri Lanka. We have 600 people working with us, and the team will become 1,000 individuals soon.
Nepal’s e-commerce market has shown robust growth from last year. What categories, particularly, do you think will grow rapidly?
The pattern that we saw for Daraz Nepal was very similar to what other e-commerce markets around the world actually sees. Due to the disturbance in the supply chain, electronic items did not grow much last year. We grew very big in terms of groceries as supermarkets were closed during the lockdown. Then we started collaborating with supermarkets like Big Mart. Lifestyle items have also grown quite significantly. Groceries will keep growing, the fastest growth across all categories. Electronics and fashion was a big one in the past. Fashion is gradually recovering in the past few months with everything starting to open gradually, and we expect that electronics is going to recover with the supply chain becoming stable.
Where do you stand on promoting prepayment over cash on delivery? What are your other strategies that can help Nepal become a cashless society?
Digital payment has become a big focus for us since April 2019. Two years back, 100 percent of the transactions was cash on delivery, now 40 percent of the transactions is being done through cards and e-wallets, which is a huge number for a country like Nepal. The customer friendly experience and safety is driving people to go for digital payment. After acquisition by Alibaba, we tried to take all the learning that we have from Alibaba China and bring it to Nepal. In the beginning, it’s all about education because people feel sensitive putting their card details online, and it is a justified concern. We needed awareness and education for it. Our technology from Alibaba is the safest to make sure that these card details are secured. We gave card discounts earlier together with banks and digital wallets so that people would try it out, which most of the people did and stuck to it.
The government has prepared a draft e-commerce bill. How is it going to help the growth of e-commerce in Nepal? Do you have any comments on the draft?
For the first time, e-commerce companies were talking to each other last year during the lockdown as they were associating with each other and discussing with the government. On the one hand, we were competitors; and on the other hand, we jointly figured out something for the best interest of this industry. We formed an e-business association; and through that channel, we discussed with the ministries concerned. The Nepal government put its focus on e-commerce quite quickly. The more the industry is governed, the safer it becomes for buyers, sellers and also for intermediaries like us. We were having a lot of discussion especially around January and February, and we were having a lot of meetings and giving feedback on the proposed draft. There is almost a final version after giving the final feedback through the association.
In the initial phases, there were complaints about wrong delivery, delayed settlement and higher prices compared to the market. How has the company addressed all these issues?
I hope we are getting better with the feedback we are getting from our customers. If you launch in an emerging market, even if you have the greatest technology and expertise, you cannot have a perfect system from day one. We can be as good as the local sellers and banks, and then it is up to us as the market leader to lead that change. Everyone in this platform needs to improve. We have done a lot of improvement in terms of training. We have also been strict sometimes by delisting sellers if they are not fulfilling top quality standards. We are still giving lots of training to sellers and following them. And being facilitators between buyers and sellers, we could never manage pricing, but we make sure that there is a lot of transparency through ratings, algorithms putting good products up in the list, and delisting the poor products. We are trying to spot the price if it goes higher than normal, and make sure we take action on it. Buyers can make decisions with the transparency that we create.