The Russian invasion of Ukraine this year has not only triggered large-scale humanitarian crises but has also added downside risks to the global economy, including Nepal, which is still dealing with the Covid pandemic. The war has caused inflationary expectations to soar and has delivered a sharp shock to the business sentiment which had been recovering after lockdown measures were lifted. Globally, companies' Chief Financial Officers (CFOs) report a record level of risk, stemming from geopolitics and inflation. In an email interview with the Post, Jashisha Kumar Gupta, the CFO at Daraz, Nepal talks about inflation as one of the most significant future risks. Excerpts:

What are the challenges that you see as a CFO this financial year?

We are all aware that Covid-19 effects on the global economy are still being felt. Liquidity problems, rising gasoline prices, and currency devaluation are key factors driving present-day inflation in Nepal. Inflation is a significant challenge for the CFO of any company. The crisis in Ukraine has also stalled the global economy and increased the prices of food and other necessities. Such an occurrence has increased the pressure on already-existing global inflationary forces. A CFO's job is to maintain a strong financial position by controlling costs, maintaining liquidity, and forecasting future expenses. This requires a lot of research into how their company is doing in comparison to their competitors as well as the market at large. With inflation on the rise, CFOs must face supply chain disruption from conflicts or geo-political reasons and liquidity problems from economic downturns or unexpected expenses.

How has global inflation impacted the business of Daraz? How have demands changed recently in a price-sensitive market like Nepal?

Daraz functions as a platform where merchants display their goods and customers use the platform to make purchases. Sellers are unable to acquire goods at cheaper prices due to global inflation and supply chain disruptions, and as a result, the price of products has increased. Some products' prices have escalated to the point where the consumer must make trade-offs in order to afford the present price. The demand has been significantly influenced by inflation-driven pressures. The first thing businesses need to understand is that inflation is not just about prices going up; it's about the purchasing power of money going down. Inflation can mean that even if prices are stable, money will buy less than before because buyers have less available. In other words, inflation causes a decrease in purchasing power without any change in the price level.

How do you see the progress of the e-commerce industry in Nepal?

E-commerce is an ecosystem in which a marketplace, a payment partner, and a delivery partner collaborate to offer a wide variety of product assortments under one virtual roof and deliver the consumer's preferred product to their doorstep across Nepal. The government and pertinent regulators are actively pushing the digital Nepal agenda, which has contributed to the long-term success of this industry. The e-commerce business will continue to flourish as a result of the proposed e-commerce bill, which could be passed soon and contains crucial provisions required for the development. The e-commerce sector is well-positioned to benefit from shifting market dynamics thanks to a young population and rising internet usage. The e-commerce industry in Nepal is still in its early stages, but it is quickly evolving. In the future, we can expect more e-commerce businesses, as well as an increase in the number of people shopping online; especially with benefits such as greater choice, convenience, and competitive prices. The e-commerce industry is also creating new opportunities for Nepali businesses, helping them to reach a wider audience and tap into larger markets.

How is Daraz impacting Nepal’s economy?

Small and medium-sized businesses (SMEs) are the foundation of any economy, and Daraz enables SMEs to sell their products throughout Nepal, increasing their revenue. It has also increased interprovincial level demand, which benefits domestic supply. Daraz has a positive impact on Nepal's economy, creating jobs and providing a boost to businesses. In addition, we make it easier for local businesses to reach a wider audience. As Daraz continues to grow in Nepal, it is likely that the country's economy will continue to benefit. Our prepayment share increased from 13 percent to 35 percent and during campaigns — prepayment share exceeded 50 percent, assisting the digital economy. Daraz also employs over 1,000 employees at any given time and is constantly creating new jobs.

Is this year’s 11.11 campaign any different from last year’s? What are the expectations for this year?

Similar to a festival, 11.11 brings together a retailer, a brand partner, a bank partner, a logistic partner, and an employee to celebrate. 11.11 sets records and benchmarks every year, and this year, Daraz users will receive up to 80 percent off on over 1.1 million products. We are able to provide our customers with attractive offers despite import limitations and other macroeconomic difficulties. We are dedicated to providing exceptional service to improve our customers' overall buying experiences.