In Conversation with Ehsan Saya – Managing Director, Daraz
The breakout of the COVID-19 pandemic in Pakistan took businesses by surprise. Suddenly thrust into a period of uncertainty, they were forced to grapple with the new reality of life under lockdown. Investors’ anxiety wreaked havoc at the stock exchange and the government rushed to contain the economic fallout. Almost two months later, things are starting to become clearer but certain segments of the economy are still under threat and may face the brunt of the impact. On the other hand, one of the ubiquitous points of discussion since the outbreak has been whether or not COVID-19 will serve as the unexpected catalyst of a digital revolution in Pakistan, accelerating the rate of digital adoption among home-bound consumers restricting visits to physical retail stores.
A conversation with Ehsan Saya, Managing Director Daraz Pakistan, sheds light on the issue as he discusses the changes witnessed in consumer demand in the weeks following the outbreak of the pandemic, the challenges that Daraz faced in those initial days and the protocols that had to be brought into effect immediately to protect the health and well-being of the platform’s stakeholders: employees, delivery agents, sellers and users.
The pandemic has meant a shifting of priorities at Daraz; the leading e-commerce platform’s mission is to make it easy for anyone to do business in the digital age and believes that, now more than ever, there is a responsibility to extend support to the economy and protect the SME sector from economic harm. The discussion evolves to discuss the launch of the Humqadam program and how Daraz is inviting businesses across the country to set up their Daraz shops and start retailing online.
PAGE: What precautionary measures has Daraz adopted following the outbreak of COVID-19 pandemic?
Ehsan Saya: In the days following the outbreak of the pandemic in Pakistan, our priority shifted towards ensuring the health and well-being of our entire community — delivery agents, customers, sellers and users around Pakistan. We wanted to ensure not only that our customers had continued access to the essentials that they need during this time while they practice social distancing at home but also that those products are delivered to their doorsteps in the safest manner possible. We implemented several precautionary measures at all our facilities in keeping with the recommendations of the World Health Organization. Work-from-home became a norm for most of our employees. Our warehouses, hubs and offices were disinfected frequently, colleagues were told to refrain from physical contact and to maintain as much distance between each other possible, and were asked to stay at home in case they started to feel unwell.
Our DEX Heroes were asked to wear gloves and masks at all times and instructed to disinfect customers’ packages with alcohol swabs before handing them over. Additionally, our DEX vans and motorbikes are being disinfected everyday and deep-cleaned once a week.
Furthermore, we have launched Fulfilled by Daraz – a reliable, safe and secure service that is complemented by our four fulfillment centers. Products are packed carefully at the warehouses in Karachi, Lahore and Islamabad and shipped directly to the customers.
These protocols are still in effect and we are ensuring that they are being adhered to strictly. The safety of all our stakeholders remains our foremost concern.
PAGE: What changes in customer demand have you witnessed since the outbreak of the pandemic?
Ehsan Saya: We have observed several trends in customer demand emerge since the pandemic broke out in Pakistan, primarily in the first few weeks we witnessed demand for FMCGs, and essential products increase. There was an 18x spike in orders for hand sanitizers and hand washes while the demand for groceries is up by 50% and the average basket size has increased by 70%. Further, our traffic increased by 20% as compared to a normal day.
In keeping with government regulations, we had to restrict our customers access to non-essential items and focus only on essential products. However, there was still a significant demand for non-essential products as indicated by trends in search words. While customers wanted to purchase groceries, they also still want to buy mobiles, board games, gym weights and since the reopening of non-essentials categories a few days ago, we have witnessed demand increase by 25% as compared to pre-COVID days.
PAGE: Do you believe that the pandemic presents an opportunity for ecommerce platforms to explore new areas of customer engagement?
Ehsan Saya: Staying at home has greatly impacted the way consumers behave. With restrictions imposed on movements and visits to retail stores limited, customers have turned to e-commerce platforms as a solution during this period of uncertainty. The longer these restrictions remain imposed in the country, the more ingrained the buying online behaviour will become.
We believe that this situation will potentially accelerate the shift from offline to online, not only in terms of the customers who are shopping online but also in terms of brands that, while previously were not ready to commit to ecommerce and wanted to remain offline, are now more willing to explore this avenue.
At Daraz, to further engage our visitors, we are continuing to bet on shoppertainment and plan on launching a robust gaming platform within Daraz in the coming weeks.
PAGE: Daraz recently launched the Humqadam program. How do you think it will serve the economy? Will it increase entrepreneurship?
Ehsan Saya: We launched the Humqadam seller stimulus program as part of Daraz’ efforts to contribute to the economy and to mitigate the impact of the economic downturn on the small-and-medium enterprises sector. Following the breakout of the pandemic and the imposition of the lockdown across the nation, we, as a company, began to think about the impact on livelihoods especially on small and medium businesses and we realized quickly that we had to side with the SMEs.
With these businesses contributing 40% to the country’s GDP and 80% of total non-agricultural employment, we believe that in order to revive Pakistan’s economy, efforts need to be geared towards reinvigorating this critical sector. As the country’s largest e-commerce platform, we stand in a unique position to extend our support and we believe that during this time we have a responsibility to play our part for the country and to help restart the economy.
The Humqadam program invites businesses from across the country to set up their ventures with Daraz and we are offering complete financial and business support in the form of free-of-cost education, dedicated one-on-one support to business owners as they set up their Daraz shops and waiving the commission for the months of May and June.
Studies have shown that each e-commerce seller creates between 3-5 downstream jobs so the reverberations of the investment in the SME sector can be far-reaching and very impactful. By facilitating businesses in their transition from the offline market to the online, we will be able to save livelihoods and create employment.
PAGE: How much emphasis does Daraz place on seller education and why do you believe it is so crucial?
Ehsan Saya: We believe that seller education is the most foundational and critical step in a seller’s journey to start selling online. We place a lot of emphasis on it not only when sellers are being onboarded but throughout their journey with us on Daraz. We have launched Daraz University (DU) – an online free education portal – through which we provide new and existing sellers access to free-of-cost education and training in e-commerce operations. Every month, 3,000 sellers are educated on various aspects of e-commerce including packaging, customer service and how they can optimize their ventures with us.
Recently, we have also partnered up with Karachi School of Business and Leadership, and we are working very closely with the institute to provide our community of sellers exclusive and free-of-cost access to specialized courses that are taught via video lessons by KSBLs faculty on the Daraz University portal. Each course is specially curated for DU and upon successful completion, sellers will receive certifications from KSBL and Daraz.
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Education is also a key element of the Humqadam program, and it is essential because we are inviting businesses that have exclusively operated offline to join the ecommerce industry. With access to free-of-cost education on how to start selling online and grow their businesses, we will be able to better facilitate their transition to our platform.
Our mission is to enable anyone to do business in the digital age and now more than ever, there is a responsibility upon us to ensure that businesses wanting to transition online are able to do so as seamlessly as possible and the provision of good quality education enables us to do so.
PAGE: “Work from home” is nowadays a phenomenon that every organization around the globe is following. How has Daraz adopted to the new culture?
Ehsan Saya: It has been more than 2 months since we implemented work from home for the large majority of our employees and we have been pleasantly surprised at the level high level of productivity we have witnessed during this time. In order to keep employees engaged, we have also launched various initiatives such as “Interviews with Leaders”, learning sessions for our employees to learn about different functions of the business, and online fitness in which we all get to engage with each other.
We are also digitally hosting townhalls on a group level and in the individual countries where we operate as well. Our employees are invited to tune in as leaders discuss important achievements and latest company updates.
PAGE: dFresh is a great project of Daraz which mostly deals with fresh fruits & vegetables. How has the demand for fresh produce changed since the outbreak of the COVID-19 pandemic?
Ehsan Saya: dFresh was launched last year in Karachi, Lahore and Islamabad to deliver fresh produce to our customers’ doorsteps within 24 hours. Since the outbreak of the COVID19 pandemic, the demand on this channel has increased by 9x – an indication that customers are turning towards online retail even for categories over which the offline market has traditionally held a very strong grip.
PAGE: What response has dMart received over the past few weeks?
Ehsan Saya: The dMart channel was launched last month to offer customers a one-stop solution to all their FMCG/grocery needs. Our thought process was to ensure that customers can head over to one channel on the app and have access to surface cleaners, food items, toiletries and even fresh fruit and vegetables through dMart. At the time, Ramadan was fast approaching and we had already witnessed a big increase in demand for groceries and essentials and we wanted to provide this service to our customers.
However, with demand spiking, we need to ensure that we have enough supply to meet it. In order to do that, we are focusing on including SMEs who have inventory so that they can continue to retail online and customer demand is met.
PAGE: If we talk about the sales and revenue, did COVID-19 bring any effect in the sales or revenue of the organization?
Ehsan Saya: Initially, the situation was evolving very quickly and, in compliance with the government’s orders, we had to turn off a lot of our operations. However, once we were permitted to do so, we started operating in the ‘essentials’ space and noticed that demand for groceries had increased by 50%.
Not only in terms of demand, but also in terms of search words we witnessed a few shift – in the first two weeks of the pandemic we saw that there was an increase in customers searching for hygiene products – ‘gloves’, ‘masks’, and ‘Dettol antiseptic’. However, in the last week, searches for typical items like mobiles and children’s fashion have increased again.
Interestingly, since we opened our non-essential categories last week, we have noticed a large spike in orders across most categories including electronics and fashion (given Eid is fast approaching).
PAGE: What are the major’s steps or plans you will immediately place as soon as we move to post COVID-19 phase?
Ehsan Saya: Strategically, our next steps are aimed towards establishing Daraz as a daily destination by offering customers access not only to a large assortment to shop from but also by increasing the entertainment quotient on our platform. Gamification has fast become a strong element of our identity and is featured in all our Tier 1 campaigns. Through increased focus on this area, we hope to increase customer engagement on our platform. In the coming days, we will be launching a robust gaming platform into the Daraz App which will allow our customers to play games individually, with their friends, and collect points to redeem on Daraz. Operationally speaking, we plan to continue adhering to the SOPs we have implemented over the past few weeks at all our facilities in order to ensure that our employees, customers, sellers and delivery agents remain safe. We also plan on giving our employees greater flexibility with the option to work partially from home even after the situation subsides.
PAGE: How much potential for e-commerce growth is there in Pakistan? And do you believe that COVID-19 can be a catalyst for lasting digital adoption?
Ehsan Saya: There are reams of untapped potential for e-commerce growth in Pakistan. Last year, Daraz witnessed a 2x increase in the number of active users year-on-year and a 3x growth in orders year-on-year, fueled by a 35% increase in the internet penetration rate in the country. While Karachi, Lahore and Islamabad contribute significantly to the overall e-commerce market’s order share, tier 2 cities such as Multan, Sialkot and Hyderabad have been identified as particular hotbeds of growth. Last year, we also witnessed an encouraging shift towards digital payment methods.
We are very optimistic about the future of e-commerce in this country. Since the outbreak of the COVID-19 pandemic, we have witnessed the country move towards digital adoption at an increased rate. Customers are more readily turning towards online shopping as a solution and business that have historically operated in the offline market are seeking to set up their e-commerce ventures. We have had a large number of sellers sign up with us over the past few weeks – not just small retails but also large brands and that is very promising. However, it is important to remain focused right now on ensuring that the economy remains on track and operations continue to run smoothly and we will continue to play our part to contribute towards that goal.