Daraz.

pk: The 1st “Rocket

Internet” Business In
Pakistan
A Case Study On Online
Shopping Challenge

BY
Dr. Arif Vaseer
Agenda
1. To Explore the Online Shopping Challenge
2. Finding out the Solutions
3. Growth & Marketing Strategies of Daraz.pk
4. Review of Success Story of Daraz.pk
5. Conclusion & Some Recommendations

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 DARAZ.PK: THE 1ST “ROCKET INTERNET” BUSINESS IN PAKISTAN
How Daraz Is Setting New Standards for E-Commerce in Pakistan?
“A Case Study On Online Shopping Challenge”

The Online Shopping Challenge

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”. 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

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

Daraz.pk
Co-Founder of Daraz.pk
Muneeb Maayr & Farees Sahah

Business Type
Business to Consumer (B2C)

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 “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 by Daraz Group.

Daraz.pk was founded in 2012. It is an online retailer that provides high quality branded products
that fulfills the fashion needs of Men and Women regarding clothing, footwear and accessories. It
operates through www.Daraz.pk. Daraz.pk hosts a wide variety of consumer electronics, fashion
and beauty products, alongside a rapidly growing miscellany of general merchandise. It is in the
industry of Apparel and Fashion. Daraz.pk is an E-Commerce industry and it is a project of
“Rocket Internet”. Rocket Internet follows the strategy of building companies on the basis of
proven-based business models. Proven online business models satisfies the basic consumer needs
across four sectors: e-Commerce, Marketplaces, Financial Technology and Travel. Rocket Internet
is one of the world's largest e-commerce focused venture capital firms and startup incubators
founded in 2007 by the Samwer brothers. In 2013. Rocket Internet raised close to $2 billion from
investors including Russian billionaire Leonard Blavatnik, Swedish investment firm Kinnevik, and
J.P. Morgan. Rocket Internet operates in more than 50 countries and has more than 75 ventures in
their portfolio such as the e-commerce retail companies. Rocket internet projects in Pakistan
includes; Daraz.pk, Kaymu.pk and Lamudi.pk.

The Estimated Website Traffic of Daraz.pk Worth $3.7 Million US Dollars - 24 November, 2017.
Their Monthly revenue is $100,000. Daily revenue is $3,333. Daraz.pk ranks #1,917 in the world
It is in the largest e-commerce industry of Apparel and Fashion. Daraz.pk also operates
internationally in which Bangladesh, Sri Lanka, Myanmar & Nepal are the famous countries. Its
company size is between 51-200 employees. It contains more than 126 popular brands in its online
portal including Stella, Ego, Depak parwani etc. Almost they have 360 international and local
brands and 500,000 products. They have also the last mile logistics in all major cities of Pakistan.

Growth Strategies of Daraz.pk: A Changing Business

• Product Listing
In next 6-12 months, Daraz is aiming 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

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and training programs to make sure customers continue to have a good shopping experience as it
scales the assortment.

• Growing Sellers
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.

• Review & Rating System

The cornerstone to a healthy online marketplace is an ecosystem of reviews and ratings. Therefore,
Daraz is also making a new review and rating system strategy to provide the opportunity to the
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.
They have also started to use the balanced score card approach to measure the both objectives i.e.
Financial and Strategic.

• Stricter Operating Standards

In addition to the reviews and ratings system, Daraz has introduced stricter operating standards in
November 2017 last year and encourages sellers to comply with the standard by supporting and
promoting sellers that perform well.

• Training & Development

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.

• New Online Culture

Daraz.pk is 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.

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 • Most Popular Search Engine
To become the destination for all products searched in Pakistan. Instead of Google, Daraz is setting
the trend for people to search on Daraz.

• Revamping of Website
Daraz.pk is revamping its website that will benefit the users as it offers display of high resolution
product images, detailed product specifications and descriptions, easier checkout and ordering
processes and an advanced delivery tracking function.

• Personal Smartphones with Android App.

Daraz.pk also plans to launch its very own smartphone app sometime in January 2018 so that its
customers can order whenever they want even more conveniently.

• Alliance with ABL

Starting November 20th, Daraz is offering up to 86 percent off on its entire assortment during the
week-long sale with new deals being unveiled every day, and with this collaboration, Allied Bank
VISA Card Holders can enjoy an additional 15 percent discount during the sale. Allied Bank has
partnered with Daraz for Black Friday for the first time this year, in a bid to provide its customers
the ease and access to thousands of products at their doorstep.

Marketing Strategies of Daraz.pk: A Competitive Approach

Seven P’s of Marketing
• Product
Daraz.pk has engaged itself a wide array of products that range from jewelry to sports equipment.
There are a lot of other successful ventures out there which have focused solely on a particular
category of products like cuisine in case of foodpanda.pk, however, Daraz.pk has basically
diversified its risk. Furthermore, when talking about the Product mix, it is not just what it offers
on its websites but also how it does as well. The discounts and easy purchase options has enabled
the customers to do more.

• Price
This is another component where Daraz.pk has managed to gain a completive advantage over its
competitors. The company essentially operates on a virtual platform thus eliminating the fixed

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costs associated with physical stores and therefore passing on those savings to consumers in terms
of deals and discounts. Furthermore, through the means of various offers which shall be discussed
later. But the most influential measure in this regard has been the Black Friday Campaign that has
offered products with discounts up to 70%.

• Place
The E-Commerce is one of the rising trends in the world due to the fact that it enables the
consumers to purchase their needs and wants without having to go mobile and utilizing that time
to their priorities. Daraz.pk is based on this model precisely and this feasibility has allowed it to
grow so quickly, this is also due to the fact that consumers have become more aware and due to
the propagation of the internet.

• Promotion
The whole marketing strategy of Daraz.pk is primarily based on Direct Marketing measures which
shall be discussed later in detail. However, the following strategies are use which were discussed
earlier.

i. Relationship Marketing iv. Database Marketing

ii. Online Marketing v. Search Marketing
iii. Drip Marketing

• People
The company size of Daraz.pk is between 51-200 employees. Daraz.pk has a wide range of talented
workers as well as the sellers now and it is investing huge amount on the education of sellers that
is the common problem specially in online business. Recently, Daraz.pk has started the training
and development program for the betterment of their core employees and new sellers.

• Process
The process system of Daraz depends on the 4 performance and interference requirement through
which Daraz.pk manages it’s all process. These are …

i. Hardware iii. Domain

ii. Software iv. User Friendly Website Design

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 • Physical Evidence
Basically Daraz.pk operates through the world wide web so there is no as such physical evidence
but for the employees that they hire have to pass through proper documentations and paper record
i.e. the physical evidence. Moreover, they have started the ranking and rating system now in which
employees fill up the forms about their experiences and views of shopping on Daraz.pk. So, this
is a little bit process of physical evidence

Internal and External Environment: SWOT Analysis

Strengths Weaknesses

Feasible Modes of Payments Low Profit Margin

Diverse Branded Products Operates in Few Category

Opportunities Threats

Growing E-Commerce Sales Security Issues

Fast Growth in Internet Users More Customers Increase in Online Retailers

Success Story of Daraz.pk

• In January 2015, they started their operations in Myanmar. Right after one 8 months, they
raised their capital by $55 million that was a huge amount for Daraz.
• After this, in November 2015, they hosted Pakistan’s first black Friday.
• In April 2016, company launched Pakistan’s first shop able fashion week.
• In June 2016, launched the same day delivery of the products.
• July 2016 was the month of launching the services in Sri Lanka and Nepal and
• In August 2016, they started the international delivery. Bachat Bazar was firstly launched
by Daraz in September 2016 and
• November 2016 was the second black Friday event organized by Daraz.

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 • In January 2017, they introduced the new security system and ensured the 100% purchase
protection on the shopping.
• September 2017 was the month when Daraz started to do strategic alliances with other
firms. The recent example is of the ABL and Daraz.pk. So in this way, Daraz.pk has
established its business and covered a successful journey by using the first mover
advantage of Rocket Internet.

BCG Analysis

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Conclusion & Recommendation
So at the end, we can say that the Daraz.pk is one of the best marketing leader in online shopping
businesses because of its strategies and reliability on customers as well. Although Daraz.pk is also
facing some problems but the positive point is that the customer rating of Daraz.pk is not
decreasing. It can be due to the maximum possible brands online, the secure modes of payment,
the advantage of one stop shop etc. On the other, having a big market share and huge growth at
marketplace, still Daraz.pk has also some drawback or we can say that the gaps in its strategies
and customer fulfillment processes. We discussed with some people who purchase regularly from
Daraz.pk and they told us two major problems which they faced while shopping from Daraz.pk.
So in this case, we are proposing those gap as our recommendations that are …
• The delivery which should be one day at most but originally Daraz.pk provided a time
period of four days. It’s understandable that it’s better to have some excess time on hand
and increase customer satisfaction by delivering the product earlier than the customer
anticipated. But it’s not acceptable to propose four days for a task which can be completed
in one day especially when the online store stocks up inventory in their own warehouse in
Karachi.
• The major disappointment which is common in online stores in Pakistan, misleading
information. The polo shirts I ordered should have been made out of pure cotton as
mentioned on their website but instead it was made out of mixed material cotton and
polyester. Maybe Daraz is not aware of this but they should definitely verify the material
from their suppliers.

So, keeping these two major points in consideration, Daraz.pk must have to take the steps to
remove these hurdles which are faced by many people in online shopping from website.

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References
1. www.daraz.pk
2. https://www.professionalacademy.com/blogs-and-advice/marketing-theories---the-
marketing-mix
3. https://fp.brecorder.com/2017/11/20171121236840/
4. https://www.dawn.com/news/1137932
5. https://pakwired.com/daraz-pk-ceo-if-you-neglect-brand-the-product-will-fail/

Questions
1. What is the Problem lying behind the Online Shopping?
2. How Daraz.pk is Solving this Problem?
3. What are the Growth and Marketing Strategies of Daraz.pk to compete with its competitors
in near Future?
4. What are the major drawbacks that Daraz.pk is facing from customers and how to solve it?

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