Local online retail industry gets boost by globally affiliated e-commerce giant, Daraz.
For a country to which online shopping, let alone an online shopping mall was a strange phenomenon around a decade ago, Sri Lanka is now emerging as one of the high potential markets in the region. A catalyst in this change is none other than Daraz.lk, which has transformed the entire perception of online marketing into what it is today, throughout the past 3 years.
Muditha Thebuwane – Chief Commercial Officer of Daraz Lanka emphasizes that Daraz is different from any other e-commerce platform by nature of being an online market place. Generally, other platforms are stand-alone retail spaces owned by a company, which procures from their own supply sources, and markets and sells the products, limiting exposure for the supplier. Daraz is based on a marketplace model where all local sellers from top brands to SMEs, manufacturers and household entrepreneurs can set up their online shop, start building it and sell. Space, technology, logistics and systems are provided by Daraz to help anyone become an online seller.
“Sri Lanka is fortunate that a global leader like Alibaba is readily transferring technology,” states Muditha. “If the state or a single corporate were to build this kind of infrastructure, it would require a very large cost. With Alibaba and Daraz we have the proven technology at our fingertips and we can put it into use in the most effective way”. The Daraz App, which is AI driven, stands as the best example. The App looks different from user to user because the products that are showcased are purely based on a person’s browsing habits.
Apart from making online shopping popular, Daraz’s main focus is to develop e-commerce in the country. Local sellers are highly benefitted as Daraz believes in growing them as entrepreneurs and providing all possible support they would need to get there. For instance, the Daraz Seller Center is a fully fledged software system, which is available to all sellers who partner with Daraz. The Center allows a seller to get onboard, upload their products, manage sales, carry out promotions, monitor inventory and manage finances. The sellers manage their online stores by themselves but have the entire technology and logistic system offered by Daraz.
Furthermore, the Daraz University, which is an online training system has been translated into the local languages, thereby increasing accessibility to all sellers. Merchants are able log into the university and go through e-tutorials, webinars and trainings on how to be an effective online seller.
Further explaining about what Daraz has to offer, Muditha draws attention to its own warehouse facility, a 50,000 sq. ft. space, which sellers can use to hand over consignment stocks. “Daraz will take care of packaging and dispatching the items. Then the official fleet of Daraz ensures island-wide delivery. A separate Marketing team works on driving traffic to the site and manage campaigns where sellers can showcase their products. The Content team creates SEO friendly content, including attractive photographs of the products. The Commercial team plans campaigns, decides on products to be pushed and price points. All these support facilities are readily available for all sellers who join Daraz”.
One of the biggest investments made by Daraz to grow online retail in Sri Lanka is the Seller Community. The Incubation and Seller Community team travels across the island conducting workshops at the grass root level giving them comprehensive training on Daraz. The team conducts boot camps where they photograph products for the sellers, demonstrate how to submit for campaigns and boost sales. Daraz invests considerably in these operations, despite it not being immediately beneficial in economic terms. The first mile cost of getting the products to the sorting center is born by Daraz. On the other hand, it grows the seller community and it also opens up wider markets to the vendors.
In addition, the resources in terms of systems, technology, support and logistics alone cost millions of CAPEX and OPEX. With e-commerce at a mere 1% of the overall retail market, a single company in the country is not capable of deploying such an investment at the moment. “What we are advocating for is that all entrepreneurs, SMEs, companies and individual businesses come together and make use of what Daraz has to offer and grow the overall sector to about 10% – 15% in the near future,” says Muditha.
However, the resources are available free of charge for Daraz, except for a minimal commission since Daraz firmly believes that e-commerce partnerships are a long term journey. Traction in e-commerce requires a lot of commitment. Thus, the sole requirement from sellers is to ensure product availability, timely dispatch and quality of the product.
At present Daraz moves over 100,000 orders a month, spread across 4 main categories; electronics, fashion, lifestyle and FMCG, all categories that industries across Sri Lanka are trading and manufacturing. The aim is to encourage sellers and manufacturers to make their products available online.
Daraz is present in 5 countries in the region; Pakistan, Bangladesh, Nepal, Myanmar and Sri Lanka, thereby creating wide global affiliations. As a subsidiary of Alibaba, the market also has access to the Far East Asia through Lazada, which operates in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. “Through Daraz’s Global Collection, we are able to provide about 30% of overall assortment from cross border suppliers, only if the products are unavailable with our local sellers. The next step of this cross border initiative is to enable our sellers to supply to any other Alibaba ventures out of the country. This will be a welcome boost to the local e-commerce industry,” she concludes.