“We witnessed an encouraging shift towards digital payments over the past year. The use of e-wallets and mobile accounts grew by 8.2x year-on-year in March, while the use of bank cards and online banking increased by 1.9x each”, expressed, Ehsan Saya, Managing Director at Daraz (Alibaba Group), during an exclusive Q&A session with our Editor in Chief on the impact of COVID-19 outbreak on the overall economic and e-Commerce landscape in Pakistan and shared what key steps Daraz is taking to overcome the challenges during this crisis scenario.
1. What do you think how this pandemic impacting e-Commerce landscape in Pakistan and how is it effecting supply chain?
Globally, the pandemic has caused deep and on-going supply chain disruptions. We live in a world which relies heavily on trade and globalization. Many of our sellers suffered with being unable to import products into the country due to supply chain constraints in China and other countries. Furthermore, our Global Collections channel, which focuses on selling products from China, had to be halted for some time.
However, the longer-term impact of the pandemic will be positive on the e-Commerce landscape in Pakistan. We noticed that a surge in digital adoption and e-Commerce was driven by ‘convenience’ rather than ‘discounts’. This is a very positive direction for the industry as a whole. We also believe that as more and more customers try shopping online, these behaviors will get more engrained.
In addition, we have seen a large surge in SMEs adopting the new norm of selling online. As people avoid bazaars and offline markets, sellers realize that via online selling, you can cater to the entire population of Pakistan rather than the people visiting the bazaars.
2. What key actions did you make to stand by your customers and society?
Our priority has been to ensure that our customers and employees remain safe. As soon as the virus broke out in Pakistan, we implemented a number of safety measures in line with those recommended by the World Health Organization. Our head office has been with minimal to no staff since March and our employees have been doing an exception job working from home.
In order to protect our customers and ensure that deliveries are taking place in the safest manner possible, we have provided our DEX Heros with gloves, masks and sanitizers and have instructed them to disinfect packages at customers’ doorsteps with alcohol swabs. At our warehouses and hubs, we are ensuring that employees follow strict safety protocols which include maintaining as much distance between each other as possible and washing their hands frequently. Hand sanitizers have been installed at the facilities and employees have been provided with masks and gloves. We are monitoring their health very closely and have asked employees to stay home if they begin to feel unwell.
Finally, one of our major stakeholders, sellers, needed a lot of support during this time. Hence, we launched the Humqadam seller stimulus program as part of Daraz’ efforts to restart Pakistan’s economy and to mitigate the impact of the economic downturn on the small-and-medium enterprises sector. The Humqadam program invites businesses from across the country to start selling online with Daraz. In order to facilitate them, 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.
With SMEs 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.
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.
3. How are you observing the need of the customers during the lock-down and what measures are you taking to provide appropriate customer experience?
At Daraz, we have witnessed an increase in a demand across categories. During the initial days of the lock-down, we were focused on ensuring that our customers have access to groceries and saw an 8-9x increase in demand on DFresh – our fresh fruit and vegetables channel. The contribution of the FMCG category to overall sales doubled in March and demand for hand sanitizers and hand washes increased by 18x.
Since the easing of the lock-down, we have witnessed a 20-25 per cent bump compared to the pre-Coronavirus days — part of the broader shift towards online. In the days leading up to Eid, we noticed a more than usual increase in demand for fashion and health and beauty (compared to the same season last year).
Due to the lock-down restrictions, it has been very challenging for us operationally. Our hub, warehouses, and last mile riders have had to stop operating much earlier in the day due to restrictions. This has in turn resulted in slight delays in delivery timelines. We have ensured our support to sellers by giving them more time to get products to our hubs to ensure their safety. In addition, we have notified customers of such delays and by in large, customers have been very cooperative and understanding of the situation
4. How are you educating your customers to use digital channels?
In order to ensure that our customers have an enhanced experience on our platform, we have always focused on education. Not only is education a significant element of our marketing, we also focus on providing customers easy access to the information they need on our platform whether they are looking to return products or inquire about delivery timelines.
We also offer a live chat feature through which customers can talk directly with our customer service agents and resolve any queries that they might have.
5. Have you noticed a surge in digital payments? What are the challenges do you face to increase the volume and how to fix the ecosystem of the digital payment?
We witnessed an encouraging shift towards digital payments over the past year. The use of e-wallets and mobile accounts grew by 8.2x year-on-year in March, while the use of bank cards and online banking increased by 1.9x each. Even before the outbreak of the pandemic, digital payments accounted for 32% of total consumer spend on Daraz.
In the month of April, there was a significant increase in Daraz Wallet transactions and since the outbreak of the pandemic, customers have shown an increased interest in installment plans owing to the anticipation of dwindling purchasing power and economic uncertainty in the country.
The biggest challenge to digital payments adoption has remained the low level of financial inclusion in Pakistan where people don’t even have access to conventional banking payment methods. Mobile wallets provided a solution but there is significant ground that needs to be covered to provide every Pakistani access to digital methods of payment.
