KARACHI: Do the founder and group CEO of Daraz, the biggest player in Pakistan’s $1.5 billion e-commerce market, believe that the nation is a challenging one to do business in?
“Absolutely. Bjarke Mikkelsen, CEO of the Alibaba-owned e-commerce platform with operations in Pakistan, Sri Lanka, Bangladesh, and Nepal, said, “I’d say definitely.
During his one-day tour to inaugurate the nation’s first automated smart distribution centres in Karachi and Lahore, Mr Mikkelsen spoke with Dawn and stated that the largest obstacle to e-commerce in Pakistan is the lack of seller education.
According to the group CEO of the online marketplace, which claims to have a 35% share of the national e-commerce pie with 20 million active monthly users, the trust deficit problem is unique to developing countries.
“If the seller sends a red t-shirt instead of a blue one, trust is eroded.” The customer will not buy from you again. “We can only be as good as our sellers,” he said, adding that the trust deficit exists to a “much, much lesser extent” in developed markets such as the United States and Europe.
According to him, the company has worked consistently to reduce the rate of quality-related returns, which is a gauge of consumer satisfaction in e-commerce, from 2% of all orders to 0.7% in recent years. According to him, “we’re at an inflexion moment now as the market’s confidence reflects the way things were perhaps three to four years ago.”
Despite the staggering figures, Daraz has regularly lost money throughout the eight years that it has operated in Pakistan. “We’re still three to four years away from profitability… Growth has been the focus over the past many years. We have been growing the ecosystem while securing the market. It has been costly. In Pakistan, we’ve spent $100 million doing that over the previous three years, he claimed.
Mr Mikkelsen said Daraz believed in building a sustainable business, despite recent “blow-ups” of quick-commerce start-ups that promised grocery deliveries in 30 minutes after raising huge sums from venture capitalists. “We’re in it for the long haul.”
According to Mr. Mikkelsen, the opening of the two automated smart distribution centres will significantly increase the company’s operational capacity.
According to him, the company has established the “most technologically advanced logistics facilities in South Asia” in collaboration with Cainiao Network, the logistics arm of the Alibaba Group, at a total cost of $4 million.
To guarantee operational quality and stability, these centres will include automatic assembly lines and use Cainiao’s own solutions, including e-programmable logic controllers. The buildings are over 50,000 square metres in size and can handle 428,400 orders each day.
It will enable us to increase our sorting capacity by more than 4.2 times and decrease manual errors by more than 90%, he claimed.
