Daraz.Pk’s Farees Shah Discusses E-Commerce In Pakistan

Farees Shah is co-founder of Daraz.pk, an online retail store based in Pakistani that offers multi brand clothing, shoes and accessories for men and women. The e-commerce site is a venture of the Berlin-based Rocket Internet, one of the world’s fastest growing and most dynamic internet incubators.

We spoke to Shah to learn more about Daraz.pk and get an overview of the e-commerce sector in Pakistan.

Ad Geek Daily: How long has Daraz.pk been around?
Farees Shah: Daraz.pk has been online since August 2012, so about 18 months.

AGD: Have you been involved from the start?
FS: Yes, I was the first person on the ground in Pakistan. I was approached by the regional team in Dubai when they were looking to enter Pakistan and I joined shortly after in April 2012.

AGD: What are some difficulties you faced while establishing Daraz.pk? Was it challenging to sell the concept of an online store to the Pakistani market?
FS: The first and foremost challenge was to get brands on board. Keep in mind that till Daraz.pk went online there was no precedent of selling fashion online in Pakistan so we had to convince them to not only sell online for the first time, but also place their stock at our warehouse and agree to share a profit margin, which at that point would seem high to all the suppliers.

What’s amazing is that we have come a long way and today any supplier we meet is not only very familiar with Daraz.pk but in fact we actually have more suppliers contacting us to get on Daraz than vice versa.

Setting up warehousing and logistics was also very challenging as in Pakistan warehousing is generally done at a carton level but we had to set up warehousing at an item level. Secondly the local logistics providers we worked with weren’t really structured to cater to e-commerce, which is why we went ahead and set up our warehouse and last mile logistics.

What made all of this extremely challenging was that we were the first e-commerce players in Pakistan. So even though we hired alot of young, smart people, no one had done this before and that coupled with the aggressive launch deadlines we had from Rocket headquarters in Berlin made this extremely tough. Needless to say, this was an extremely exciting time for all of us and if I look back at this time I can safely say I have probably not learnt so much in any previous part of my career as I did in the first 6 months at Daraz.pk.

AGD: Initially we were introduced to Azmalo.pk, which was then rebranded to Daraz. Then Azmalo was reintroduced as a separate brand, which was once again rebranded, this time to Kaymu. What’s with all the rebranding?

FS: So Azmalo.pk and Daraz.pk both started as Rocket Internet ventures but were always separate entities with distinct product portfolios, sector focus and business models. Azmalo was initially launched as the Amazon business model but Rocket decided to restructure that business model globally and relaunched it as an eBay clone, which was subsequently rebranded to Kaymu as that is the brand Rocket is using for the eBay model globally.

Daraz.pk on the other hand launched in Aug 2012 and due to its expanding brand portfolio and a high percentage of returning customers  became Pakistan’s premier online fashion destination and is now the most recognized ecommerce brand in Pakistan.

AGD: Going back to Daraz, how many brands do you currently stock?
FS: We stock 380+ brands at the moment and this number should be crossing 500 within the next 2-3 months. We currently have more than 13,000 products on the website and we add around a 1,000 new products every week, which allows us to stay extremely current in terms of style.

AGD: How do you choose which brands to stock?
FS: We are extremely selective with the brands we work with as we are extremely conscious of our high fashion image in the market and we do not work with brands that cannot meet our criteria for product quality. We choose brands based on their current sales (both online and offline), brand image and quality of products. We not only target all top brands in Pakistan but are also continually analyzing our brand portfolio to ensure we cater to the needs of the various segments of the Pakistani fashion consumer.

AGD: In your experience, what are the three most important attributes that ensure the success of an e-commerce site?
FS: The three most important attributes are assortment, customer experience and marketing.

Assortment is not only having the widest possible variety of products and the big brands but also ensuring that there is variety within each price bracket of every subcategory. Customer experience comes down to both how well the website is designed  and works as well as timely deliveries etc. Marketing of course is essential for a business where we are looking to target such a high number of people. Yyou can have the best product or service in the world but you won’t get too far unless you have a way of reaching your target audience.

AGD: There are many multi-brand online stores popping up in Pakistan. Are you flattered or threatened?
FS: To be honest we don’t think there are too many multi-brand online stores popping up in Pakistan.

The reason I say that is that we, at the moment, have over 13,000 fashion products on the website whereas no other multi brand store even has a 1,000 products. So sure, there are lots of smaller players that do exist in the market but not at a scale close to what we are operating at. And yes the market is so huge and there is such potential that I feel there is room for multiple online stores to exist, but we haven’t come across real competition as yet.

Customer-ServicesAGD: Customer service is an important part of retail. Would you say handling returns and exchanges is more challenging for e-commerce sites?
FS: We offer all our customers a 7 day return policy on most of our products. We appreciate the fact that unlike shoppers at a brick and mortar store, a Daraz.pk customer does not have the opportunity to touch and feel and possibly try on the product before making a purchasing decision. So by having a 7 day return policy we allow our customers the opportunity to touch, feel and try on their purchase and return it if they feel the need to do so.

Even though we were warned by various suppliers that this policy would be detrimental as the Pakistani consumer would use and abuse it, that has not been the case and our return rate in Pakistan has been negligible.

AGD: Would you like to share any interesting experiences in this regard?
FS: We had a funny incident when we had just started operations where a customer returned a shoe he had purchased. When we received the package at the warehouse and opened it there was no shoe in it but a giant stone. This of course was a one off incident but our processes are now structured to ensure such things do not happen while maintaining a high level of customer service.

AGD: What are your future plans for Daraz.pk? Anything exciting we should look out for?
FS: Based on customer surveys we established a list of 50 top brands in Pakistan and I am very proud to say that more than 50% of them are already online on Daraz.pk. Our target for this 2014 is to have 80% of the top brands on Daraz.pk by the end of the year.

Daraz.pk has established a very strong foothold in the Pakistani e-commerce market and we strongly feel that we are on track to change the landscape of ecommerce in Pakistan in 2014.