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The online retail industry recently witnessed a partnership that amalgamated two leading e-commerce platforms, Daraz.lk and wOw.lk. Daraz Lanka Managing Director Rakhil Fernando speaks about the partnership and future plans for Sri Lanka’s
e-commerce industry
Q: Recently Daraz declared the strategic partnership with Dialog Axiata to integrate the operations and management of wOw.lk under Daraz.lk. Can you elaborate on this?
Essentially the partnership is for Daraz to integrate into Dialog Axiata’s products and offerings to create a collaborative solution for customers. As a result, Daraz is working with Dialog in using their assets like the mobile network, which is the largest in Sri Lanka, the payment networks such as eZ cash and genie, and the cable TV. The partnership enables us to integrate these channels to the Daraz e-commerce experience. As a company under Alibaba, Daraz brings to the table the expertise of its parent company, which was a strong value proposition we made to Dialog Axiata.
In the specific case of wOw.lk, Daraz offered Dialog an option to focus more on their telecommunication and payment businesses while allowing Daraz to focus on the e-commerce business as a partner. In much simple terms, the e-commerce product that was offered by Dialog was transferred to Daraz. So, whoever visits wOw.lk will be now automatically re-routed to Daraz.lk.
Q: How will this affect the existing WoW.lk customers?
We have made the transition as seamless as possible, where they can continue to shop on Daraz.lk, where they have close to a million products to shop from. Daraz delivers island wide and strives to maintain the promise we have made to our customers of delivery within four days. This partnership lets us extend this service to the wOw.lk customers as well.
Q: There are hundreds of sellers partnered with both the e-commerce platforms. How will this partnership impact them?
Daraz is not only about servicing online shoppers, we also service sellers. There are approximately 30,000 sellers registered on Daraz, selling from plates and pots to TVs, clothing, groceries and everything in between. This seller base comes from all over the country. At Daraz we want to create economies, we want a seller in Batticaloa to be able to sell to a customer in Colombo. We also want to empower businesses, from small home businesses to large scale ones such as Abans. This is the way for e-commerce to grow; to serve both the demand and supply sides of the business.
Q: The two platforms have been operating under different models. How is this integration possible?
This integration is more in terms of man power. Daraz identified some key people in wOw who we felt would be ideal to join the Daraz team. We have also moved a fair amount of wOw staff into the Daraz family. As for technology, nothing has changed with Daraz. We utilise the entire infrastructure that Alibaba has and the same is operated in Sri Lanka as well.
Q: What would Daraz’s input to this partnership be?
Daraz has grown immensely in Sri Lanka, especially after Alibaba bought the entity one-and-a-half years ago. At present Daraz processes around 15,000 orders a day. The kind of investment made into the infrastructure to maintain such an operation is something quite unique to Daraz. To my knowledge, no other e-commerce company in Sri Lanka is capable of that scale.
The general perception is that e-commerce is easy, but it’s an investment heavy area, especially in its logistics. Daraz is 700 employees strong, out of which 400 are under the logistic arm. We want to deliver island wide since that is where our consumers come from. We are also investing in the payment side of the process, and look forward to integrate with all payment solutions operating in Sri Lanka to enable ease of payment to all.
Daraz will also bring in innovation; we want to launch the Daraz Rewards Wallet where customers can collect points, thus creating a loyalty platform, and also a Daraz co-branded credit card where users get extra points at every purchase. In essence, we want to tap into every part of the eco-system – logistics, payment methods and products. The future for e-commerce looks very exciting in Sri Lanka.
Q: How will this partnership reflect on the overall e-commerce industry in Sri Lanka?
Daraz’s long-term plan remains the same; investing in Sri Lanka in order to grow the e-commerce market. The online retail industry is less than 1% from the overall retail industry in this country. Our ambition is to take it to 3-4% in the next three years. This requires a big investment to move the consumers towards online shopping.
The partnership with Dialog Axiata gives an integral element that would make this plan work. Dialog has a strong mobile base, is one of the two local cable TV operators and also owns a strong fin-tech element. Daraz will integrate e-commerce into all these components. For example, by next year you can pay for your purchases from Daraz through eZ cash or genie methods. We are also looking forward to create interesting content such as shopping through your TV. Such are the exciting solutions we want to explore.
Q: What elements do you identify as strengths and weaknesses in Sri Lanka pertaining to e-commerce?
Payment is one of the biggest challenges we face. People still want to pay by cash and not by card. This is an area Daraz wants to invest in and get people to feel comfortable with shopping and paying online.
Logistics is the other major challenge. However, it is essential to invest here to make e-commerce successful. Simply serving a small part of the island will not create a scalable business. Daraz, going along with the mandate of its parent company Alibaba aims at making e-commerce accessible to anybody, anywhere.
The greatest strength we have is that people are increasingly shopping online. A common misconception in Sri Lanka regarding e-commerce is that most online customers are from Colombo, but 70% of our customers are not from the capital city. Many also assume that they shop through a desktop, but close to 75% shop through the mobile app. Therefore, we know that consumers are ready to move into online as a preferred form of shopping.
Daraz has grown 100% over the last six months, November recording the best month, with 11.11. We achieved Rs. 800 million at the 11.11. this year as opposed to last year’s 250 million. Online shopping is not slowing down and we want to invest in it and ride that wave.
