Daraz Group has set its sights to double its retail volume in the next 5 years. Alibaba-backed eCommerce is going from strength to strength and wants to remain a predominant force in the emerging markets in the region.
Daraz Group CEO Bjarke Mikkelsen says that Daraz will maintain a compound annual growth rate of about 100% in online market deliveries. This will result in it sustaining the steady growth of the previous four years. He also informed that Daraz’s revenue growth has doubled on average during this period.
South Asia is an exceptional platform for eCommerce growth with a large population and growing consumerism. Venture capital firms are lavishing investment and we can expect digital shopping to grow further during and past the COVID-19 lockdowns.
Online retail makes for just 2% of gross domestic product (GDP) in five countries where Daraz operates. The list includes Pakistan, Bangladesh, Sri Lanka, Myanmar, and Nepal. In Indonesia, the number accounts for 20%.
“We really see the digital economy take off,” Mikkelsen said in Karachi “There’s plenty of runways.”
Daraz has accumulated 35 million users in the five countries and expects a 100 million milestone before 2030. This is part of Alibaba’s broader aim of reaching 2 billion consumers worldwide by 2036.
As part of its strategy, the Chinese online marketplace has expanded its service from Eurasian countries to Asia to achieve its target.
There is no active plan but “it’s a possibility” that more investors may be brought into the company in the future, said Mikkelsen. Alibaba-backed Trendyol drew capital from SoftBank Group Corp. and two Gulf wealth funds in August.
Mikkelsen says that there is a possibility that more investors will join the company in the future owing to recent signs. Alibaba-backed Trendyol has received investments from SoftBank Group Corp and a couple of Gulf wealth funds back in August.
Daraz is the predominant force in eCommerce in South Asia. It is the leading online marketplace in all the countries in the region except only India, says Ali Farid Khawaja, chairman of KTrade KAS Securities Ltd. “In Pakistan, there is no e-commerce company that even comes close to them,” he said. “Besides the scale, they are the only one which has made supporting infrastructure, including warehouses and logistics.”
Daraz has invested over $100 million in Pakistan and Bangladesh in the last 2 years building its own network among other projects. Now, the company is able to handle about 70% of its deliveries and has dispatched 150 million packages since it came into operation.
Daraz also plans to start logistics as a separate service in the future. It is also testing the buy-now-pay-later service in Sri Lanka as an experiment.
And despite the challenges of being in emerging markets, Daraz Group is hopeful of its steady sustainability and growth. “Even though there are competitors coming up in different verticals, our biggest growth opportunity is from the digital economy to grow,” Mikkelsen said. The industry is “still at an early stage.”
Daraz in Nepal
Daraz is also the leading marketplace in Nepal with over 1 million Nepalese checking into Daraz online stores per month. Recently Daraz Group saw off a successful 11.11 single-day sale in many South Asian markets.
In Nepal, it was the greatest online shopping fair to date.
In the 24 hours run time of the campaign, it served 7 lakh of Nepalese pulling in shopping worth Rs.36 crore. With 1000 delivery heroes and 100 additional delivery vehicles, Daraz satisfied its customers with the best-in-class products dispatched on time.
Daraz was originally launched in Pakistan as a fashion retailer. Daraz Group was formed in 2015 as its parent company to head its operations as it expanded. Since its acquisition of Kaymu in 2016, it launched the online marketplace in Nepal and Myanmar.
Later in 2018, Alibaba acquired Daraz Group for $150 – $200 million. Now, Daraz is a leading eCommerce giant in the South Asian markets inspired by Alibaba’s larger vision and consumer practices.