Pakistan’s e-commerce giant Daraz pivots, is now also offering used electronics

KARACHI: Pakistan’s e-commerce giant Daraz has launched a used products category in its ‘Electronics Devices’ section, pivoting to the second-hand market as runaway inflation disrupts household budgets in the country.

“The current state of inflation has significantly impacted consumer buying habits in all sectors,” Arusha Imtiaz, Chief Commercial Officer at Daraz Pakistan, told Business Recorder recently.

“We’ve noticed numerous changes across many categories.”

Her remarks referred to the ‘Daraz Like New’ category on the e-commerce platform that currently offers mobile phones, laptops, smartwatches among other related items.

“Due to inflation and import restrictions, it has become increasingly difficult for consumers to purchase new electronic devices. Seeing this as an opportunity, we have introduced ‘Daraz Like New’, which offers certified, slightly used products at a lower price with up to six months of official Daraz warranty,” Imtiaz added.

The executive said there is a “strict criteria of quality control” that includes the Daraz team vetting each item before it is listed on the platform.

Daraz’s move comes as inflation ravages Pakistan’s economy with low foreign exchange reserves putting severe strain on the rupee.

A programme with the International Monetary Fund (IMF) has provided some breathing space, but experts say Pakistan’s economic woes will continue until structural issues behind the constant boom-and-bust cycles are addressed.

Inflation has recently slowed in July, but its outlook has been hit by a nearly 15% increase in fuel prices over the last two weeks. The State Bank of Pakistan (SBP) kept the key policy rate unchanged at 22% in its last meeting on July 31, but many believe another round of interest-rate hikes is on its way.

To conserve its low level of foreign exchange reserves – boosted only recently due to inflows from the IMF, Saudi Arabia and the UAE, – the government has restricted the flow of imports since last year. While some curbs have eased, electronics is an area where high taxation, duties, and inflation have suppressed demand.

In such a scenario, Imtiaz said local companies have an opportunity. “There is an opportunity to fill this gap created by the import restrictions. The fall in rupee’s value means customers need budget-friendly options.”

The company officials declined to share Daraz Pakistan’s year-on-year growth, but added that sales have increased in the “double digits”.

“Despite the situation, Daraz’s growth hasn’t been impacted as e-commerce is still in its early stages in Pakistan and targets a significant portion of the overall retail landscape. As the retail sector continues to grow, so does our platform,” said Imtiaz.

Other e-commerce trends

Meanwhile, in the fashion category, Daraz said it has seen a growth of over 100% while its grocery category has seen 82% increase in volume of orders over the past six months.

However, the ticket value of each order has gone down.

“Average item value is going down,” a company statement to Business Recorder said. “Users have started buying less expensive brands of the same category compared to premium options.”

The company added that local brands offering products in its ‘Health and Beauty’ category are also doing well.

“Top-performing local beauty brands on our platform have seen an uplift of up to 6x (600%), which indicates there is room for more players to step in to create quality local alternatives in other categories,” the company said.