Muneeb Maayr is the co-founder of Daraz.pk at Rocket Internet. Muneeb Maayr is a graduate from the University of Virginia and a successful entrepreneur in his own right. Muneeb started his career as an investment banker in Bear Stearns but moved back to Pakistan to establish SNL Pakistan. In a short span of six years he was able to expand the company to over 600 people after which it was bought by SNL Financial in a cash & equity deal while retaining management control. Muneeb remained associated with the firm till August 2012 after which he joined Rocket Internet to help build Daraz, Pakistan's largest e-commerce venture. BR Research team recently sat down with Muneeb and discussed the e-commerce dynamics in Pakistan and Daraz's future plans. Following is an edited excerpt.
BR Research: what is Daraz.pk (Daraz) all about and what is the core philosophy behind it?
Muneeb Maayr: Daraz is basically an e-commerce entity, where we do end-to-end fulfilment. That means we are responsible to help fulfil the order from the time of its placement. Almost two-thirds is our inventory, which is housed in a warehouse in Karachi. Whereas, the remaining is what we call the 'managed marketplace', where suppliers have the inventory with themselves and we help fulfil it.
The idea is to try and become Alibaba's 'Tmall' for Pakistan. Alibaba is the Google, the advertiser and also the last mile fulfilment company, hence they are valued at what they are. There is a tremendous opportunity to do all of that in Pakistan because there is very little competition. The infrastructure does not really exist, which allows us to come in and be the formative player.
In terms of platform, Daraz is one of the very few here that generates its own content. We proudly have a self-generated content, unlike most others. Secondly, in terms of advertisement, there has been very little competition in terms of online advertising in Pakistan, which allows our teams to become one of the finest in the country.
Our online marketing is perhaps the most efficient in terms of spend to earning. Unlike others, we are actually able to see how many people have come in, seen a certain product, bought it and how many have we physically delivered to and completed the transaction. No one else can see that. For instance, someone like OLX can see how many people came in, but they would have no idea how many actually engaged in the actual transaction.
Our platform allows us to see end-to-end fulfilment and that is the business we want to get deep into. What you will see play out in the near future is that a lot of players such as Samsung, and other mobile phone companies will advertise, and then you will see our number. We want to be able to fulfil orders for all retailers' brands in the country.
BRR: What is the geographic break-up of your business outside the three major cities?
MM: The goal is to become the non-physical face of the brand and allow any brand to work with us. If you look at the order spectrum right now, over half the orders are from outside Karachi, Lahore and Islamabad, which is a very exciting proposition. The reality is that people now have more access and exposure in smaller cities, yet there is no retail infrastructure.
For instance, we get a lot of orders from Quetta because there are hardly any malls or retail infrastructure. Retail infrastructure is an expensive proposition and a time consuming one too, this is where we see the opportunity.
BRR: How do you differentiate yourself with Kaymu? Do you not face a threat of cannibalisation?
MM: Kaymu is meant to be a person-to-person platform, more like ebay and OLX. But when you come to Daraz, we want to know if you are an established retailer, will you be able to fulfil the orders and the readiness and ability to be able to supply. It is a different ball game from Kaymu.
We care about fulfilment, for which we have set up a separate company aside which takes care of logistics and warehousing. Right now we are doing end-to-end retail, and that is about to change as well very soon.
We are about to start a marketplace very shortly, which means that as long as you can prove you have the original stuff to sell, willing to hold the inventory at our warehouse or guarantee timely delivery, you do not have to be the brand yourself.
BRR: The electronic retail market has very few authorised retailers. So will that be an area you would be tapping?
MM: Yes, that is a huge market. We will be concerned about the originality and legitimacy of a certain product and not concerned whether it is the authorised dealer or not. Most brands in Pakistan do not have a website presence, and they do not even know how to manage and maintain the website, in case they do have one.
So this is a tremendous opportunity for us. We have actually gone in and made stores for certain brands. Most brands have a Facebook page, but their core purpose is engagement, whereas, we want to take care of the fulfilment aspect. When the marketplace comes up, there is massive opportunity for traders and small businessmen in Pakistan.
It enables anyone with the power to sell in Pakistan, without worrying about payment and fulfilment. We will be there to take care of that.
BRR: How much volume does Daraz generate currently and at what pace is it moving?
MM: It has been two years during which we had very little funding to grow. We did not have the money to pile inventory. If you look at comparable players in the region, e-commerce players essentially have ample inventories. So we spent whatever money we had on brand building, interface building and getting suppliers on board.
Our top line is a direct relation to the amount of inventory that we have relative to the amount of money that we spend. We are selling over a 1000 products per day, and we are the biggest in the country.
BRR: Where do you see the e-commerce market in the near future?
MM: I think in 2015, the market will probably be around $35-40 million. It will depend a great deal on the money spent on marketing. Still lots need to be invested on customer acquisition, the cost of which will eventually go down. The retail business in Pakistan does not have high margins, unlike west.
The goal right now is to grow market share, not profitability. Capturing the market is the aim at the moment. The market share will only reap fruits in the longer run.
BRR: What are Daraz's marketing plans if the goal is to grow the market?
MM: Probably by the end of this year, we will start advertising on television as well, in a bigger way than others have.
We always build in the customer lifetime value in our business model. The basic acquisition cost is always high; we then work on assumptions on repurchases over the lifetime that gives us profit. As long as we have the information and we can keep drilling the potential customer, and have the business rolling.
On a lighter side, eventually we want you to become lazy, use your phone and simply make the purchase at your convenience.
BRR: Are there any plans to make the payment mode any advance than just continuing with cash on delivery mode?
MM: We are one of the first companies in Pakistan in the retail sector to sign up with 1-link as well. As long as you have a bank account in Pakistan, you can transfer money to us through your mobile phone. We are also the only retail website in Pakistan that allows rupee denominated credit card transactions.
There are 20 million plastic cards in Pakistan, so now we are considering deploying machines with our riders, for those who are apprehensive of using online payment or paying cash. We are trying to crack the nut. We have a lot of dedicated people working on these projects. It is a matter of a year, and you will see an entirely different eco system. We are working day in day out to make retail more efficient for these brands and established MNCs.
Surely, we will not become profitable very soon. We are right now investing in intellectual capital. We want to have the leadership advantage of the market. We are working with various players on the payment front.
BRR: Where do you see your revenue and volume of transactions three years from now?
MM: I can guarantee you that it will be very close to three digit millions of dollars. That is because the amount of money we are going to put into this business in six months from now, will help us supersede anyone else. We are setting up the infrastructure.
We are getting into electronic gadgets full scale, starting from mobile phones to lap tops and whatever electronic gadget you can think of. Pakistan's internet audience is predominantly male and electronics is a good business to capture male audience.
We are looking at the future which lot of people are not seeing. Once 3G services spread and the costs get down, we will surely have a bigger audience, especially the female segment sitting at home. Once mobile banking becomes common and cheaper, we will not have to deal with cash, just as it happens in Kenya.
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