There is a huge growth potential in the Pakistani e-commerce industry, but to unleash this potential government intervention in the form of tax relief is needed, said Ehsan Saya, Managing Director of Daraz Pakistan.
While talking to Business Recorder here on Thursday, he observed that there is a huge potential in the e-commerce industry to create jobs in Pakistan; "the best part about e-commerce is that every time a seller joins any platform, he or she creates around three to five jobs on average".
For the promotion of this growing sector in Pakistan, he sought a different tax policy for the e-commerce industry. "From the government, we need tax policies that promote growth for an industry that generally is very capital intensive in the beginning. We need to put that on the weighing scale versus the taxes because when you tax businesses, which are in the early stages, they are not able to create jobs," he added.
Infrastructure was another component that he felt was very important for them to be able to provide customer service, which will help on the expansion of this sector and economic growth in the longer term. "We need to reassess how we look at the logistics infrastructure across Pakistan and see if it is the most optimal. It requires not only financial resources but intellectual resources to see whether there is a need to change it in certain ways and reassess if we need to rebuild some of that infrastructure," he added.
He talked about Daraz Pakistan, a sister concern of Chinese multinational company Alibaba, and its future plan.
"It is an online marketplace spread over five countries, including Pakistan, Sri Lanka, Bangladesh, Nepal, and Myanmar. We have around 15,000 sellers with millions of customers who use Daraz app on a monthly basis in Pakistan. Operationally, we have built a very vast network of distribution where we have four warehouses in Pakistan and around 50 hubs. Spreading nationwide, Daraz aims to provide the best customers service by getting closer to the buyers," he added
He disclosed that by the year 2022, they believe they will have over 200,000 sellers and will create 1 million jobs in Pakistan through those sellers.
When asked about the challenges Daraz is facing at the moment, he saw 'access to digital payments' and 'logistics' as two biggest challenges.
"An access to digital payments is weak in Pakistan. To overcome this, we have launched Daraz Wallet to payment solution to our customers. Half of the digital payments of Daraz are now going through Daraz Wallet, which is positive as it is adding a lot of value to our customers. One of our aims is to add more customers to this type of financial inclusion and give them the ability to pay digitally," he added
However, he said, in terms of payment, they also offer options of cash on delivery, credit card and debit card payment and Easypaisa. "The back end system of payments at Daraz is best in class, which is safe, convenient and quick," he added.
On the logistics front, he said, Pakistan is still relatively okay in terms of Daraz operating in other countries; "we have launched Daraz Express to ensure quality service is being extended to both customer and sellers. Over 55 percent of the total deliveries go through Daraz Express. We have invested millions of dollars to build a network from across all cities in Pakistan," he added
He believed that economic instability is going to affect e-commerce less because it is still a nascent industry. "There is such a big market in Pakistan that economic downturn has impacted the e-commerce industry less. Generally, when people are wary of spending, the whole economy feels it and e-commerce is part of the economy, but we are a little bit more resistant to this typical behaviour," he observed.
He admitted that there is a trust deficit in this industry. "To overcome this, Daraz has spent a lot of money and time to give 100 percent protection to its customers. We allow them to return products and above all the buyers can look at reviews and ratings. Customer reviews have also been added.
Customer reviews, picture reviews and ratings are a very important tool to build that trust," he added. Responding to safety of customers' data, Saya revealed that they have strengthened their data security significantly. "We are a fully PCI compliant with the best in class technology available from Alibaba. So anyone buying through Daraz should rest assure that their data is protected," he added.
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