A former investment banker, Ehsan Saya is the Managing Director at Daraz Pakistan. In 2018, Saya returned from Canada to join the leading e-commerce marketplace. In Toronto, he had also founded JoeyCo, a transportation and logistics company. Mohammad Hasan Osama is the Head of Seller Marketplace, Daraz Before joining Daraz, Mohammad Hasan Osama has built a unique reputation to lead growth operations within the tech start-up and e-commerce space in Pakistan and is now serving as the Head of Marketplace at Daraz. Before becoming a part of Daraz, Hasan Osama was leading multiple roles at Careem; led category operations for 6 countries at Kaymu and was part of the core team which launched Tripda in Pakistan.
Last time BR Research met Ehsan Saya, the conversation revolved around valuing customer. This time the conversation with the two was about Daraz’s second key focus area for 2021: sellers. Following are the edited excerpts:
BR Research: Daraz has made some new promises to its sellers. Before coming to what these promises are, do you think offline sellers have generally started selling online since Covid – or are they still reluctant?
Ehsan Saya (ES): First of all, COVID definitely expedited the transition to online selling for a lot of the sellers as it was very difficult for them to sell when the markets were closed, and footfall has reduced significantly last year. Daraz was just one medium; there were other ways to sell such as sellers putting up their WhatsApp numbers and taking orders on the phone.
There definitely was transition towards selling online. However, our markets did not stay closed for a long time fortunately, and hence a lot of sellers did not have to be online for a very long time. And fundamentally, small and medium sellers have fears associated with selling online. When am I going to get my money; how do I learn how to sell online; the whole process is going to be too difficult; these are some qualms these sellers had.
So, one of the things when we talk about seller promises is making it easy for them to sell online. We believe that it’s our responsibility to make sure that they are facilitated and improve their experience on our platform. One of the promises that we are making this year to the sellers is to pay them in half the time, which is a very strong sign from us that we are committed to making our sellers’ experience better so that they can mature online and sell better.
Mohammad Hasan Osama (MHO): Anyone who has been selling offline, and now wants to transition towards online selling as well faces challenges from two aspects: the logistics capability, and the tech capability. Areas where were Daraz really helps out the sellers is providing a logistics service where we have the entire end-to-end operations for them; and providing them with a market on the platform where they already have mass numbers of customers coming in on a daily basis.
BRR: How many new sellers have registered on Daraz since last June, and what categories have they signed up for?
MHO: We have had around 223,000 people who have shown interest in working at Daraz since June 2020 till date. Out of these, around 53,000 sellers have actually completed their registration and are selling on Daraz. In terms of year-on-year comparison for Daraz, the numbers have really scaled up, and you can see how COVID has expedited the whole transition. On the category side, the growth has been pretty evenly split across all clusters.
BRR: Could you explain the process of seller onboarding at Daraz?
MHO: It is fairly simple to sell on Daraz. All you need is a valid CNIC or a business account in case of a registered business, and banking details. Sellers sign up with their email and phone number, add the credentials and start selling online. We are revamping this entire process to make its even faster and easier. On the backend, we make sure that the quality of products they put up is in line with Daraz’s guidelines.
BRR: A key issue from customer point of view of having so many sellers online is about finding the genuine and credible sellers. Daraz is offering ‘carrot’ to the sellers; but what kind of ‘stick’ measure do you take - or plan to take to ensure the authenticity and credibility of the sellers on your platform?
ES: Customer experience and seller experience are the two main battles for Daraz this year. Even though we make it easy to sign up, we put the sellers through rigorous process to start selling to make sure we are getting appropriate quality sellers. We make sure that when they go through Daraz University, they know exactly what sort of titles, descriptions and pictures they need to post for their products on the platform; how they should package the products once its sold; how they should answer the customer queries; and how they should work toward improving as well as increasing their reviews.
We charge a Rs500 penalty to sellers for selling a fake product. We also look at the sellers’ return rate and if it exceeds 2 percent, we take the sellers off the platform temporarily and put them through Daraz University again. If it happens again once these sellers are allowed on the platform, they taken off the platform permanently.
We measure the performance of the sellers against various KPIs on a weekly basis; and based on the score card we decide whether a certain seller should start selling more, or less or should be delisted permanently. Not only do we do that on seller basis; we go product by product to see which ones have poor ratings, which is why we encourage our customers to give review because we use that data to take decisions like delisting a seller from our platform. So, we take a lot of actions to make sure that the customer experience is smooth and that includes our promise of quality sellers on board. Daraz has only a 1.5 percent return rate for all our products.
We have also launched a Virtual Refund where a customer that buys something for less than Rs750 and wants to return the product, we return the money and offer the customer to keep the product as well. That’s a big commitment to make when you are delivering millions of packages. We also make it easier to do returns and refunds; in Karachi, Lahore and Islamabad, we come to your doorstep to pick up the product and refund the money.
BRR: Seller’s must also have complaints against customers in an online marketplace. What are these complaints and how is Daraz addressing these issues for the sellers?
ES: The same way we owe it to the customers, the sellers are the backbone of online platform. At the onset, we look at the data such as high number of fake returns or high number of fake rejects. We start blocking such customers entirely and don’t allow them to order from Daraz. We have a very good technology that looks at their username, device id and many other personal details that helps us identify such customers.
MHO: Also, we have an entire quality control department that checks why a certain return of product occurs. And if the seller is still not satisfied with the decision, he can file a claim. This is actually core of the seller promises that we are committing to.
BRR: So, for a typical seller on Daraz, what are the key challenges that they face while selling online?
ES: First and foremost is the cash flow and supply because Pakistan is an import driven country. During COVID, supplies had run short for many of our sellers, which became very challenging for them. And the cost of capital in Pakistanis relatively high; so, when someone sells something, it’s very difficult for them to wait for a long time to get paid because that’s the cash they use to recycle and purchase more. This is predominantly the problem we want to solve for the seller when we say we are going from 14 days to 7 days to pay our sellers.
MHO: Another thing that is difficult for sellers to sell on a platform is to understand the data side of things in terms of what’s selling and what’s not; or how to make a product sell more. So, over the course of next year, we are looking to help sellers identify what gaps to fill in order to grow on Daraz. We also have a number of tools on the platform such as business advisory which can help sellers in terms of what’s selling, what’s out of stock, how to go around restocking them, what are the number of customers visiting their shops, what products have the highest sales conversion and what price points are selling the most, etc. This makes decision making with regards to price adjustment, quality tweaking or key growth drivers easier for sellers.
BRR: So, what are you offering sellers in the coming year to make it easier for them to stay and sell on Daraz?
ES: Sellers are the heart of Daraz’ ecosystem, and in 2021 our efforts will be focused on making it easier to sell and grow your business on Daraz. These actions are driven by the insights that small and medium businesses are important for our economy.
First, we will pay the sellers twice as fast by decreasing the payment cycle from 14 days to 7 days. We understand that maintaining a healthy working capital is essential to our sellers, and we want to help you manage cash flows better with this initiative.
Secondly, we will aim to always respond to seller enquiries on live chat within 30 seconds during business hours. We expect to be able to achieve this target over the coming months to ensure instant support.
Third, if a seller’s products are not selling as expected, we will provide specific support to help the seller identify the gaps.
And lastly, we will streamline the claims process to make it much easier and faster for sellers to file claims.
With these initiatives, and continued investments to increase the page views from our fast-growing user base, we will more than double the number of sellers generating more than a $1,000 revenue per month before the end of the year.