ALIBABA ACQUIRED DARAZ BANGLADESH: THE NEXT

GROWTH STRATEGY

As the consequences of the COVID-19 emergency keep on being felt across the world, all the
sectors are struggling due to increase number of COVID cases every day. Moreover, maximum
sectors are suffering due to demands declined, labor shortages and inability to maintain their
supply chain processes. However, decrease in demand has not been a big concern for all sectors.
One such industry is e-commerce, which has seen an unparalleled spike in orders for many e-
commerce companies as well as an increase in the overall customer base as a result of the lock-
down.

It was December 2020, Mr. Bjarke Mikkelsen, CEO of Daraz and Mr. Syed Mostahidal Hoq,
Managing Director, Daraz BD were in his office and having coffee. They reflected, indeed it was
a great year for the company during COVID 19. With an innovative and aggressive business
restructuring process known as “New Management,” Daraz Bangladesh had emerged as a
potential leader in e-commerce market in Bangladesh.

Mr. Bjarke Mikkelsen, CEO of Daraz, presented the new management philosophy for achieving
leadership in a dynamic competitive e-commerce market in Bangladesh. He said-

“Best price, Biggest Varity, fast delivery and 100% protected are the promise of Daraz to provide
the superior customer service. He added that, Daraz also having values like customer
commitment, embrace change, integrity and ownership to ensure superior customer satisfaction.
And we have an aspiration to be the best e-commerce brand in Bangladesh”.

Mr. Bjarke Mikkelsen, CEO, identified, they need a strong strategic approach to be one of the
renowned e-commerce brand in Bangladesh by 2022. He understood that, to achieve continued
success they need a strong strategy to get more customer and retain existing customers.

DARAZ: THE INCEPTION

Daraz is an online marketplace and logistics company which operates in markets of South Asia
and Southeast Asia. It was founded in 2012 as an online fashion e-commerce marketplace in
Pakistan by Muneeb Maayr (Founder) & Farees Shah (Co-Founder) at the based venture builder,
Rocket Internet. Daraz Group operates e-commerce platforms and logistics service in
Bangladesh, Myanmar, Nepal, Pakistan and Sri Lanka.

DARAZ IN BANGLADESH: Experience Personalized Online Shopping in Bangladesh

Daraz.com.bd is best online shopping store in Bangladesh that features 10+ million products at
affordable prices. As bangaldesh's online shopping landscape is expanding every year, online
shopping in dhaka, chittagong, khulna, sylhet and other big cities are also gaining momentum.
Daraz is among best websites for online shopping in Bangladesh that promises fast, reliable and
convenient delivery of products to your doorstep. Daraz being the trusted online shop in
Bangladesh aims to provide a trouble-free shopping experience for the people of Bangladesh but
is also providing ample opportunity for international online shopping from Bangladesh. Daraz
aims to make online shopping accessible to all parts of the country.
Among tons of online stores in Bangladesh, Daraz aims to strictly adhere to international quality
standards ensuring trust and reliability in customer service and originality in product delivery.
Realizing the surge in ecommerce platform in Bangladesh, Daraz aims to redefine online
shopping experience with home delivery, cash on delivery and installment facility for shoppers
across country. Our assortment includes 100% original products from leading electronics,
fashion, beauty, and lifestyle brands. Especially for shoppers who do not have debit cards or
credit cards, Daraz provides a facility of online shopping with cash on delivery to your home.

ALIBABA ACQUIRED DARAZ

Multinational e-commerce company Alibaba has acquired Bangladesh’s one of the leading online
commerce sites Daraz. The Retail E-commerce is developing at 72 percent a month in
Bangladesh. Currently, 35,000 individuals and 25,000 little and medium enterprises (SMEs) are
included with this division.

With the acquisition, Daraz will be able to leverage Alibaba’s leadership and experience in
technology, online commerce, mobile payment and logistics to drive further growth in the five
South Asian markets that have a combined population of over 46 crore (17 crore in Bangladesh),
60 percent of which are under the age of 35 years, reads the statement. In 2018, Alibaba, the
China-based global e-commerce giant, acquired Daraz Group, one of the leading e-commerce
companies in Bangladesh, launched initially by Rocket Internet. It was a strategic plan to open
up South Asian Markets and cast an important limelight on the sector.

E-COMMERCE MARKET IN BANGLADESH: AT A GLANCE

The E-Commerce industry in Bangladesh began to flourish since 2013 with the Bangladesh Bank
lifting its previously established restriction on international purchases via consumer credit cards.

While this was a huge boost to the growth of e-commerce, other factors also played a defining
role, such as the gradually improving access to the internet and rising smartphone usage across
households.
Internet/Mobile Users OPERATOR SUBSCRIBER (MILLION)
Internet Users Mobile Internet 102.353
ISP + PSTN 9.522
Total 111.875 million
Mobile Phone Users GP 79.037
Robi 50.901
Banglalink 35.272
Teletalk 4.927
Total 170.137 million
Figure: Internet/Mobile Users in Bangladesh (December 2020) Source: BTRC

Major competitors in the E-Commerce Industry

The 3 types of e-commerce most prevalent in the country are: business-to-business (B2B),
business-to-consumer (B2C), and consumer-to-consumer (C2C). Some of the notable players are
shown in the figure:
 Figure: Major competitors in the E-Commerce Industry / Source: DATABD.CO

Global Top Markets and Bangladesh

Globally, the biggest countries in terms of e-commerce sales were The United States of America
(USD 8,640bn), Japan (USD 3,280bn), China (USD 2,304bn), Korea (Rep) (USD 1,364bn), and
United Kingdom (USD 918bn) in 2018.

The market valuation of the E-commerce industry is contested by different sources such as
Statista and e-Commerce Association of Bangladesh (e-CAB), however the latter estimates it to
be around Tk 8,000 crore with an annual growth rate of approximately 50 percent. It also
estimates there are currently around 500 websites and 2000 Facebook-based companies present
in the industry.

Too Much, Too Fast for Local Players

Convenience in meeting orders in the time of the pandemic has become paramount for online
businesses as they experience rapid growth in the number of customers and orders. However,
this sudden scale-up has been met with a general lack of preparedness in terms of capacity,
mobility, and resources for these same companies as they struggle to capitalize on the demand
surge.

Companies such as Chaldal.com, the average order size rose from an average of BDT 1300 to
BDT 3,750. Now deal with over 5,000 orders a day. The crisis has made way for businesses
like AjkerDeal.com and PriyoShop.com who are e-commerce giants, to diversify into the online
groceries market, helping to secure employment for their own workers and providing much-
needed service for the community.

Bikroy.com, which is the largest online marketplace for C2C customers have introduced a
category called Essentials as they attempt to help local suppliers find markets.

Foodpanda, Uber Eats and Pathao which focused their core business on food delivery have also
joined the fray to scale up and deliver groceries, medicine, and other items to their customers
through listing suppliers of such products on their respective apps.

Bangladesh leading Towards a Bright Future in E-commerce Sector

As indicated by market analysts, Bangladesh’s E-commerce business market will flood to USD
20 billion by 2020, by when, as per Goldman Sachs, India’s online retail market is expected to
reach USD 69 billion. Worldwide financial investors who are heading to India are starting to
make a stopover at Bangladesh.

Present challenges and future steps for e-commerce in Bangladesh

One key issue is that of trust. Just as there has been an increase in online consumerism, there has
been a significant increase in problems related to fake products, broken products, bad quality,
unnatural delay, and severe lack of customer service, at times bordering on rudeness towards
the customer. And these issues have increased proportionately during the pandemic. And these
led to a significant drop in trust in many of the e-commerce portals and traders. The problems
are mostly focused on either retailers who are small, Facebook shops, and at times with larger
organizations as well. And though many small (sometimes large) organizations have opted to
take advantage of the situation and the need for a contactless economy to offer sub-par services,
they need to understand that the damage done will not only have a short-term repercussion, but
will echo in the longer terms as well.

FUTURE GROWTH OF DARAZ: THE CHALLENGE AHEAD

The competition in the e-commerce is very high, so in order to stay into the long run as a one of
the top brands, Daraz needs a solid Business strategy as it has huge potentialities. Mr. Bjarke
Mikkelsen, CEO, is thinking about future challenges and opportunities.

You (you and your team) need to take a charge of CEO of Daraz and need to
develop Business Strategy for the company.

References
1. About us- Daraz- Daraz.com.bd
2. Alibaba buys e-commerce venture Daraz – The Daily Star
3. E-Commerce in Bangladesh Struggling to Capitalize on Opportunity-LightCastle Partners
4. E-commerce of Bangladesh: Shaping the future of shopping- IDLC Monthly Business Review
5. Bangladesh - Country Commercial Guide-International Trade Administration
6. Bangladeshis adopting e-commerce faster than ever amid pandemic – The Daily Star
7. About e-CAB e-CAB – eCAB
8. E-commerce suffers on supply crunch – The Financial Express
9. Current E-commerce Industry Scenario in Bangladesh- The Brainstation
10. Online grocers fail to seize the day during biggest opening yet – The Daily Star