The Emergence of Daraz.

pk as the
Market Leader of Pakistan
E-Commerce

PRINCIPLES OF MANAGEMENT (1796)

INSTRUCTOR: MIRZA SARDAR HUSSAIN
SPRING-2018

GROUP MEMBERS:
Taimoor Saif - 14460
Rutaba Pervez - 14497
Mahrukh Fatima - 14475
Kaenat Shiraz Khoja - 14553
Shan-e-Rab - 14561
 Table of Contents

ABSTRACT................................................................................................................................................................... 1

BACKGROUND............................................................................................................................................................ 2

INTRODUCTION........................................................................................................................................................ 3

PROBLEM-ANALYSIS:.............................................................................................................................................. 6

PRIMARY RESEARCH............................................................................................................................................... 9

SECONDARY RESEARCH....................................................................................................................................... 20

RECOMMENDATIONS............................................................................................................................................ 25

BIBLIOGRAPHY....................................................................................................................................................... 27

CONTRIBUTION SHEET........................................................................................................................................ 28

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 ABSTRACT
Since the last couple of years Daraz.pk has been leading the Pakistani e-commerce market. To
reach such levels of prosperity and success it took Daraz.pk struggle of about 6 years since its
inception in 2012. In this term report, we aim to discuss issues and strategies that the
organization employed. Recommendations at the end of the report are proposed according to the
primary and secondary research done by us. Ex-Finance head of Daraz.pk was contacted and
interviewed by the team for better understanding of how Daraz.pk achieved success with such
flying colours. Moreover, to better understand the consumer patterns a survey was also
conducted, which helped us understand the consumer preferences.

1
 BACKGROUND
About Daraz.pk:
Stretching across 5 countries including Pakistan, Daraz.pk is Pakistan’s first and largest online-
shopping platform offering a wide range of products and brands. Being founded in 2012, by
CDC group- a development finance institution wholly owned by the UK Government, along with
Asia Pacific Internet Group (APACIG)- this leading e-commerce portal fulfills needs of people
of all age groups.

History:
Starting the journey in 2012, Muneeb Mayr and Farees Shah being the Co-founder of Daraz.pk
brought fashion to doorstep and this e-commerce revolution was fueled up soon by people across
the country. After starting his career in investment banking in New York, it was not until
summer 2012 that muneeb decided to move back to Pakistan. He then became a part of Berlin-
based Rocket Internet’s Venture, Daraz.pk. Upon questioning him regarding his experience at
Daraz he said:

“Heading Daraz.pk has been the most fulfilling experience thus far. being a part of this is
invigorating to say the least.”
Starting their venture with the moto” We build companies” in 1999, Rocket Internet was found
by three siblings- Marc, Oliver and Alexander commonly acknowledged as Samwer brothers.
Originated at Berlin, with 33000+ employees, this largest internet platform stretches across 50+
nations and has almost 120+ market-accelerating organizations. It targets the individuals from
several developing nations who they see as leaders of tomorrow. Soon it began getting support
from eBay, Facebook, Groupon etc. Other than Daraz the online platforms of Rocket Internet in
Pakistan are:

● Lamudi.pk
● Foodpanda
● Kaymu.pk

Figure 1:Official Logo of Rocket Internet

2
 INTRODUCTION
Vision & Mission:
VISION MISSION

● To provide wide-range of products to ● Set its name as Pakistan’s best

the customers. customer oriented company.
● Offer cheapest prices. ● Help people get every possible range
● Fast and convenient home delivery of products at their door-step.
service.
● Be the utmost retailing market place in
Pakistan.

BPO:
Daraz.pk is a practical example of BPO i.e. Business Process Outsourcing. This means that
many retailers have outsourced their sales and distribution department to Daraz.pk. Daraz helped
Pakistan take another step towards progress. BPO is common in the west but in Pakistan, Daraz
is one of the forerunner of such a concept. BPO has a lot of advantages and has shown great
success throughout the world and over time we saw that even Daraz is a successful venture that
uses BPO very effectively.

Organizational Environment:
Complete understanding of the organizational environment is pivotal to the success of any firm.
Same goes for Daraz which established a proper understanding of its external and internal
environment which contributes to the effective management. Following is the complete
description of its specific and general environment:

SPECIFIC ENVIRONMENT:

● Customers:
With the availability of wide range of choices, they offer, Daraz has become successful in
making tremendous number of purchasers of their final goods and services. The versatility of

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products eventually leads to people, of all sorts, shopping from Daraz. Furthermore, to meet the
needs and fulfill the wishes, their marketing plan aims to retain and attract more customers. An
excellent customer service has allowed the customers to reach for help-anytime and anywhere.
For this purpose, the website shows live chat options with customer-care Centre long with email
id, phone number and other contact details for meeting the expectations of the targeted
customers.

● Suppliers:
To this date, Daraz has more 126 different brands on board. These range from the famous brands
like Ego, J., Khaadi etc to the newly emerging ones like Mardaz, Contessa etc. The pricing
strategy of these brands effects the revenue Daraz earns. It has always developed good relations
with the dealers and tried not to hamper its reputation. But at the same time has made sure that
there isn’t any compromise on customer satisfaction and took a complete check on its supplier’s
activity. This is because a suppliers behavior will directly impact the business it supplies.

● Competitors:
Since its emergence Daraz has tried to establish its USP(Unique Selling point) which allows it
compete with other online retailers. Homeshopping, Becho Online, Dexpel are its possible
competitors. This competition has led to innovation as the company has evolved new ideas to
flourish itself in the marketplace.

● Shareholders:
Being a private ownership company Daraz makes sure to take care of all its shareholders.
Effective financing, governing, operations and control requires good shareholders.

GENERAL ENVIRONMENT-PESTEL ANALYSIS:

● Political:
The imposition of monetary,fiscal and other demand side policies affects how a firm operates as
these factors determine how much and how will they produce. Since Daraz is an internet based
company there is no such political influence on Daraz. However, working under the prescribed
labour law, environment law and foreign trade barriers etc is important. Governmental support
for e-commerce is also a plus point.

● Economic:
Economic factors determine the purchasing power of all the inhabitants of a nation. The
economic factors include interest rate, inflation rates, unemployments rates etc. These economic
factors are divided into two broad categories-micro and macroeconomic forces. The way people

4
allocate their incomes after paying taxes and individual demand/supply of goods and services
comes under micro-economic forces. However, the way firms and households react to changes in
interest rates etc comes under macroeconomic factors. Since Pakistan is a developing country,
the per capita income here is low so Daraz needs to make sure that it keeps its prices affordable
for all. Also high inflation rates affects it’s working negatively while income growth positively.

Social:
Some of the social factors affecting the working of an enterprise are lifestyles,norms & customs,
age-groups etc. These are the binding forces of any society and determine their tastes and
preferences. Daraz should always be flexible enough to compensate the changes in consumer
behaviours. Not reacting to these may lead to decline in market share. Daraz has always tried
hard to address the needs of the people and benefit people’s lifestyles by providing goods and
services otherwise the demand for their products may fall.

Technology:
Rapid technological obsolescence acts as threat as well as an opportunity for the growth of
Daraz. With the rapid pace of technology it has been seen that Daraz has been taking measures to
develop its technological assets. It has been capturing the target market through social media
marketing. However, cybercrime acts a threat for the organization and its integrity.

Environmental Factors:
Ecological factors like weather and climatic changes contribute to the environmental factors But
since Daraz an internet-based company, so environment doesn’t affect it much. Also online
shopping platforms like Daraz contribute to greener shopping experience by eliminating travel-
distance and time thereby cutting-off pollution.

Legal Factors:
Imposition of restrictions on the selling/buying of certain commodities are laws Daraz abides to
obey. Selling overseas requires international laws for company.

5
 PROBLEM-ANALYSIS:
Even though daraz is hands down the best online shopping venture in Pakistan, it faced and still
faces a lot of managerial issues that need to be solved. We tried to analyze the issues that any
online store specifically Daraz.pk faced through its path of emergence. Following are a few of
the most prominent ones.

 Poor internet connection

In a country like Pakistan, internet connection has always been a very serious issue. Sometimes
the internet service is down and at others the browsing speed is too slow. Whereas e see that
Daraz has all its network on the internet since it is an e-commerce brand. However we see that
Daraz has overcome these issues and managed to give the typical retail market a competition.
This is because of the way its managers especially IT managers handled their work.

 Trust issues
Before Daraz, online shopping hasn’t been much of a very popular show. People in Pakistan
weren’t very familiar with the cash on delivery phenomenon before Daraz.pk. Also when we
asked a few people, we got to know that people did not trust the way Daraz.pk worked. People
are not sure if they will receive the same product that they ordered. Also what if they received
any broken or malfunctioning apparatus. All these add up to the trust issues that lead to people
opting the physical market place instead.

 Quality check
Since Daraz itself doesn’t produce goods, one of the biggest issues that it faces is how to ensure
that the best quality goods are being delivered to the customer is of the quality that was promised
by the seller. The problem here is Daraz plays the role of a middle man and if there is even the
slightest of issues in dealings, Daraz would be on the losing side.

 Security
It is a clearly known fact how much exposed to risk Daraz.pk is as an e-commerce. Everyday
hundreds of hackers try to confiscate the website. To protect the data of millions of buyers and
sellers and to protect their own statistics, it is important for the managers of Daraz to provide
maximum security which is indeed a difficult task.

 Black friday fail

Last year, Daraz.pk created a lot of hype about it’s black friday sale: how it will be the biggest
sale ever and would consist of the best discount deals. Even though Daraz made huge profits, the
sale had many difficulties. Website crashed after some time, when people proceeded to checkout,

6
they lost their data and some people couldn’t access it. Also a few customers complained that the
products they bought from that sale were not as promised.

 Payment issues
The fear that an online glitch or any other issue might result in problems with online monetary
transactions always lurks. This is a huge hindrance in the path to progress for any online
shopping venture. People fail to put their trusts in them because of the same reason and hence do
not prefer making online payments. For cash on delivery too, there is a whole process that one
has to go which is very long procedure which is very hectic for a customer that sometimes they
opt out of it.

 Scamming
With easy access to customers all over Pakistan, comes scamming. People would just browse the
web for hours, checkout and refuse to pay for their order at the time of delivery. This results in
the company incurring loss every now and then. The reason that these scams are effective are
because there is no complete information provided to Daraz.pk. The information that Daraz.pk
has is the one that the customer has provided in the form on its website. Daraz.pk’s 70% sale are
on Cash on Delivery(COD) which makes up the major chunk of the sales. The problem of
scamming heightens when the sales made is on COD, which in Daraz.pk contributes a major
chunk, because the business is unsure whether the customer is genuine or not.

 Language barrier
People in Pakistan belong to a diverse culture. In different regions, different languages are
prevalent and the people living there are comfortable with that particular language or dialect.
English is just used as a secondary language hence people find it difficult to read and understand
rules and guidelines in it. This results in misinterpreted code of conduct which in turn leads to
consequences.

 High price
Another major complaint that we receive by customers is that the items have a very high price.
They say that the same stuff is available in market at a lower price. Now this price inflation is
because of many reasons. Like there are shipping and transportation costs that need to be
accommodated for. Other than that there are commissions for vendors and the organization itself
that need to be adjusted.

 Vendors having a monopoly

7
To make the most profit as possible a vendor tries to register from different accounts in turn
trying to establish a monopoly and set a barrier for other sellers on the website. This needs to be
stopped since the main objective of Daraz.pk is to deal with multiple vendors at the same
platform.

 Product returns and refund

When a product is returned by an unsatisfied customer, the company has to incur the loss of the
delivery charges and other logistics. This is specifically the case when the delivery is made for
free.

8
 PRIMARY RESEARCH
The primary research for this term paper comprised of two parts:

1) Survey
2) Interview

Survey
Aim:
The aim of this research was to investigate the position of Daraz in the market. Moreover, the
survey also helped us to compare other factors like prices, variety, customer service etc offered
by the top six online websites.

Survey Formulation:
The survey comprised of fourteen questions on total about the six top online shopping websites
in Pakistan. The survey included questions to identify the websites that the people knew about
or/and have shopped from. Is also had questions about the factors like prices, variety, customer
service etc provided by the top six online websites. These top six online websites were included
in the survey on the basis of the Alexa website rating from an website article from 2016. These
top six websites were

1) Daraz
2) Yayvo
3) Kaymu
4) Shophive
5) Symbios
6) Home shopping

Note: Kaymu has been shown as a separate entity in the survey although it was acquired by
Daraz. the reason behind showing kaymu as a separate entity was:

1) The term paper talks about the emergence of Daraz, how Daraz has successfully secured
a market and how has it managed to achieve a competitive edge to all its competitors. For
this reason, any factor or entity that has affected Daraz (Kaymu as a competitor) over the
years was included in the survey.
2) Including both Daraz and Kaymu as separate entities helped us to understand why
Kaymu was acquired by Daraz and why it wasn’t the other way round.

Sample:
9
The sample included thirty active online shoppers. The data was collected on the basis of
convenient sampling.

Survey Summary and Results:

The first question of the survey was: “How many online shopping websites have you heard
about?”

The result of this question was as follow:

Out of thirty people 7 (23.3%) had heard about home shopping, 4 (13.3%) had heard about
Symbios, 19 (63.3%) had heard about Kaymu and Yayvo whereas all 30 (100%) had heard about
Daraz. The answer to this question shows that Daraz is a very popular online shopping website
as most (or all as in this case) of the online shoppers are aware of it.

The second question of this survey was: “How many of the following online shopping websites
have you visited.” The options included the top 6 online websites as mentioned earlier. The
result to this question was as follow:

10
Out of thirty people 3 (10%) had visited Home Shopping, 1 (3.3%) had visited Symbios, 4
(13.3%) had visited Shophive, 12 (40%) had visited Kaymu, 15 (50%) had visited Yayvo and all
30 (100%) had visited Daraz. This reflects that all the online shoppers did not just have
knowledge about Daraz but had also visited the website its website. Once again Daraz was the
most popular amongst the 6 top websites.

The third question of the survey was: “From which online website did you first order?”

To this, 22 out of 30 participants said Daraz. Other responses to this question were Shophive,
Kaymu, Tee-fit, fifth-avenue, Olx and don’t remember.

The fourth question of this survey was “From which online website do you shop most
frequently?” The 6 top online websites were included in the options with an option of other so
that the participants can state the name of any other website that they shop from and are not
limited to the provided set of options. The response to the question is recorded below.

Out of a total of 30 participants 23 (76.7%) of the participants said that they shop most
frequently from Daraz. Other of the responses included Yayvo (3.3%), Instagram shops (3.3%),
Ali express (3.3%) etc. once again Daraz proved to be the most online website in Pakistan.

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From Question 5 to Question 9 all the questions had the same options i.e. the top six online
website as mentioned earlier. These questions were included in the survey to have a comparison
based analyses of the websites and to identify where Daraz stands in terms of:

1) Quality
2) Prices
3) Variety
4) Customer service
5) User-friendly website

The fifth question of the survey was “Which website according to you offers the best quality
products?” This question was included in the survey to identify where Daraz stands in terms of
the quality of products sold.

Out of a total of 30 participants 25 (83.3%) said Daraz, 3 (10%) said Yayvo, 1 (3.3%) said
Kaymu and 1 (3.3%) said Home Shopping. From this result, it can be concluded that Daraz
offers best quality products.

The sixth question of the survey was, “Which website according to you offers best prices?” The
response was as follow:

12
Out of 30 participants 23 (76.7%) said Daraz, 3 (10%) said Yayvo, and 4 (13.3%) said Kaymu.
Once again Daraz was at the top. From this it can be concluded that Daraz offers best prices.
Kaymu and Yayvo too offer good prices.

The seventh question of the survey was, “Which website according to you offers greatest
variety?”

Out of 30 participants, 25 (83.3%) said Daraz, 2 (6.7%) said Kaymu, 2 (6.7%) said Yayvo, 1
(3.3%) said Shophive. From this it can be concluded that Daraz offers greatest variety of all.

The eighth question of the survey was, “Which website has the best customer service?” options
were the same as the previous question. The response was as follow:

Out of 30 participants, 25 (83.3%) said Daraz, 4 (13.3%) said Yayvo, whereas 1 (3.3%) said
Kaymu. So from this it was concluded that amongst the top six websites Daraz has the best
customer service. Yayvo has the second best and Kaymu has the third best.

13
The ninth question of the survey was, “Which website is the most user friendly?”. The response
recorded was as follow.

Out of 30 participants, 25 (83.3%) said Daraz, 2(6.7%) said Yayvo, 2 (6.7%) said Home
Shopping and 1 (3.3%) said Kaymu. From this it was concluded that Daraz has the most user
friendly website. Yayvo and Home Shopping have equally user friendly websites.

The tenth question of the survey was to rank the top six online websites according to the
shopping preference of the shoppers. The ranks were from 1-6, for which one was the most
preferred and 6 was the least. Following was the response collected:

In this question more than one websites could be given the same rank. For example, for a person
who prefers both Daraz and Kaymu equally can give both of them the same rank.

21 participants said that Daraz was their first preference, 7 said it is Yayvo, 2 said its Kaymu, 1
said it is shophive, 1 said it is symbios and 1 said it is Home shopping.

4 participants said that Daraz was second most preferred, 10 said its Yayvo, 6 said its Kaymu, 5
said its Shophive, 2 said its Symbios, and 6 said its Home shopping.

2 said that Daraz is third most preferred, 5 said its Yayvo, 12 said its Kaymu, 12 said its
Shophive, 10 said its Symbios and 6 said its Home shopping.

2 said that Daraz is fourth most preferred, 2 said its Kaymu, 3 said its shophive, 1 saids its
symbios and 2 said its Home shopping.

14
1 said that shophive is fifth most preferred, 1 said its symbios and 2 said its Home shopping.

1 said that shophive is least preferred, 5 said its symbios and 3 said its Home shopping.

If this result is concluded together most of the people said that Daraz is the first most preferred,
Yayvo is second most preferred, Kaymu and Shophive are both third most preferred.

The eleventh question of the survey was, “If you have ever shopped from Daraz, how was your
experience?”. The options were Excellent, good, bad and terrible.

29 people participated in answering this question (as not everyone had shopped from Daraz). Out
of 29, 23 said it was good and 6 said that it was excellent.

The twelfth question of the survey was, “Describe your experience with Daraz”.

To this we received a varied range of responses. Following are some of the responses that we
received:

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The thirteenth question of the survey was a suggestion about a thing that Daraz could improve to
secure a greater market. Following were some of the responses:

16
Conclusion of the survey:
According to the survey carried out by us, Daraz proved to be the most popular online shopping
website, as all the participants had not just heard about it but had also viewed the website and
most of them had shopped from it as well.

When considering the factors like quality, prices, customer service and user-friendly website
Daraz stood number one in all the factors mentioned above. Not just this Daraz was also the most
preferred website amongst all.

The overall experience of people buying from Daraz was also good and most of the reviews
received about their experience are overall satisfying. Any of the negative comments were not
ignored but were carefully considered while planning questions for the interview. (for e.g. any
concern about quality were incorporated in the interview by asking measures that Daraz takes to
ensure high quality).

As one of the reasons for mentioning Kaymu as a separate entity was to see why it was acquired
by Daraz. It is evident is the suvey that Daraz was better than Kaymu in every aspect (quality,
prices, etc.) and that’s the reason it was acquired by Daraz.

This concludes that Daraz has successfully secured a huge market compared to its competitors
and is the most popular online shopping website in Pakistan.

Interview
To help us with our term report we had the assistance of Mr Ali Raza from the department of
finance at Daraz.pk who gladly agreed to give us a brief interview and address our questions and
concerns. He had joined Daraz.pk in 2014 and had since been a part of it.

As the focus of the term paper was to see how Daraz emerged to become one of the most popular
online shopping websites we first discussed how Daraz was established. Daraz.pk was
established by a German company by the name of Rocket Internet in July 2012 (which also set
up another company called azmalo.pk). Daraz now operates in five countries including Pakistan,
Bangladesh, Nepal, Sri Lanka and Myanmar.

When asked about the objectives of Daraz back when he first joined it, he told us that
profitability was never an objective for Daraz the main objective was to build their customers.
Once they have had a strong base a new objective could have set into place. When asked what is
its objective now he told us that Daraz is still working on capturing the market which is the
prime objective of Daraz right now. The second objective is to provide best prices.

17
When asked about how Daraz’s challenges are different from any other traditional retail store he
replied that one of the major challenges is that the customer cannot physically touch the product
which can actually lead to an expectation gap. This might make the customer feel that he has
been cheated. Moreover, as daraz offers the option to return any item within 7 days this means
that the customer can return the item and daraz has to bear the transportation cost when an item
is being returned.

When asked how Daraz has managed to compete with the traditional forms of shopping he said
that Daraz provides a platform where one can compare the products available in the market and
brings to you products with the cheapest market prices. When one can order from home an item
at a lower price after he has compared it with all the similar items why would he opt for
traditional form of shopping anyway. Moreover, daraz not just provides best prices and greatest
variety but their campaigns with different partners also help customers to get discounts.
Furthermore, Daraz also has a return policy as mentioned earlier. Anything that is bought from
Daraz can be returned within a period of seven days.

When asked how Daraz has become one of the most popular online websites he replied that it is
because of strong marketing. The reason why Daraz has become so famous is its strong
marketing campaigns and its objective to provide best product prices, which has helped it to
capture a huge market.

The next question that we asked was what features of daraz’s website makes it user friendly. To
this, he replied that the website has filter for price range and size. It also has a search pane to
make searching easier. Furthermore, it has zooming in and front/ back features as well.

Our next question was related to a complaint that many of the people had been doing about
Daraz. People believe that daraz’s website often showed products that were not even available.
To answer this question he first explained to us the different inventory types that Daraz has.
Following are the types of inventory that daraz has:

1) Consignment: Products that do not belong to Daraz but are kept in its warehouses to be
sold. Once such a product is sold out, payment is made to the seller, otherwise the
products are returned after a period.
2) Cross- Docked: Product does not belong to Daraz, neither is it kept in its custody. The
seller informs Daraz about the products that are available with him that he would like to
sell. Daraz shows it as being available on the website. Once an order is placed for any
such product Daraz buys it from the seller performs a quality check and then delivers.
3) Outright: The inventory that belongs to Daraz. It buys these products in bulk and stocks
it.

This type of problem as mentioned above arises in the cross-docked type of inventory. In this,
the supplier fails to provide Daraz with the product that he had initially promised. Under the

18
circumstances the supplier is charged with a penalty, the order placed by the customer is
cancelled and the customer is informed about it.

When asked about the competitors of Daraz he named two; Yayvo and Ali express.

We next inquired about the reason behind the very shift of the name from Black Friday to Big
Friday and if this was actually the reason behind the 3 billion rupee sale. To this, he said that
Daraz first introduced the idea of Black Friday to Pakistan in 2015. Soon loads of others adopted
the idea too. However, from the very beginning Daraz had to face criticism for adopting the
name “BLACK FRIDAY”. As we know that Friday is a holy day for the Muslims and
associating Friday with Black was not acceptable to the people. (People even commented that
they would not buy from Daraz but instead Home shopping as they had named their sale as
White Friday). To tackle this issue Daraz decided to change the name from BLACK FRIDAY to
BIG FRIDAY. This was during the Black Friday sale in 2017 that they decided to change the
name. As soon as we changed the name, the sale increased dramatically and daraz was able to
reach the height of 3 billion rupee sale.

Lastly, we asked if the news about the acquisition of Daraz by Ali Baba was true. He confirmed
that Ali Baba is in talks with Rocket Internet and that all at Daraz had been waiting for the
announcement. When asked where he sees Daraz under the leadership of Ali Baba he said that he
sees Daraz expanding and prospering.

19
 SECONDARY RESEARCH
The slow pace of online shopping trend has been a major problem for all the Online Shopping
Companies. This has been due of different factors.

Lack of online Payments

The lack of payments has been a major issue in the Online shopping trend in Pakistan. Facilities like
PayPal or Visa payments are not available on such websites. Due to which customers are left out with
on delivery payments.

Payment method preference

80

70

60

50

40

30

20

10

0
Bank Draft Cash on delivery Debit Card Easy Paisa

Lack of awareness
The culture of online shopping has still not evolved in Pakistan. People in Pakistan are not willing to
take risks. They are also at a cultural disadvantage. Unlike Western countries, people in Pakistan still
lack trust due to which the leading Daraz.pk faces major consequences. Moreover, most of the
customers do not know how to place order

No after sale service

What makes a customer to get back to its desired online website? It’s after sale services. Customer
satisfaction must be the primary objective of every company. A major problem in online shopping is
unordered products being supplied to customers. In the very first place, in order to minimize such

20
problems, a quality assurance team should be available to counter check all products as per their
orders. However, Customer facilities should be available once the problem has been occurred, for
their satisfaction of the customers.

Competition
In case of Daraz.pk, there is no such local high competition in the market. Other than Daraz.pk, the
consumer as a choice between, Kaymu.pk and Dealstoday.pk. However, Customers have a high
preference for Daraz.pk in online shopping in Pakistan.

Site Preference
60

50

40

30

20

10

0
Daraz.pk Kaymu.pk Dealstoday.pk

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Advantages and disadvantages about online Shopping

Advantages
 Less time consuming
 Ease of access
 Review options
 Delivery at doorstep
 Variety of choice
Disadvantages
 Quality/Size risk
 Fixed prices
 Originality of products
 Account hacking (Security issues)
 Frauds and fake sites
 Customer service
 Late delivery time

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Reasons of slow pace of E Commerce in Pakistan

There are several economic, social and cultural reasons behind the slow pace of online shopping in
Pakistan.

The very first reason being,

Trust Factor The Cultural Aspect of
80
70 Household shopping. People
60
50 in Pakistan would always
40
prefer more towards traditional
30
20 shopping as we previously
10
0 learned in the Statistics above.
Don’t trust at all To some extent Trust enough to Fully trust
purchase The online shopping companies
should keep this in mind that
pricing, efficient delivery and after sale service matter to the customer most.
Consumers in western countries, who in a busy schedule of their everyday life cannot afford to spend half
of their day in grocery stores, online shopping becomes a necessity in their life. Unlike western countries,
Grocery shopping in Pakistan turns out to be a family event.

Second, the misrepresentation of our market as a Culture of Fraud. The sellers of our market, who
conceal the weakness of the product. This makes it necessary for the consumer to physically visit the
market to assure the quality and quantity of the product is as per desire. According to most of the users of
e commerce in Pakistan think that the size, quality, colour or form is different from the product shown on
website. This has caused a vast decrease in the trust level of online consumers.

The graph above clearly indicates that people are still not trustworthy towards online shopping websites.
And that they still do not have enough trust to purchase.

Third, Lack of Discounts or we should say, discounted rates displayed by online stores are usually higher
than the average prices offered by traditional stores. Globally, large online shopping centers have
achieved growth by offering high discounts to its consumers, however Online stores in Pakistan have

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failed to do so. The major cause of this can be efficiency in Online shopping companies. A store can offer
good discount to its customer only if it is able to reduce its costs, which can be only possible if the
company is working as productively efficient.

Fourth, Lack of Non-Branded/second hand products. Majority of the consumers in Pakistan go for low
priced goods. Due to low per capita income and high inflation, traditional markets are crowded with non-
branded and used products. Offering cheap, non-branded or second hand/used products can be of a great
advantage to online stores which introduces such products. This shows that the main market segment of
Online stores in Pakistan is towards urban upper-middle class consumers who are just one segment of the
whole market. Current Online stores in Pakistan ignore the rural consumers who contribute to the 60% of
the population in Pakistan.

Fifth, Lack of online Payments. Pakistan being a cash-based economy differs from most of the
developed countries. “About 97% of our economic transactions are cash-on-delivery,” says Nauman
Mirza, CEO of EatOye and foodpanda. “In Pakistan, there are one million and credit and debit cards but
debit cards are not eligible for online transactions. So, these are inoperational as far as e-commerce in
concerned,” Mirza said. Most of the online shopping centers in Pakistan offer only on delivery payment
method, like daraz.pk. According to experts, there are 5000 online shops with only 50 of them which use
online payment methods. Offering online payment methods can cause ease to both, customer and seller.
This would make company easier to make its refund or return policy. Government and local banks should
look into this matter. For example, PayPal – which is digital wallet service that allows you to send or
receive money to and from any person or a company around the globe – is banned in Pakistan due to
government restrictions.

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 RECOMMENDATIONS
According to a thesis “Consumer Behavior towards online shopping of electronics in Pakistan”
published by Adil Bashir in 2013, the main barrier in the process of online shopping is the safety
issue. People of Pakistan are afraid to share their personal information and financial information
on internet. Credit cards are also not available to all in general as majority of the consumers are
young generation and in Pakistan to avail credit cards in not a simple process. Due to which
consumers are reluctant to make online purchasing, then second the most familiar barrier is the
low level of trust on online stores therefore, sellers have to make proper strategies to increase the
consumer’s level of trust on them. (Bashir, 2013)

Moreover, as mentioned in the report above, problems like Quality check, Competitive edge,
lack of investment and trust have been really serious issues. Daraz.pk should work on different
strategies to increase the level of sales and overcome the problems. Some of the strategies that
we came up with include:

● Easy payment methods: Lately Daraz.pk has started the initiative of incorporating
Easypaisa, JazzCash, UBL Omni, etc. This has led to increased sales as facilities like this do
not require internet connection and majority of Pakistani population has no or poor internet
connections. But this is a short-term solution because as time passes internet connectivity
will improve drastically. Daraz.pk has more than 70% of its sales on Cash on Delivery,
which increases the issue of scamming, to reduce this Daraz.pk should introduce ways to
receive payments online. To make a credit card account in Pakistan, a person goes through a
lot of lethargic steps, this demotivates the consumers to make a credit card. This means that
Daraz.pk will have less payments through online means. Hence, Daraz.pk should introduce
the system of paypal or online currency wallets. This will lead to surety of sales made and
verification of consumers will be easy.
● Multi-Language Approach: Pakistan is linguistically a diverse country with Urdu being the
national language and English being the secondary official language.To make Daraz.pk
consumer friendly, we suggest that Daraz.pk should introduce the application and website in
urdu, sindhi, punjabi and pashto as well. There are high chances that this will lead to
increased sales in long-term, if not short-term since a great populace of this country is
accustomed to understanding only its own regional language.
● Countering Trust Issues: To prove the point that Daraz.pk provides best quality product,
Daraz.pk has been coming up with different tactics which include awareness on TV,
Newspapers, etc. But the question is “Are these measures enough?”. The answer is “NO”.
Daraz.pk opted a strategy that we call in management terms as “Persuasive”, however, what
Daraz.pk should actually do is use “Informative” means to persuade. Why? because people

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 are unaware of the process that Daraz.pk uses to ensure that products are delivered in best
quality and that products shown in images match the actual product.
● Trusted Vendors Only: Taking the example of careem and uber, in the transport market of
Pakistan. Careem has been the market leader. Why? Because they make sure that the captains
they hire pass the rigorous process of induction into the company. This resulted in consumers
trusting careem blindly and obviously, high sales for them. Uber has adopted this policy after
they were facing huge losses. In the similar way, Daraz,pk should make sure that only
vendors who genuinely want to sale products with good quality of product become part of
Daraz.pk’s vendor directory. The process of hiring new vendors may include checking of
goods by Daraz.pk’s quality management staff, vendor’s previous history, NOC Certificates,
etc.

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 BIBLIOGRAPHY
Bashir, A. (2013). Consumer Behavior towards online shopping of electronics in Pakistan.

http://www.klc.org.pk/why-is-paypal-banned-in-pakistan/

https://profit.pakistantoday.com.pk/2018/02/19/e-commerce-where-does-pakistan-stand/

https://www.dawn.com/news/1351491

https://www.slideshare.net/SaraAmjad6/darazpk-presentation

https://www.google.com.pk/amp/s/pakwired.com/popular-online-shopping-sites-pakistan/amp/

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 CONTRIBUTION SHEET

Name Contribution
Mahrukh Fatima Introduction and Background

Rutaba Pervez Problem analysis

Kaenat Shiraz Khoja Primary research

Shan-e-Rab Secondary research

Taimoor Saif Abstract and Recommendations

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