​ ​Course Code : MGT 3225

Course Title : E- Business

​ ​Individual Assignment on E-commerce Business Model of Daraz

​ UBMITTED TO:
S
MOHAMMAD TOHIDUL ISLAM MIYA
​Asst. Professor

​SUBMITTED BY:
Reza Rahman
ID :111 182 081
SEC : A

​DATE OF SUBMISSION:
​30th November, 2020
Company Background (Daraz)

Daraz Bangladesh is a multivendor e-commerce site which started its journey in 2014. It is a B2C venture
which was initially launched in Bangladesh by Rocket Internet limited. The business model of Daraz
revolves around creating an online marketplace where local sellers can sell their products to local buyers
through their platform. Daraz was later purchased by Alibaba in 2018. The main products on the
platform consist of men and women apparels, footwear, apparels, jewelries, health and beauty,
electronics, home and lifestyle, groceries, accessories, automotive parts and sports items. Daraz also has
operations in Pakistan, Nepal, and Myanmar and is the first online platform in South Asia with 22 million
of products, 50000 sellers, 1100 brands and more than 10 million monthly users.

The E-commerce sector has developed since the mid-2000s when Bangladesh needed far and wide
internet access or a solid online exchange framework. In 2009, the Bangladesh Bank, the nation's
national bank authority started allowing online transactions. As per the International
Telecommunication Union (ITU), the quantity of web clients has almost significantly increased from
2013. Regardless, Bangladesh still ranks 147 out of 176 on the ITU's ICT Development Index 2017, a
yearly report that captures the degree of ICT improvement. Back then E-commerce was still in its infancy
in Bangladesh. The overall state of the industry was not good as the country was just starting to recover
from major political issues related to elections for the past few years.

Daraz also entered Bangladesh in 2014 and there were only a few other firms in the industry. PriyoShop,
shoppers BD and Gift Ghor were among these few firms operating in the similar market but they were
operating at a small scale.

Daraz entered the country at a time when the situation was just starting to get stable. They knew it was
not that easy to penetrate the market Since, people of Bangladesh were not that much habituated with
the concept of E-Commerce so at first, they formed a Marketing Team and formulated a marketing
strategy to get recognition in Bangladesh.

Unique Features of E-commerce Technologies utilized

by Daraz

1) Ubiquity​ – The availability of mobile devices across the nation enables Daraz to have its
platform on the hands of the people of this country seamlessly. The users of the platform
can access its site or app from their portable devices without any hassle. This truly shows
the capability of the platform to make sure access is given to the user as the information can
be viewed
2) Global reach​ – As Daraz is a Bangladeshi based platform the global reach of the app is
limited within the borders of the nation as such the global reach of Daraz is nonexistent.
 3) Universal Standard​ – The universal standard of Daraz is met as the platform was created by
an international brand the standard set by other e-commerce platform by other companies
were followed so that the consumer could have an amazing experience. The platform itself
is the utilized to give the full experience on an online shopping service.
4) Information Richness​ – The information that can be viewed by the consumer on the
platform of Daraz is information rich as such the product is labeled with pictures to
showcase the visualization aspect needed by the consumers to view if he or she would be
interested, The platform also host other services such luck draw and raffle which are
showcased with written information and visual cues followed by corresponding sound to
give the consumer as sense of excitement.
5) Information Density​ – Daraz hosts a lot of information by the user so that the preferences
set by utilizing the user data can be set in the platform to have a better experience. It also
hosts information of previous purchases made by the user.
6) Interactivity​ – The interactivity of the users and Daraz as defined by a vertical relationship is
available there are 24/7 and helpline support enables users to call or text with Daraz
regarding any issues they might face
7) Social Technology​ – the ability to communicate to other users are available on Daraz as
products that are on the platform have a review section and as such other users can talk to
each to see how the product is from a firsthand experience. Users can also talk to the sellers
through the FAQ sections utilizing the social technology
8) Personalization/Customization​ – Daraz offers users the ability to personalize their search
and also help them find the products they are most interested in.

Analysis of Business Model of Daraz

1) Value Proposition –
The value proposition that is given by Daraz can be split into 2 groups that includes the user and
seller. First, we shall focus on the user as it is their main priority. The user-based proposition is
focused on the dependance of internet as due to the workload of the 21​st​ century rate race that
everyone goes through the ability to order anything online and have the products and items
they need be delivered to their doorstep allows for easier and hassle-free process by going
online and ordering through Daraz. The following benefits that are gained by the user are -
● The advantage of saving time and money: The product or item that the user is searching can be
easily found through a keyword search and doesn’t have the hassle of searching the product
physically in a store. The user also saves their money by not having to go from one store to
another and having an extra transportation cost by paying a delivery charge to Daraz there
products get delivered to their home and with offer such as vouchers and cashback users will be
able to save a lot compared to going to the store and buying the product.
● The search for a specific item/product – The user can search for a specific product that they
desire but do not know where to get them from as Daraz is an online marketplace the users
have the ability to search through their catalogue.
.
The value proposition of the sellers is listed as –
● The advancement towards business expansion – The sellers on the site have the ability to
expand their business by listing the items they have for sale in their physical outlet on Daraz and
gaining another customer which increases the business profit.
● Online entrepreneur – The sellers who want to start their own business have the ability to sell
their products on Daraz as through the online platform they have the ability to gain the
customer base that they desire and if a seller is a startup business then they have ability to
initialize with a low investment as Daraz will handle the majority of the sales the ability to just
buy the products and sell them will save them a lot of the cash capital which can be utilized to
further expand the business.
● Free marketing – Thorough Daraz they are able to gain free marketing promotion needed to
reach out to a new audience.
2) Revenue Model –

The contract signed between the seller and Daraz is the first act in the process then the
Commission act is place where in the item sold by the seller in a specified category will have a
commission charge that will be taken by Daraz, as stated the charge will depend upon the
product itself and what category it will fall under. The item that is sold will have to ready and
delivered to a specified warehouse location where it will be delivered to the customer on behalf
of Daraz. They delivery charge that is paid by the customer will go to the delivery firm utilized by
Daraz and the product that was sold the commission charge will be taken by Daraz and the rest
of the amount to the seller customer also has to bear the delivery charge and the delivery man
takes it from the customer when the product is delivered to the customer Once the product is
delivered to the customer then Daraz takes the agreed determined commission from the selling
price and sends the remaining portion of the amount to the sellers. This follows a
transaction-based business model as due to the transaction between the seller and the buyer
Daraz will take a transaction fee based on the category of itself. They also follow a sales revenue
model where Daraz mall hosts an offer sale on products on their warehouse inventory and if the
products are sold the entirety of the revenue shall be received by Daraz.
3) Market Opportunity –
 The market opportunity for Daraz is huge as an online e-commerce giant in this platform the
ability to reach newer heights are potential waiting to be gained. The online platform of
shopping for products and items are something that everyone in Bangladesh have become
accustomed too. The main potential opportunities that Daraz has in its grasp are –
● Competition: As Daraz has the ability to become the biggest online platform in this country the
barrier for competition is less as other e-commerce platforms do not have the necessary backing
as Daraz. The force behind Daraz such as it’s investors and logistic resources are enough to
handle the competition on its own.
● Target market – The target market must be the ultimate goal for Daraz as the target market will
select the future for Daraz, as attracting the right customer base will make sure Daraz prospers
successfully. The aspect of selling products with a plethora of options makes the target audience
massive.
● Online platform and resources – The online platform be it a website or an app will have to be
the main buzz around Daraz as to whether or not it provides what is stated and Daraz have
successfully done that with its platform.
4) ​Competitive Environment
T​ he current trend towards e-commerce in Bangladesh has made other companies in
the industry highly interested as it is a very lucrative segment but with Daraz having a
large backing in the sector from foriegn titans such as Ali Baba the current competitive
environment scenario is certainly weak but that;s not to say it will stay this way forever.
The hurdles that it will face are the sellers selling authentic products and the consumer
having the trust issues with online services where they cannot view or spectate the
product as needed for their own satisfaction.

5) Competitive Advantage

The spot of being number 1 did not just come from hard and dedication it came it with
advantages too, they follow as:
● First mover advantage: Daraz was the biggest international e-commerce platform in Bangladesh
as Ajkerdeal.com couldn’t garner the proper audience due to not having trusted relationship
with their customer base Daraz was the one that swooped in and got the glory of being the first
online store.
● Better Technology at hand – Daraz is able to provide a more unified experience for both users
and seller as the app and website is designed so intricately that they are able to utilize it to the
max
● Logistics and human resources – The team behind the success of Daraz is massive pool of
employees that cover the talent pool as they are able to handle the day to day activities in order
to meet demands.
● Financial advantage – As Daraz has a huge financial backing by international investors such as
Alibaba the financial advantage allows for it expand to almost every product category available,
6) Market Strategy
 Marketing Mix Strategy that is utilized by Daraz are -
● Product: The product categories hosted by Daraz enables them to be an industry leader for their
market. The categories are mostly endless enabling the users to find anything they want.
● Price: As Daraz only takes a commission based on the item being sold as which category it falls
under the sellers can list their items at the desired price as Daraz will take the commission after
it is sold
● Place – the online platform enables them to have a reach nationwide helping them reach the
customers anywhere.
● Promotion: The promotion deals that are hosted by Daraz allow to them be a market leader as
11.11 sale or fata-fati Friday allows for massive discounts, cash backs and gifts.

7) Organizational Development

The organizational structure of Daraz is as follows -

● The Board of Directors which houses the CEO. Then following command order Chief Technical
Officer (CTO), the Chief Operating Officer (COO) and the Chief Customer Officer (CCO).

● Chief Technical Officer (CTO), is the main hub for the developers and engineers as it is an
app-based business and they will be helping him with the technical aspect of Daraz.

● Chief Operating Officer (COO) is the main hub for the day to day operations of Daraz as he is on
control of the Senior Managers who have their designated activities that they are in charge of

● Chief Customer Officer (CCO) are the main hub for the customer aspect of Daraz as they are in
charge of the PR Manager, who are responsible for developing and implementing an
organization’s PR & Media strategy, ‘ Territory Officers’, who maintain customer relationships
along with setting targets to meet sales revenue and lastly ‘Sales Executives’, who are
responsible for to promote products and services to the customers along with the aim of
maximizing profits.

● Chief Finance Officer (CFO) is the main for the financial aspect of Daraz as they are in charge of
the Finance Manager, who is responsible for managing the financial activities of Daraz and lastly
the HR executives, who are responsible for managing the human resources.

8) Management team:
The management team behind the magic of Daraz is what makes sure that the day to day
operation of the organization is going smoothly. Bjarke Mikkelsen the CEO of Daraz was the one
who envisioned the possibility of creating one of the biggest e-commerce platforms. The other
heads of department are the ones who make sure that the financial, human resources, and PR
department are run by talented individuals who make sure that everything works in conjunction
effectively and efficiently.
Industry Structure of (Your Company) as influence by
E-commerce

As regarding Daraz, the five forces of Porter that will be utilized are:

● Threat of New Entry – Daraz is an online e-commerce platform as such they are hosting the
sellers and buyers on their platform which allows for their sellers to have their products listed in
another platform. As there is no contract of exclusivity between Daraz and the seller if there’s
another viable platform with a lot of traffic and traction it would stand as a major competitor.
● Buyers Power – Daraz creates an opportunity to have consumers option when it comes to
choosing products from their platform as multiple sellers of same products will fall under mostly
every category enabling the consumer their right to choose increasing their options for a better
deal thus. Increasing their buyer power.
● Suppliers power – The suppliers in question do not have the power in a sense that as
Daraz hosts multiple vendors on their site if a particular vendor decides to hike up the
price of a product then there will be someone else offering the product at a more
regular price point.
● Threat of Substitution- As the rapid growth of e-commerce in Bangladesh is growing the threat
of another competitor always stands and with other brands already established in the market
the consumer switching brands is always a possibility.
● Competitive Rivalry - Competitors like Ajkerdeal, PriyoShop and Othoba.com are the direct
competitors of Daraz currently and Daraz really need to stay up on the game always in order to
maintain their position in the industry.

Firm Value Chain of Daraz

1) Inbound Logistics: The products come directly to Daraz’s own warehouse and then they
outsource the delivery aspects to a registered delivery company in order to reach it to the
consumer.
2) Operations: Not applicable.
 3) Outbound Logistics: Daraz strives to deliver authentic products to their consumers while
ensuring safe and secure delivery from verified sellers and wants to create a one-sum solution
for the consumers so they can buy any desired product they want at the perfect price.
4) Marketing and Sales: Daraz use social media platforms like Facebook, Instagram, LinkedIn and
also digital ad campaigns through their affiliate program.
5) After Sales Revenue : Daraz collects after service revenue through the means of customer
reviews, customer complaints and more.

Growth Strategy

Differentiation – Daraz provides a seamless experience compared to other e-commerce platform where
the products are not available. Not enough vendors, authentic products, and verified sellers. This makes
Daraz the no.1 online shopping site.
Cost Competition – Daraz offers a better deal as there are multiple sellers on the platform that creates a
competitive market on their terms and with sales discount, cash back offers, and much more creates a
more lucrative opportunity for Daraz to be taken as only online shopping platform.

Market Niche – Daraz selects the niche market of the consumers who do not want to go through the
hassle of going store to store to find the right product. Daraz is one stop solution to finding the desired
product at a desired price.

Scope – The ability of the Daraz platform of being available from any device and OS platform allows for
the hundreds of million of potential and existing consumers base to be connected to them to find what
they want and with the product catalogue that challenges others with physical stores.
Customer Intimacy – Daraz utilizes the effectiveness of the internet connectivity to be connected to the
consumer through their app or website to make sure that the product received to their experience on
the platform is perfect.
References -

https://blog.daraz.com.bd/2017/09/13/daraz-bd-revolutionizes-online-shopping-habits/

http://dspace.bracu.ac.bd/xmlui/bitstream/handle/10361/8949/ID13304082_BBA.pdf?sequence=1&isA
llowed=y

http://dspace.bracu.ac.bd/xmlui/bitstream/handle/10361/8717/10204114_BBA.pdf?sequence
=1&