Considering how it has forced some economies into the digital age, the COVID-19 pandemic may well be the most defining moment of this decade and the next.
It has overtly reshaped the way we live, especially in terms of the ways in which we spend and consume. From bulk-buying to online shopping, people are changing what, when and how they are buying.
Back in March, when the pandemic first hit Pakistan and the government imposed a lockdown, Daraz saw fast-moving consumer goods (FMCG) sales increase from 20% to 70%, as sales of hand sanitisers and liquid handwashes grew 18 times.
“Groceries became one of our top selling categories,” Daraz Managing Director Ehsan Saya said in a recent interview.
“Our fresh produce business grew faster, as we ensured every single product was authentic and the delivery fee and time favoured the customer.”
The e-commerce website’s grocery sales increased nine times during the lockdown. The trend has continued and was reflected in the online retailer's annual "11.11" (known locally as the 'gyara gyara') sale.
As over 15,000,000 products from across 150 cities and districts went on discount on Daraz on November 11 (the date which the sale gets its name from). Grocery items were among the three top selling categories, with mobile and tablets and home appliances making up the remaining. This was a visible change from last year’s 11.11 sale, where electronics, fashion and mobile and tablets made it to the top three.
“Most of the businesses are hit by the pandemic. People have experienced salary cuts, lost their jobs or businesses,” reflected Saya, adding that due to these factors, most people decided to avoid upgrading durable items.
“For example, if the fridge stopped working, people now are more inclined to get it repaired than buy a new one," he explained.
The trend was visible in top searches as well, with make-up, watches, kitchen accessories, cycles and bikes becoming more popular this year. Last year, top searches had revolved around phone cases, dresses, sneakers, screen protectors and jeans.
A Daraz report said it sold enough tea on sale day to make more than 4 million cups of the beverage; and enough oil to make 100,000 kilogrammes of biryani.
Disinfectants, bikes, diapers and washing machines were the most sold items. In last year’s 11.11 sale, headphones, balloons, power banks and memory cards had been the most sought items.
The trends seen during Daraz's 11.11 sale reflects how e-commerce is penetrating the retail market as consumers expand their online purchasing decisions from non-essential and luxury products to essential items.
Saya noted that although e-commerce is a young industry with about 0.5-0.6% of the retail share, the pandemic has boosted it by forcing people to buy online.
“The beauty of online shopping is the convenience,” said Saya. “You can be sitting in Karachi and buy or sell to and from any city, town or village [in Pakistan and abroad].”
The Daraz MD said customers were now realising that e-commerce is not “just about discounts but the ease and convenience to get something delivered to your doorstep”.
The realization was visible in the 11.11 sale as the website saw over 2.5 million users in 24 hours, with over 2 billion pageviews in seven days. Digital payments made up about 50% of total sales.
Saya said Daraz had delivered around two million products in September.
“Our fleet of heroes — i.e., riders — wipe down packages with alcohol swabs before delivery. The riders wear gloves and masks, their bikes and our 50 hubs across the country are regularly disinfected so that our employees and customers are protected against the virus.”
Although the COVID-19 pandemic has accelerated shift towards a digital world, a recent United Nations study revealed that online sales may have increased, but people’s spending has seen a sharp decline in most countries.
And Pakistan is no different. “E-commerce has taken over a large chunk of the country’s retail market during the pandemic but the retail sector itself has shrunk,” said Saya.
“Unfortunately, Pakistan doesn’t have the ability to print money to support its economy the same way other richer economies do.”
If anyone’s shopped online before, that too locally, there is always a doubt about the product you see and the item you end up with.
As sales increased, Daraz introduced reviews and ratings of products and sellers, as well as chat features allowing customers to post photo reviews and a chance to discuss product details with sellers.
“This not only helps other customers but also helps us flush out bad sellers,” said Saya.
Daraz delisted around 4,400 sellers temporarily and around 500 permanently in September, added Says. “E-commerce can only flourish when customers have a vested interest. We encourage them to review, rate or file a complaint.”
At the moment, Daraz offers returns and refunds if the customer is unhappy with the product. “If the product is worth less than Rs750, then we ask the customer to keep it and refund the amount.”
Saya underscores how e-commerce has helped small and medium businesses. “We have about 70,000 sellers and more than half are active. Let’s assume there are 35,000 active sellers; out of them only a thousand or so would be brand, while the rest are small and medium enterprises (SMEs).”
“During the pandemic, we invested Rs80 million in our Humqadam Programme to promote the e-commerce ecosystem in the country,” said Saya. “Over 35,000 SMEs registered from across 88 cities. You’d think most of the sellers would be from major cities, but they were from small towns and villages.”
Saya said some 5,500 SMEs have since joined the Daraz platform. “That is the true power of e-commerce.”
In October 2019, the federal government issued a policy framework aimed at allowing access to e-commerce by ensuring consumer protection, availability of e-payment solutions and global connectivity of goods and services.
“All these measures will lead to a reduction in the cost of doing business for current and prospective e-commerce enterprises,” read the document.
The framework also proposed a simplified online registration of e-commerce business with the Securities & Exchange Commission of Pakistan (SECP) and made it mandatory for them to maintain a physical address in Pakistan.
“In addition, for enhancing consumers’ trust, measures for protection against counterfeit goods and a code of conduct is included in this policy,” it added.
Although Saya appreciated the steps taken by the Ministry of Commerce (MoC) to incentivize the sector, he underscored taxation reforms. “We should keep in mind that e-commerce companies generally face losses in the beginning as they need to invest in infrastructure,” he said.
“In other countries, the governments back online businesses through tax regulations. If the government here implements a similar system, it will produce a more conducive environment for e-commerce companies.”
Daraz has another sale planned for 12.12.
