Wednesday, May 22, 2024


Dhaka Tribune

How Daraz changed the logistics game in Bangladesh

In an exclusive interview with Dhaka Tribune’s Md Tajul Islam, Daraz Chief Operating Officer (COO) Khondoker Tasfin Alam shared how they transformed the logistics sector in Bangladesh and the secret behind their growth

Update : 14 Jun 2023, 11:33 PM

As the chief operating officer (COO) of Daraz, what would you consider to be your biggest achievement in driving growth and operational efficiency within the e-commerce industry of Bangladesh?

As the COO of Daraz, my most significant achievement has been revolutionizing the logistics network of the e-commerce industry in Bangladesh. 

When I joined in 2018, the industry faced a major challenge with delivery time, taking an average of 7 to 9 days for customers to receive their orders.

To address this bottleneck, we developed our own e-commerce friendly logistics system, partnering with companies similar to Paperfly, REDX and eCourier. 

Today, we proudly own the largest e-commerce logistics network in Bangladesh, reducing delivery times to an average of 2 to 3 days. This has not only enhanced the customer experience but also fueled the growth of the entire e-commerce industry.

Can you provide an overview of the DEX and Digibox facilities offered by Daraz and how they have transformed the logistics and customer experience of the platform?

The Daraz Express (DEX) infrastructure has significantly transformed the logistics and customer experience on the Daraz platform. 

We have reduced the delivery time from 7-9 days to 3.5 days by establishing DEX facilities across all 64 districts. 

This infrastructure includes 250 collection points, 84 hubs and 120 drop-off points for sellers, enabling us to enhance customer experience and attract more sellers from various districts.

To further improve convenience, we introduced Digibox, an ATM-like machine for package collection. Digibox was developed within the country with the assistance of a2i (Access to Information) and its digital innovation lab. 

Rather than importing the technology, we collaborated with a2i to design and build Digibox locally, leveraging our digital infrastructure and capabilities.

The development of Digibox is our contribution to providing convenience to customers and represents the true application of smart logistics. 

We take pride in Digibox being 100% made in Bangladesh, showcasing our commitment to innovation and local manufacturing.

I think that is a bigger achievement than even having it on our platform.

How does Daraz ensure a consistent standard of international delivery while considering factors such as customs, shipping regulations and last-mile delivery challenges?

Thanks to our affiliation with Alibaba, we benchmark ourselves against global standards rather than just local competition. 

Since 2018, we have been the top e-commerce platform in Bangladesh. Our ambition is to surpass ourselves and set benchmarks for our own performance. 

As part of Alibaba, we strive to provide world-class services and adhere to their standards and systems. We do not compromise on the international level and all our systems and processes are from Alibaba. This approach allows us to maintain a permanent international standard, even exceeding Asian standards.

What are the key factors that contribute to the smooth day-to-day operations of Daraz, and how do you manage logistics challenges with such a large customer base and local and foreign merchants?

Smooth day-to-day operations in e-commerce, with a large customer base and local and foreign merchants, present challenges. 

We operate a fleet of over 4,000 riders and over 570 vehicles, serving around 120,000 households on average in a day. 

With approximately 6,000 people in our operations department, we emphasize process orientation and streamlined operations. 

We benefit from Alibaba's systems, technology and trackability, which enable us to scale up and monitor our workforce effectively. Despite being process-oriented, we understand that unexpected events can occur, such as vehicle accidents, weather conditions, traffic jams or issues in the line haul. 

Each day presents new challenges, and our flexibility allows us to adjust accordingly. Ultimately, our motivation is to deliver happiness to our customers, and this focus drives our daily operations.

In your opinion, what are the main challenges that Daraz faces while operating in Bangladesh? How do you navigate and overcome those challenges?

E-commerce is a new industry in Bangladesh, and like any new industry, it faces its own set of challenges. 

Initially, there were legislative and ecosystem-related challenges due to the lack of infrastructure and specific policies. 

While the government is supportive and values our market leader position, certain practices imposed as regulations can be a bottleneck for our growth. 

The market size in Bangladesh is vast, with a population of 160 million, but the prerequisite for e-commerce is access to smartphones and good internet coverage. 

However, there are challenges related to literacy and user adoption among certain age groups. 

On the positive side, people in Bangladesh are adaptive, and we believe that in two to three years, the country will become more digitally educated and receptive to our offerings.

Another ecosystem challenge is the seller base, as most sellers still operate in the brick-and-mortar model. In ideal e-commerce conditions, the majority of sellers would be entirely dependent on e-commerce platforms without physical shops. 

Payment is a significant challenge in Bangladesh, as the transition to cashless transactions is relatively slow compared to developed countries. 

Cash remains the dominant method, which increases costs and leads to failed deliveries. However, we have been working to address these challenges by partnering with major banks and mobile financial service providers to offer better cashless transaction options.

Overall, these challenges are being tackled and we are pushing to ensure the ecosystem is ready for the future. A successful transition to cashless transactions will boost the entire industry, including Daraz.

How do you keep a culture of collaboration and high performance within your team at Daraz to work towards continuous improvement and meet business objectives?

First of all, we have a common objective, which is to serve our customers. 

In Daraz, we have several departments and everybody works towards the same goal. Importantly the on-site experience for customers when they use our app or website. This plays a significant role in their overall satisfaction.

Once an order is placed, our commercial team collaborates with sellers to ensure readiness, manage offers, and provide guidance. Then our operations department takes charge of the delivery process, and the customer experience team addresses queries and concerns, ensuring a smooth operation.

Everybody in the organization works in sync. We are highly process-oriented. The collaborations and interactions between departments are guided by standard operating procedures (SOPs). 

Teamwork is a key factor that contributes to high performance. When the objective is similar and cross-functional, it also helps the growth of the organization.

Can you elaborate on your personal vision for the future of Daraz and the strategies you plan to implement to achieve that vision?

We are continuously evolving. We try to learn from our customers instead of imposing our own ideas on them. Listening to their needs and desires is the key philosophy and vision that we strive to follow.

Personally, my vision is to build infrastructure that can serve 1 million customers per day. I believe this goal is not too far away, maybe achievable within three years. 

I aspire to create the largest infrastructure, capable of serving a million customers on a regular day, not just during promotional campaigns. 

It's worth mentioning that we already served half a million customers in a single day during last year's 11.11 event. However, the aim of serving 1 million customers requires an infrastructure that can handle such capacity.

Additionally, I want to establish the largest smart logistics warehouse facility in the country, equipped with fast order processing capabilities including achieving 100% automation and sorting processes. By accomplishing this, we can efficiently serve a million customers per day without requiring an excessive number of facilities or a large workforce. 

Looking ahead, when I eventually retire, I hope to look back and say that I contributed to the early days of the industry and that the initiatives I started are still paying dividends today. It's a fulfilling and inspiring vision to strive for.

As a leader, how do you stay updated with the latest trends and innovations in the country's e-commerce space to ensure Daraz remains competitive in the market?

I always emphasize that the market is highly competitive. However, one of the satisfying aspects of my job is that there is no significant difference in how companies like Amazon and Alibaba operate compared to our operations in Bangladesh. 

Being part of the Alibaba ecosystem provides us with insights into global developments. We are always aware of what is happening in one of the world's largest companies and we incorporate relevant advancements into our own roadmap. 

This continuous flow of information keeps us updated and aligned with industry trends. 

Furthermore, the digital infrastructure in Bangladesh is adaptable, which means we can customize our offerings to suit the local market. An example of this is the Digibox.

What advice would you give to individuals who want to pursue a career in the e-commerce industry, maybe as f-commerce or as a daraz merchant, based on your own experiences and professional growth?

I believe the most significant advantage for entrepreneurs in the e-commerce industry is the availability of working capital or initial investment. 

You can start your own business as a merchant or supplier with a small capital because there is no need for physical infrastructure in e-commerce. 

This aspect greatly supports and encourages entrepreneurs, including women, recent graduates or individuals transitioning from employment to starting their own businesses. 

Some may choose to pursue a career in e-commerce, while others may consider establishing their own digital channels or actively participating in the e-commerce ecosystem within established companies. 

The future is moving in the direction of e-commerce, and it is evident that the industry will continue to grow. The growth rate may vary, but the upward trajectory is certain.

Even big brands like Bata have realized the need to diversify their business models by having their own Facebook pages, websites and by engaging in e-commerce. 

Embracing this transformation is crucial for everyone, regardless of their scale or industry, as e-commerce is undeniably the future. 

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