Daraz’s Managing Director, Rakhil Fernando, shares insights into how the largest E-commerce platform in the region pivoted quickly to counter the growing economic challenges in Sri Lanka, sustain and grow the business and support communities and the economy.
Sri Lanka’s economy is seeing one of its worst downturns. As a global company, how are you navigating through these economic challenges?
With a strong presence in South Asian markets, such as Pakistan, Bangladesh, and Nepal, Daraz is the largest online platform for local sellers and entrepreneurs. Around 97%-99% of our sellers are local. However, to bring consumers a wider assortment of products, we allow a select number of overseas sellers to sell their products on Daraz.
Both local and international sellers are negatively impacted by Sri Lanka’s economic crisis, particularly because of the import bans. Many local sellers have built brands or retail businesses by importing stock and selling it online. Consequently, sellers earn less because they now have fewer products or no products to sell, and consumers lose out because they have limited choices and less access to a wide variety of products at competitive prices.
However, in terms of navigating this situation, we are optimistic, and we are focused on growing our product assortment in several different ways while encouraging local sellers of goods and services to sell on the platform. For example, we launched.
a program called Daraz Connect, that will educate rural sellers on how to sell online and help them develop their products further. We pivoted from being a platform known for selling electronics and home appliances to a platform that is also known for essentials like groceries, household items, baby products, fashion and beauty supplies, and pet supplies. And under the Select by Daraz brand, we launched our own line of staples, herbs, and spices.
The economic crisis also encouraged us to think more broadly about sustainability, and we swiftly transitioned approximately 50% of our delivery fleet to bicycles last year. This move not only reduced our operations’ dependency on fuel but also made our delivery process more affordable and reliable.
How do you reimagine, sustain, and grow in a volatile economic climate where clarity on the future remains blurred?
To stay relevant and significant even in a volatile environment, we continue to make the platform more versatile by introducing new features and elements. It’s important to focus on adaptability and sustainability, rather than on short-term growth. Daraz has now become more than just a shopping destination for our users.
For example, Daraz Live is an entertainment channel for users and Daraz Donates is a timely solution that enables users to easily donate via the platform to charities and organizations doing meaningful community work in Sri Lanka. We partner with many popular sporting and entertainment organizers in the country as a ticketing partner and that enables users to access events and other services conveniently through the platform. We are constantly innovating and collaborating to not only help the retail sector grow but to also bring far more exciting and engaging experiences to our customers, while being an essential lifestyle partner and a onestop shop for all their daily needs.
E-commerce as a sector will only grow stronger in Sri Lanka. It is unconventional in terms of adoption and use, mainly because it is an equalizer enabling anyone, irrespective of their geographic location, gender or socio-economic status to either develop a revenue stream or to access goods and services. E-commerce as a share of retail will increase and the industry also holds great export potential. Therefore, the growth opportunities for the industry are local and global as well. E-commerce is youth-oriented and an industry of the future and we are likely to see a large number of youth and women starting e-commerce businesses. We should see a lot of innovation and creativity emerging from within the industry, and as a company, we are extremely optimistic about the trajectory of the E-commerce industry in Sri Lanka. Daraz has seen continuous growth and efficiency in Sri Lanka, and we have developed ambitious growth plans for this market.
As a leader, what do you think defines an organization’s success, especially in challenging times?
Tough times and challenges will not last forever and such conditions pave the way for a company to zoom in on what does and doesn’t bring results and build resilience from within. An organization’s success depends on its ability to withstand challenges by re-strategizing and rapidly adapting to market dynamics with ground-breaking solutions. Having the right people deployed in the right positions is a great advantage as well for a company to navigate tough times and to also ensure that its objectives are met efficiently. Not only must your recruitment be excellent, but you also need to provide a workplace culture that is empowering and empathetic, and one that will drive more proactive action from within.
As leaders, we should remain optimistic about the opportunities and possibilities that emerge through these difficult times, and we should try to rearrange our priorities to suit the changing environment and also stay open to innovative ideas that drive change in the communities we operate in and impact. We must use these challenging times to reflect and critically assess what needs to be done to drive change and transformation – be it businesses, institutions, or even teams and individuals. Make the hard decisions that will lead to a better future, and protect the vulnerable. Being proactive goes a long way and taking responsibility and holding yourself accountable is always better than resorting to giving in to the challenging circumstances you may be going through.
How have you reimagined the workplace to empower employees to grow and be the best they can be?
Daraz is a vibrant, dynamic, and fastpaced environment. It is a new and fresh workplace for the youth. The average employee age at Daraz is 26 years, and our Daraz Future Leaders Programme (DFLP) is one of our signature initiatives that provide an opportunity for graduates to join Daraz and accelerate their career growth through multiple learning opportunities across different business functions. Despite the challenging environment in Sri Lanka, through DFLP, we hope to provide youth with an opportunity to be changemakers. The impact youth can have in Sri Lanka is immense and through this programme we hope to broaden their perspectives on the opportunities in Sri Lanka, which will help retain talent.
We constantly think about ways to keep our young teams focused and motivated during these extremely trying times. Driving targets in this environment seems daunting, but we maintain the momentum by constantly communicating with our teams and working on areas within our grasp and control to maintain positivity.
At Daraz, we celebrate creativity and encourage our teams to constantly think about what can be done differently to work through challenges. When navigating challenges, we focus on opportunities to be creative amidst the chaos and look for breakthroughs and learnings through trial and error. As leaders, we must continue to look at how the workplace (physically, mentally and emotionally) affects employees and make the necessary infrastructure and other changes needed to be made to motivate and inspire our young staff members. It is important to give them a well-thought-out workspace that gives them the space to grow, the freedom to learn from their mistakes and the confidence to build on these ideas.
How important is employee well-being?
Employee well-being and culture play significant roles in a target-heavy or target-driven organization with a large workforce. Our teams work under demanding conditions and this environment constantly prompts our HR teams to re-think their strategies on how to keep team members – particularly, young team members – engaged and motivated. This is especially important because, while teams focus on hitting their targets, they also need to be creatively stimulated. Our approach at Daraz has been to create a fun, exciting and well-structured and thought-out workplace to keep the energy levels high. We also offer flexible working hours and attractive maternity and paternity leave plans, while also ensuring employees can take time off to refresh and recharge.
Team engagement and getting to know others outside of your team is also an important focus at Daraz and we regularly host themed events during and after work hours.
In line with improving employee well-being, last year we also introduced a new employee initiative called “Career Breaks.” Career Breaks enables our employees to take up to 3 months of leave to do something new or something that brings them joy, like learning a new language, travelling to a new place or spending time with their families. With this initiative, we want to encourage our teams to follow a dream or pretty much do anything they would like during their career break, and come back to their roles with new ideas and lots of new energy and motivation. As more companies take similar steps, we can work together to create a more receptive work culture, which is especially important in these current times. We will strive to do more to support the diverse ambitions of our employees, build more trust in the workplace and help our teams find more meaning in their work as it blends in with their personal lives.
Employees care about aspiring for a higher purpose. How would you define your company’s purpose?
What we do at Daraz is linked back to our strategic purpose which is to ‘uplift communities through the power of commerce’.
In the context of Daraz and its impact on Sri Lanka’s digital economy, Daraz perhaps accounts for around or more than 50% of the E-commerce market in Sri Lanka, and the E-commerce market can and needs to get a lot bigger. Sri Lanka is one of the fastest-growing markets within the Daraz Group and a key driver of this success is that consumer sentiment and receptiveness towards Daraz is positive. The platform has around 2 million active consumers every month and our user base is growing steadily with more than 50% of our consumers coming from outside the Western Province. We are also seeing an increasing number of sellers from outside the Western Province as well, and our teams are working on various outreach programmes to increase and improve local production in rural areas.
Daraz’s purpose is to transform retail trade in the country, and the E-commerce industry will become increasingly important to Sri Lanka’s economic recovery. E-commerce is enabling more female labour force participation, lowering youth unemployment, and can fast become a key export industry for Sri Lanka with the right business-enabling environment. Using technology like Daraz, anyone, anywhere in the country can become a seller and reach a wide customer base in less than 24 hours. It doesn’t matter if you are in an urban area or rural area or if you are a traditional business owner or working from home – anyone with a viable and transportable product can use E-commerce and its wider ecosystem to earn an income. Our teams here at Daraz are the driving force of that change, and they will continue to transform Sri Lanka’s economy and communities through the power of technology and commerce. We are confident that E-commerce will positively transform Sri Lanka and our communities will benefit in several ways through this growth. It is because of this purpose that our teams give their best every day and work towards creating meaningful experiences for our sellers and buyers.