Daraz: The company that can transport one million parcels daily
In order to scale and satisfy Pakistan’s growing e-commerce demand, Daraz, the country’s top e-commerce platform, has been at the forefront of bringing constant innovation to its operations.
Earlier this month, Daraz established its first automated smart distribution centres in Karachi and Lahore through a partnership with Cainiao Network (“Cainiao”), the logistics division of Alibaba Group. These would be among the most cutting-edge logistical facilities in South Asia, and they would represent Cainiao’s first completely integrated distribution centre network there.
Innovative smart technologies, like an automatic assembly line and a smart distribution setup, will be installed in the distribution centres. For operational quality and stability, it will make use of Cainiao’s patented solutions, such as e-PLC, control algorithm, and WCS. The facilities have a combined processing capacity of 1 million orders per day and cover an area of nearly 50,000 square metres.
Cainiao has so far constructed ten smart distribution hubs in Europe, Asia, and America in addition to hundreds of automated distribution centres in China of all sizes. These intelligent distribution centres will boost Daraz’s sorting capacity by more than 4.2 times and reduce manual errors by more than 90%, which will be beneficial to our entire company and enhance the client experience.
The deliberate opening of these distribution centres would put Daraz in a position to achieve its goals and make this year’s grand sale larger than all previous years.
“Pakistan is difficult market to operate in,” says Daraz CEO
Do the founder and group CEO of Daraz, the leading participant in Pakistan’s $1.5 billion e-commerce market, believe that the country is a challenging one to do business in?
“Absolutely. I’d say so,” said Bjarke Mikkelsen, who heads the Alibaba-owned e-commerce platform operating in Pakistan, Sri Lanka, Bangladesh and Nepal.
During his one-day tour to inaugurate the country’s first automated smart distribution centres in Karachi and Lahore, Mr Mikkelsen spoke to the media and stated that the largest obstacle to e-commerce in Pakistan is the lack of seller education.
The group CEO of the online marketplace, which boasts 20 million active monthly users and a 35 per cent national e-commerce market share, thinks trust deficit issues are unique to developing nations.
“If the seller sends a red t-shirt instead of a blue one, that only undermines trust. The customer will not buy again. We can only be as good as our sellers,” he said, adding that the trust deficit exists in developed markets like the United States and Europe to a “much, much lesser extent”.
According to him, the company has worked consistently to reduce the rate of quality-related returns, which is a gauge of consumer satisfaction in e-commerce, from 2 per cent of all orders to 0.7 per cent in recent years. According to him, “We’re at an inflexion point now as the trust in the market reflects the way things were maybe three, four years ago,” he said.
“Despite the staggering figures, Daraz has regularly lost money throughout the eight years that it has operated in Pakistan. We’re still three to four years away from profitability… Growth has been the focus over the past many years. We have been growing the ecosystem while securing the market. It has been costly. In Pakistan, we’ve spent $100 million doing that over the last three years, he claimed.
Mr Mikkelsen said Daraz believed in creating a sustainable business in response to the previous “blow-ups” of quick-commerce start-ups that promised food deliveries in 30 minutes after raising mind-boggling sums from venture capitalists. “We’re here to stay for a while.”
According to Mr Mikkelsen, the opening of the two automated smart distribution centres would significantly increase the company’s operational capacity.
In collaboration with Cainiao Network, the logistics division of the Alibaba Group, the business established the “most technologically advanced logistics facilities in South Asia” for a total of $4 million, he claimed.
To guarantee operational quality and stability, these centres will include automatic assembly lines and use Cainiao’s own solutions, including e-programmable logic controllers. The buildings are over 50,000 square metres in size and can handle 428,400 orders each day.
It will enable us to increase our sorting capacity by more than 4.2 times and decrease manual errors by more than 90%, he claimed
