Daraz Nepal wants retail freedom, not just likes

Starting and running an e-commerce business in Nepal requires a large amount of investment, especially in technology. According to Daraz Nepal’s Managing Director, Aanchal Kunwar, local investment alone is not enough. She said that Daraz would have struggled to grow without access to Alibaba’s technology and tools.

Daraz started operating in Nepal in 2012, but foreign direct investment (FDI) only came in 2014. Since then, Daraz has brought in around 22 million US dollars in FDI, which is about 3 billion Nepali rupees. However, Kunwar said that more important than the amount of FDI is how much the company contributes to Nepal’s economy.

Over 22,000 sellers are currently active on Daraz, and more than 85 percent of them are small or medium-sized businesses. Kunwar said Daraz focuses not only on profit but also on building a long-term e-commerce ecosystem in the country.

Growth despite economic slowdown

While many traditional businesses faced a decline during Nepal’s recent economic slowdown, Daraz continued to grow. According to the company, it achieved 60 percent annual growth. On June 6, Daraz ran its 6.6 sales campaign and made sales worth 800,000 US dollars (around 110 million rupees) in just one day. The campaign benefited both sellers and customers. Interestingly, 50 percent of the sales came from Kathmandu Valley, and the other 50 percent came from areas outside the Valley.

Daraz has given direct jobs to over 1,000 people in Nepal. While it’s hard to measure, the company also contributes to the economy in many indirect ways. Even though the overall business environment in Nepal is not ideal, Kunwar said it is not completely unfavorable either.

Customer complaints and legal issues

One of the main complaints customers have about Daraz is receiving the wrong item after ordering. Kunwar explained that this is because Daraz is not allowed by law to run a retail business in Nepal. This means the company cannot open packages from sellers to check the contents before delivery. Whatever the seller packs is delivered as it is.

To fix this, Daraz is currently training all of its 22,000 sellers. Kunwar also said that Daraz should be allowed to do at least 50 percent of its business through retail. She clarified that the company is not trying to make extra profit through retail but wants to improve product quality and customer experience.

Daraz already does retail business in five other countries, but it hasn’t made any profit from it. The goal, according to Kunwar, is simply to improve customer satisfaction.

Billing and delivery delays

Another challenge for Daraz is billing. As a company with FDI, it doesn’t have a payment license in Nepal. If it had one, Daraz could allow customers to pay after receiving the product.

Customers also often complain about late deliveries. According to Kunwar, this is due to road conditions and logistic problems. In many cases, delivery staff must call and hand over the products directly to the customer to ensure safety, which also slows things down.

She said that solving these issues will take more time.

Here’s a clean and simple version of the note:

Note: This article is based on remarks made by Aanchal Kunwar during a discussion titled “Foreign Investment, Local Impact,” organized by NepalKhabar.