INTRODUCTION

Electronic commerce, commonly known as e-commerce deals with the buying

and selling of products or services over Internet (The Economist, 2018). Ever
since its inception in Bangladesh, the big breakthrough came in 2009 when
Bangladesh Bank had allowed online payment, thus officially opening doors up
for e-commerce sector (E-cab.net). In present scenario, with better access,
coverage and an ever-growing Internet population, the development for
platform business is growing rapidly with the advancement of mobile payment
systems like bKash.. Though platform business in Bangladesh is relatively new
idea, after government of Bangladesh approved e-business protocol, online
shopping has become much easier and popular in Bangladesh.

One of the major frontrunners in the realm of online business in Bangladesh is

Daraz. This global leading e-retail brand officially started its operation
domestically in 2015 as daraz.com.bd, which is a venture by Rocket Internet –
one of world's largest Internet & mobile platforms, is a European Internet
company headquartered in Berlin. Rocket Internet has more than 33,000
employees across its worldwide network of companies, which consists of over
100 entities active in 110 countries (Solms, 2017). Market Capital of Rocket
Internet was €3.49 billion back in November 2017 (Investsize, 2018).The Commented [WU1]:

Company’s mission is to become world’s largest e-commerce platform outside

USA and China. The company identifies new business models, untapped markets
and entrepreneurs. Nurture them and try to establish the business. Their vision
is to capture the maximum share of consumer online shopping expenditure in
the market. Their goal is to provide the best product in the best price. Also, to
introduce latest products in the market for the customers.

In July 2016, Daraz Bangladesh merged with another e-commerce platform

Kaymu with a desire for greater market access by combining the two e-
commerce platforms into one. Daraz sells many types of product like Fashion
Items, Electronics, Home Appliances, kids items, Grocery Items, Event tickets etc.
. Besides Bangladesh, Daraz has operations in Pakistan, Myanmar, Sri Lanka and
Nepal. According to E-commerce Association of Bangladesh (E-cab), the market
size of e-commerce business is about BDT 1,000 crore with a growth rate of 20%
to 30% a year. Presently, there are 8.31 crore Internet users in the country
according to Bangladesh Telecommunication Regulatory Commission (Islam,
2017). Basically, the young professionals and university students are the target
customers of this online shopping industry. As far as market potentials are
concerned, 65% of the total population of 162 million in Bangladesh is under the
age of 35 which makes the country not only one of the largest (8th based on
population) but also one of the youngest in the world. Like every year, an
average GDP-growth at around 7% and ever snowballing urbanization is
contributing to a larger middle class with higher disposable incomes make
Bangladesh the ideal target market for e-commercial activities (ICT and e-
commerce booming in Bangladesh, 2018). According to E-cab, there are about
1000 E-commerce web site and 15,000 Facebook pages relating to e-commerce
where about 50000 people are involved directly or indirectly (Ahmed, 2017).

On an average, products worth about Tk. 3-4 crore are sold every day through e-
commerce websites. Of these, a staggering 95% are done by cash-on-delivery.
Overall, these Facebook pages are significantly making it difficult for key players
like Daraz, Bagdoom, Bikroy.com, and Pickaboo. However, there is a healthy
competition among these big key players. Even though platform business in
Bangladesh is gaining noteworthy momentum in terms of popularity, still
complete socio-cultural acceptance in favor of online shopping prevail to come a
long way.

Subsequently, the whole nation can be the digital playground for e-commerce
growth expansion as Internet penetration continues to increase across
Bangladesh. In spite of such shortcomings, immense potentials put e-commerce
industry in such position where it could be the next big source of national
earnings for Bangladesh. The future looks nothing but promising as it is
impossible to attain Bangladesh government’s vision of “Digital Bangladesh”
without undertaking several initiatives including introduction of e-governance
and e-commerce that work in harmony (Strategic Priorities of Digital
Bangladesh, n.d).
OBJECTIVE
This paper has three major objectives:
First of all, identify the external drive for the Bangladesh e-commerce
industry/platform business industry and evaluate the industry’s
attractiveness by using the porter’s five forces model.
After that this paper defines Daraz’s internal resources, capabilities and
conduct the SWOT analysis.
Finally evaluate Daraz’s corporate governance, leadership style and CSR
activities.

EXTERNAL ANALYSIS
External Environment Analysis is an analytical tool for strategic business
planning. It is a strategic framework for understanding external influences on a
business. There are many macro-environment factors that affect strategic
planning such as new laws, tax changes, trade barriers, demographic changes.
Macro-environment factors include all the factors that influence an organization,
but are out of its direct control. By understanding these external environments,
organizations can maximize the opportunities and minimize the threats to the
organization.

GLOBAL SEGMENT
The term global environment refers to the outside environment in which
a company operates or the environment which has indirect impact on business.
This concept includes a broad range of factors that can influence a business,
including political events, global markets, overseas financial markets, wars,
political regimes, trade blocs, trade boycotts, changing cultural patterns etc.

The global trend of shopping has shifted towards online store from physical
store. The concept of shopping has taken a paradigm shift in foreign countries, as
people now prefer online shopping to traditional shopping. People are showing
their interest to shop through online because the procedure of online shopping is
very much easy and comfortable. Staying at home, through only one click
anybody can shop anything through online avoiding the disgusting sunlight, jam,
crowd and other obstacles. Moreover it is time saving as well as convenient as all
you need is an Internet connection. The most important facility of online
shopping is to shop anything at any time. Like foreign countries, Bangladeshi
urban people also appreciating this changing in shopping patterns. Considering
the global segments Daraz has huge opportunity to operate in Bangladesh as the
government has no trade barriers/trade boycotts issues with European
companies. In availing the e-commerce industry of Bangladesh foreign
companies are having privileges.

ECONOMIC SEGMENT
These factors impact on the economy and its performance, which in turn
directly impacts on the organization and its profitability. Factors include interest
rates, employment or unemployment rates, raw material costs and foreign
exchange rates. This concept includes a broad range of factors that can influence
a business, including inflation rates, interest rates, GDP, currency exchange rates,
unemployment levels, disposable income & personal savings rates.

Bangladesh is one of the fastest growing market-based economies in the world

context and largest emerging market on the basis of rising income in middle-
class population in Asia after China and India. Bangladesh has its membership
with IMF, World Bank, WTO, SAARC and D8 Organization for Economic
Cooperation. The economic growth of Bangladesh during the last 20 years has
followed by an upward direction that results from the earnings of RMG, Leather,
Pharmaceuticals, Agriculture exports, and remittance. Bangladesh government
is focusing heavily on new avenues of opportunities for economic development
in the form of e-commerce/platform business and information & communication
technology (ICT).
 Economic Factors & Trends GDP GROWTH 2012-2017
Over The Years 8
50.00%
40.00% 2017 6
30.00%
20.00% 2016 4
10.00%
0.00% 2015
2
2014
2013 0
2012 2013 2014 2015 2016 2017

Figure 1: Economic Trends & GDP Growth from 2012-2017 (Source:

Focus Economics, 2017)

Bangladesh economy welcomes an attractive environment for platform business

like Daraz for investment due to the facts like declining poverty rate, rising
middle-class people, increasing number of female employment and affordable
labor cost. Bangladesh economy is showing a significant steady trend from last
few years as a prospective economy that stands in 46th position on the nominal
session and 33rd position on purchasing power parity in the world emerging
market list (“Economy of Bangladesh - Wikipedia,” n.d.). Economical
achievement of Bangladesh in the fiscal year of 2017 in terms of GDP growth is
almost 7.2%, whereas according to IMF forecasts it is 7.1% and according to
ADB, it is 6.9% (Kallol, 2017; United News of Bangladesh [UNB], 2017).

DEMOGRAPHIC SEGMENT
Demographic segments that affect the business are population growth rates,
life spans, age of population, ethnic mix and geographic dispersion.
Demographics can help an organization target its consumers more accurately by
understanding the business from different perspectives.

Bangladesh, to the east of India on the Bay of Bengal, is a South Asian country
marked by lush greenery and many waterways by Padma, Meghna and Jamuna
rivers. On the southern coast, the Sundarbans, an enormous mangrove forest
shared with Eastern India, is home to the royal Bengal tiger. Bangladesh is
largely ethnically homogeneous, and its name derives from the Bengali ethno-
linguistic group, which comprises 98% of the population. The Chittagong Hill
Tracts, Sylhet, Mymensingh and North Bengal divisions are home to diverse
indigenous peoples. Bangladesh has a population of 162 million with a growth
rate of 1.6%. About 86% of Bangladeshis are Muslims, followed by Hindus
(12%), Buddhists (1%) and Christians (0.5%) and others (0.5%). The average
life expectancy of a Bangladeshi is 71.6 years whereas women life expectancy is
higher than men. At around 105 million population is under the age of 35 which
makes our country not only one of the largest (8th based on population) but also
one of the youngest in the world. As a result, our country is experiencing
“Demographic Dividend” due to the growth our economy that is the resultant
effect of a change in the age structure of our population which create potential
market opportunity for Daraz.

POLITICAL & LEGAL SEGMENT

Political & legal forces determine the extent to which government and their
policy may impact on an organization or a specific industry with relation to legal
legislation system. This would include legislation & proposed legislative changes,
taxation law, labour law, deregulations, trade practices, employment,
government policy and trends in governments’ role.

Political chaos can result to disruption of business both online and physical.
While the threats may not be the same with the e-retailers as the physical
retailers, still there are several risk factors affecting the e-businesses. For
example, Daraz’s growth in Bangladesh can be made difficult by the Red tape.
The political and regulatory challenges before the e-businesses have kept rising.
Bangladesh follows secular socialist democracy ideology with a parliamentary
system in its core. However, Bangladeshi political practices are not up to the
marks in comparison to global standards. The thing is anything can happen
anytime in our country. For instance, honorable prime minister is going
somewhere so the roads are blocked; there is a gridlock because of the agitation
by opposition party members, garment workers strike or even sometimes
blocked by ruling party’s assembly, the recent strike by students on quota
system and so on. Such unpleasant events are quite common in the context of
Bangladesh which might cause late delivery or destruction of products/services
that create huge loss for e-retailers. Bangladesh government is committed to
ensure uphold business friendly environment nationwide. In spite of having a
progressive political environment for quite sometimes now, still few questions
are left unanswered when it comes to such long bureaucratic procedural that
creates room for corruption. And, as we are fast approaching towards the
government election 2019, we certainly can comprehend that the political
uncertainty is mounting off the charts.

Legal compliance is just as important as other external environment factors. Any

tussle with the law can be a costly affair and even the platform business can
become a target unless they take care of compliance (ACCORD, ALLIANCE, BSTI,
LABOR LAW, TAX POLICY etc.). It is why the big E-retail brands have separate
teams to take care of the legal issues. Non-compliance can result in financial
losses as well as loss of image and reputation. So, companies like Daraz have to
comply with Bangladeshi legal framework as well as labor laws to conduct
business lawfully. Moreover tax policy is very liberal for foreign investors in
Bangladesh as they get 100% tax exemption in first two years, 50% in next two
years & and 25% tax on next one years, which seems investment in platform
business like Daraz huge growth potential in Bangladesh.

SOCIO-CULTURAL SEGMENT
Socio-cultural factors focus on the social environment and identify emerging
trends. This helps a marketer to further understand their customers’ needs and
wants. Factors include changing family demographics, education levels, cultural
trends, attitude changes, changes in lifestyles, workforce diversity, women in the
workforce, “Time poor” professionals, high disposable incomes, etc.

Socio cultural factors have a deep impact in e-commerce industry. Most

importantly e-retail brands find it the easiest to flourish locally. Understanding
cultural changes are key to success in modern business world. Without gaining
socio-cultural acceptance, online shopping industry won’t reach its full glory the
way it is meant to be. For instance, the growing use of mobile technology has
affected platform business like no other. In our country, almost 95% of total
internet users are nothing but mobile internet users. The biggest challenge in
Bangladesh is to move people away from traditional shopping in order to direct
them towards online shopping as majority of the consumer preferred physical
store for their shopping. One of the major drawbacks of online shopping is not
being able to physically try out and touch a product, which may lead to lack of
confidence and trust among shoppers. The overall customer perception is that
faulty products being sold online. So, Daraz has to work with all the competitors
together by forming strategic alliances to overcome negative customer
perception regarding online shopping. Online shopping in Bangladesh is a
relatively new idea in the context of Bangladeshi culture. As a result, complete
socio-cultural acceptance is yet to prevail a long way.

TECHNOLOGICAL SEGMENT
Technological factors include the rate of technological innovation and
development that could affect a market or industry. Factors could include
changes in digital or mobile technology, automation, research and development.
There is often a tendency to focus on developments only in digital technology,
but consideration must also be given to new methods of distribution,
manufacturing and also logistics.

Technological factors are very important in the context of the e-commerce

industry or platform business. It is because the industry relies heavily on
technology. Everything is based on technology in e-retail from sales to customer
service. For a country like Bangladesh, nationwide affordable and un-interrupted
internet connection can also be challenging. All the e-commerce brands are in a
race to be technologically ahead of their competitors. From Daraz to Pickaboo,
every brand is investing a lot in technology to find faster growth. Technology
decides several things in the ecommerce world from popularity to profits. The
real reason that Daraz is ahead of the others is because it is technologically
ahead from others. Daraz has a smartphone app on both IOS and Android
platform. It has managed its customer experience so well that its popularity is
very high. Technology is a major influence on businesses; moreover in case of
platform businesses technological factors are fundamental and acquire a very
special importance.

PORTER’S FIVE FORCES ANALYSIS

Porter’s Five Forces framework is a powerful tool in the hands of a skilled
manager or analyst, so they can make an effective and efficient strategic decision
for a given industry. In 1980, Michael Porter published the Competitive Strategy,
which is considered as a major tool to evaluate market attractiveness (Crowther,
2008 & Magretta, 2012 as cited in E. Dobbs, 2014). The five forces are the rivalry
among existing firms, threat of new entrants, threat of substitute products,
bargaining power of buyers and bargaining power of suppliers. The strength of
these five forces are determine the ultimate profit potential for a given industry.
This model also gives us information on the effect each of these has on achieving
company goals and objectives. According to Porter's rule the stronger the forces,
limited are their chances to gain profitable returns with the raised price for their
product or services.

Figure 1: Porter’s Five Forces Model

In the following section of this paper we conducts the Porter’s Five Forces
Frame-Work for platform business industry of Bangladesh.
 Threat of New Entrants (MODERATE TO HIGH)
The threat of new entrants is moderate to high in the e-commerce industry. This
is because in some extent, there is a need for low investment in human resources
and marketing. The barriers to entry are moderately low. However, sometime
the difficulty arise in terms of building brand image and trust with the
customers. Since the platform business has no entry barriers from Bangladesh
government and technological perspective, it is very attractive to other firms to
enter into this market. Now a days we observe the physical retail stores also
operate online and offer home delivery services. Also the nature of this business
have a very minimum level of cost, so it is hard to achieve or realize the
economies of scale. As we know, the technology is improving in every second,
which means people can create a website in few minutes. As a result, the threat
of new entrants in Bangladesh e-commerce industry is moderate to high.

Bargaining Power of Buyers (HIGH)

The bargaining power of the buyers is moderately high in the ecommerce
industry of Bangladesh. It is because several small and big brands have cropped
up and there is hardly any switching cost for the customers. Today’s customer is
well informed and has every piece of information available at a single click. Apart
from it some of the physical retail brands have also entered the e-commerce
market and the physical retail market itself adds to pressures. Most of the brands
are trying very hard to retain every customer and for this purpose they make
very large investments in technology and customer service. Due to all these
factors the bargaining power of the buyers is moderately high. The factors that
can moderate their bargaining power include brand image, quality of products
and service and prices. The environment would be same as the brick and mortar
stores in the platform business and customers have high bargaining power
because they can choose any shop on the internet worldwide. They can also
substitute the place for transaction to the offline market as well. So, the
bargaining power of buyers in Bangladesh platform business is high.
 Bargaining Power of Suppliers (LOW)
In platform business of Bangladesh, the bargaining power of the suppliers is
generally low. The reason is that the rules are set by the brand and the suppliers
have to follow the code of conduct set by them. Most of the ecommerce brands
are highly cautious regarding their supplier relationships and set a code of
conduct related to quality, labor and wages as well as sustainability. Despite the
number of players in the industry having grown, the suppliers do not have too
many options and therefore are bound by the rules that the brands have set.
Some of the suppliers may have some bargaining power because of their size and
quality. Human resource is the main suppliers in the e-commerce market. They
need a website to be created by someone or buy a solution. Therefore in this
technological age the bargaining power of suppliers like programmers, are very
low because they can outsource to all around the world. Therefore, the
bargaining power of suppliers in this industry is low.

Threat of Substitute Products (HIGH)

The main substitute of platform business in Bangladesh is the brick and motor
store, which they might change or move their place to be on the internet still on a
very minimal level. There two main threats in terms of substitutes for the
platform business. The first are the competing e-retail businesses those who try
to earn a competitive advantage through low prices, better quality of products or
through a better overall customer experience by competing with the competitors
and the second are the physical retailers. If we consider the situation of
Bangladesh e-commerce industry we observe that majority of the consumers still
prefer physical store over online shopping. Online shopping is a very recent
trend in Bangladesh and culturally the consumers of Bangladesh would like to
buy products from physical store as they are not that much use to with online
shopping. Therefore, threats of substitute products in this sector is very
high.
 Rivalry among Existing Firms (LOW TO MODERATE)
The competitive pressure created by the rivalry in the competing industry is one
of the strongest competitive force. The strength and weakness of this force
depend on a number of identifiable factors. If the rivalry among the existing
players in an industry is intense then it will drive down prices and decrease the
overall profitability of the industry. Rivalry among different e-commerce based
companies in Bangladesh is increasing day by day. The rivalry intensity in
Bangladesh can be classified as very low, as we can see that there are only few
firms that are generating revenues, there are many opportunities due to the few
competitors in the market. The amount of the firms is still insufficient when we
compare with the overall population of Bangladesh. Also when we think about
the e-commerce market, we have to think more globally because the consumers
are everywhere all around the world. Since there are not much competitions
in strategic group, the rivalry among firms are still low to moderate.

Result of Porter’s Five Forces Analysis on Bangladesh

Platform Business Industry

PORTER’S 5 FORCES LEVEL OF INDUTRY

COMPETITVENESS ATTRACTIVENESS

Threat of New Entrants Moderate to High Moderate *

Bargaining Power of High Low

Buyers
Bargaining Power of Low High *
Suppliers
Threat of Substitute High Low
Products
Competitive Rivalry Low to Moderate High *
within the Industry
Overall level of Low High ***
Competitiveness &
Industry
Attractiveness

Table 1: Porter’s Five Forces Analysis- Industry Attractiveness (HIGH)

After analyzing all the Porter five forces of the platform business industry in
Bangladesh we can say that in platform business there have a low entry barrier
as for new entrance, weak position of supplier, and strong position of buyer's,
great threats of substitute products and moderate level rivalry among
competitors. These all results in high profit potential and possible gain on
investments hence making the industry apparently attractive for new
entrepreneurs.

INTERNAL ENVIRONMENT ANALYSIS

Internal analysis is an exploration of organization’s competency, cost position
and competitive viability in the marketplace. Conducting an internal analysis
often incorporates measures that provide useful information about
organization’s strengths, weaknesses, opportunities and threats- SWOT analysis.
The data generated by an internal analysis is important because company can
use it to develop strategic planning objectives to sustain and grow business.
Internal analysis is used by managers to identify their internal strategic factors
like resources and capabilities which will collectively determine the company's a
significant competitive advantage over their rivals (Williams, 2018).

RESOURCE
Resource is a productive input or competitive assets which are owned by the
company (Thompson, 2016). It is the fundamental building block of competitive
strategy and the first step to perform the internal analysis. Resources are of two
types, tangible (visible assets) and intangible (invisible assets). According to
Daraz its resources are following-

Technological Resources
Mother Company of Daraz Bangladesh Ltd has multiple technological ventures
in Bangladesh like Everjobs, Lamudi, Carmudi, Foodpanda, Daraz. All of these are
web based services. So they have strong technological resources in Bangladesh
which other firm will find difficult to copy. Even the web site of Daraz is pretty
similar in terms of User Interface, functionality in other countries, like Pakistan
and Myanmar. Daraz has attractive web site user interface design. Their Android
and IOS app is also attractive. Besides that, their web are available in 2 Language
(Bangla & English) which gives customer more options.

Financial Resources
Back in 2015, Daraz group has secured $55 million funding from CDC, an
investment wing of UK government (Millward, 2015). Daraz have enough
financial resources which helped them to develop smooth operations in
Bangladesh.

Brand Reputation
Daraz is established brand name in the field of online shops in Bangladesh.
Daraz is also popular with its vendor, that’s why hundreds of brands are selling
their product through Daraz platform. Daraz Bangladesh has collaboration with
hundreds of brands. No other online shops in Bangladesh have that much
collaboration with such scale. They also have exclusive collaboration with many
premium brands.

CAPABILITIES
Organizational capabilities refer to the business routines, processes and the
organizational culture. Identification of core competencies or capabilities can be
useful in identifying what contributes more to customer value and which market
segments to target. A firm must analyze which resources and capabilities are
most important in providing a sustainable competitive advantage to the firm.
The firm must ensure that all resources and capabilities are fully employed and
exploited. It must focus on regenerating valuable resources and building
competencies.

Firm’s organizational capabilities must focus on firm’s ability to meet customer

demand. Daraz Bangladesh has many capabilities, like -
 Innovation Capability
Daraz Bangladesh have brought the idea of online flash sale, “Fatafati Friday”,
similar to the black Friday. They have successfully implemented it than any other
online shops in Bangladesh. They had also brought other campaigns like
Valentine’s Day Campaign, Mobile Week, Fashion Week, Autumn Sell, etc.

Management Capability
Daraz established themselves as a successful Business in Bangladesh within a
short period of time with their excellent HR resources and Management. They
provide all the funds for their resources to the employees. There is a system in
the office; at first, for the needed things they make a list in a report form and
then submit it to the HR managers. Therefore, the result indicates that most of
the employees are satisfied with the availability of the resources. According to
the satisfied employees, before starting the work, the supervisors accurately
train the steps when they perform a job. After completion the tasks, for the
improvement of the employees’ necessary feedbacks are provided and pertinent
suggestions are delivered to the employees in case of failure. Opinions from are
warmly accepted form the mid-level and top level managers and based on those
the necessary steps are taken from them.

Marketing Capability
Daraz provide free marketing for its vendors. They utilize both offline and online
marketing methods. They have very high ranking in Google search, whenever
you type something to buy online; Daraz usually stands on top ranking. Daraz
also utilize Digital Social Media marketing tools very effectively.
 Scale Up Capability
Setting up a small e-commerce site is easy now days. But scaling up the business
needs technological and management competency. Daraz started their business
in Bangladesh officially in February 2015, scaled up there web site with
relatively short period of time and they became the market leader in Bangladesh.
To become successful in Bangladesh, they focused on localization. It’s their
unique competency to become successful in this market in such short period of
time. They focus to be innovative in a local market by finding solution in local
context. They indeed have succeeded to provide localized service in Bangladesh
having the ability to be highly innovative.

CORE COMPETENCY & COMPETITIVE ADVANTAGE

A core competency allows a company to expand into new end markets as well
as provide a significant benefit to customers. Core competencies are the main
strengths or strategic advantages of a business, including the combination of
pooled knowledge and technical capacities that allow a business to be
competitive in the marketplace. A core competency contains four main
characters and they are valuable, rare, costly to imitate and non-substitutable to
be competitives. A competitive analysis is the analysis of competitors and how
business compares. By competitive analysis business organization can begin to
formulate how to give the company an advantage. Doing a competitor analysis
puts a company in a favorable or superior business position over competitors.
Bundling of resources creates a competitive advantage but sometimes single
resources can also create competitive advantage. It has created through
combination of resources and capabilities.

FOUR CRITERIA TEST

To find the core competency of Daraz, we need to see if it passes the four
criteria test or not.

Four Criteria Test for Resources

Resources Valuable Rare Costly to Non-Substitutable
Imitate
Technological Yes Yes Yes Yes
Resources***
Financial Yes No No No
Resources
Brand Yes No Yes No
Reputation

Four Criteria Test for Capabilities

Capabilities Valuable Rare Costly to Non-Substitutable

Imitate
Innovation Yes Yes Yes Yes
Capabilities***
Management Yes No No No
Capabilities
Marketing Yes No No Yes
Capabilities
Scale-Up Yes Yes No No
Capabilities
Resources and Capabilities that pass the four criteria test are considered as core
competency. Technological Resources and Innovation capabilities for Daraz
Bangladesh pass all the four criteria test, thus these are their core
competency which helps them to gain competitive advantage over their
competitors in platform business industry of Bangladesh.

SWOT ANALYSIS
A SWOT analysis is the overall evaluation of the company's position in the
market by analyzing its potential strengths, weaknesses, company opportunities
and the threats from its rivals. It is intended to specify the objectives of the
business venture or project and identify the internal and external factors that are
favorable and unfavorable to achieving those objectives. We can analyze the
strength and weakness from internal environment analysis and we can analyze
potential opportunities and threats from external environment analysis. Users of
a SWOT analysis often ask and answer questions to generate meaningful
information for each category to make the tool useful and identify their
competitive advantage (Wikipedia, 2018). The SWOT analysis of Daraz
Bangladesh is explained below with the SWOT matrix.

Figure 2: SWOT Analysis

 Strengths
Strength is something a company is good at doing. It represents a company’s
competitive assets. Strengths of Daraz are as follows:

1. User friendly Web and App interface- Website is superior to by a good

margin against its competitors such as pickaboo.com and clickbd.com.
Web site and mobile app interface of Daraz Bangladesh is attractive and
user friendly. A good user interface make the shopping experience easy,
not confused (Guiterrez, 2016). Daraz uses high quality product image,
clear call to action and seamless checkout which makes shopping
experience easy and enjoyable for customers.

2. Collection of a large number of branded product- A large number of

Brand is selling through Daraz. They have collaboration of highest
number of brands in Bangladesh. They have portfolio of over 250 brands
and new brands are being added over time (Islam, 2017). They also have
collaboration with a large number of premium brands. For example,
Leatherex, a high-end fashion focused leather line which manufactures
shoes and bags, along with other accessories and Tahoor, a women's
designer boutique line focusing entirely on the fashion needs of the
modern Muslim woman, without having to compromise on style is only
available on Daraz.

3. Fast delivery in whole Bangladesh- Delivery among customer all over

the country is one of strong capabilities of Daraz. They deliver their
products within one day in Dhaka city and three to seven days outside of
Dhaka city.

4. Brand warranty- Products bought from Daraz Bangladesh are in most

cases offered authorized warranty to customer as most of the leading
brands are there.
 5. A wide range of payment options- Daraz provide 0% EMI facility with
17 banks. None of the other competitors of Daraz Bangladesh have EMI
collaboration with more than 15 banks. Besides accepting major Credit
and Debit cards, mostly they also accept payment with Cash on delivery.

6. Good reputation with the sellers- Daraz has good reputation with the
sellers as Daraz provide free promotion of their merchandise. Also Daraz
invest in learning process of sellers by providing education to sellers
(Doerr, 2017).

Weaknesses
Weakness is something a company lacks or does poorly. It represents a
company’s competitive liabilities. Weaknesses of Daraz are as follows:

1. Low brand recognition- Awareness among the majority is one of the

lacking for Daraz as lot of people are not aware of the brand. Most of
them are only familiar with traditional shops, bikroy.com or ekhanei.com.

2. No refund on specific products- Refund policy is not available for

products such as books and some clothing. Product return method for
customer is also not convenient.

3. Lack of proper checking facility of product before sending it to

customers- A lot of vendor providing non-branded products on Daraz.
They claim that all products are 100% genuine, but a lot of fake/replica
product are available on their web site.

Opportunities
Opportunities provide a way for a company to improve its performance and
seize competitive advantage in the market place. Opportunities of Daraz are as
follows:
 1. Emerging market- The online market in Bangladesh is an emerging
market with huge potentially and scope of growth. E-commerce in
Bangladesh is still in early stage, only 22% of the internet user use online
shopping platform, but the nation is expecting a growth of about 72%
over next few years (Moslem, 2017). According to E-commerce
Association of Bangladesh (E-cab), the market size of e-commerce
business is about BDT 1,000 crore with a growth rate of 20% to 30% a
year.

2. Growth in internet user- Number of internet user is booming in

Bangladesh. Presently, there are 8.31 crore Internet users in the country
according to Bangladesh Telecommunication Regulatory Commission
(Islam, 2017). So, as internet users are increasing, the growth of platform
business in Bangladesh is also likely to grow.

3. Take order from outside Bangladesh- Daraz Bangladesh has the ability
to take order directly from other countries and deliver them to its
destination inside Bangladesh. Globally which create growth opportunity
for Daraz.

4. Emergency delivery service- Emergency delivery has huge demand and

exploiting this opportunity can have a tremendous impact on the business
of Daraz.

Threats
Threats can cause trouble for any company to survive in the market place.
External threat may pose a moderate degree of adversity on a company’s
profitability and well-being. Threats of Daraz are as follows:

1. Upcoming native competitors- Technology is improving in every second,

which means people can create a website in few minutes. As a result, the
threat of new entrants in Bangladesh e-commerce industry is moderately
high. According to E-commerce Association of Bangladesh (E-cab), the
 market size of e-commerce business is about BDT 1,000 crore with a
growth rate of 20% to 30% a year. Imminent native opponents can be an
immense threat as numerous competitors are entering the business arena
in hopes of reaping the benefits of this emerging market.

2. International giant competitors- Biggest players in Worlds E-commerce

are Amazon & Alibaba is planning to start their business in Bangladesh.
According to Daily Star (2017) they have already planned a pilot project in
Bangladesh market. Amazon already lunched their Prime video-on-
demand service in Bangladesh which will provide significant threats for
Daraz.

3. Political instability- Bangladesh is a country with unstable political

history. So political incident can harm the business at times. For instance,
honorable prime minister is going somewhere so the roads are blocked;
there is a gridlock because of the agitation by opposition party members,
garment workers strike or even sometimes blocked by ruling party’s
assembly, the recent strike by students on quota system and so on. Such
unpleasant events are quite common in the context of Bangladesh which
might cause late delivery or destruction of products/services that create
huge loss for e-retailers.

4. Limited internet user: As Bangladesh is a third world country, internet is

not yet widely available everywhere in our country and to all its people.
For a country like Bangladesh, nationwide affordable and un-interrupted
internet connection can also be challenging. Daraz Bangladesh is not being
able to serve the market to its fullest potential.
CORPORATE STRATEGIES OF DARAZ

Corporate strategy is the finest art of creating competitive value in favor of

one’s company over its true competitors (Thomson, Petaref, Gamble &
Strickland, 2016). In modern corporate world, corporate strategies are the
prerequisites to be successful in the arena of business. Now, we are going to
evaluate the benefits that Daraz achieve from their competitive corporate
strategy by merging with Kaymu which has enabled them to create superior
value over competitors.

Strategic Advantages of Merging with Kaymu

In favor of Daraz limited, the strategic advantages of merging with Kaymu are as
follows:

Penetrate a New Market

Penetrating a new market includes gaining a new geographical area or a specific
niche in an industry. For example, a successful international technology company
Daraz has merged with a similar Bangladeshi company Kaymu, so that they may
gain access to the Bangladesh market. This strategy works in favor of Daraz to
establish a superior supply chain and to build a larger brand.

Better Fulfill Consumer Needs

Business leaders always need to consider the consumer's experience with the
company and its products or services. A merger should function to better serve
the existing customer base of the companies. Merging with Kaymu has facilitated
Daraz to understand better about the Bangladeshi customers’ needs and how to
serve them better than the competitors.

Service Development
In a merger scenario, the larger company should have a higher valuation and be
better positioned to develop new services. In the case of Daraz & Kaymu merger,
the larger company, Daraz benefits from getting developed products and
services that have already met the desired level of success.

Key Personnel and Talent

Two companies might merge so that they get the benefit of leadership of key
individuals in the company. Daraz, sought to obtain industry insight from key
people within Kaymu so that it could develop its company capable of succeeding
in a new e-commerce marketplace.

Financial Power
When companies merge, overall revenues increase, making the end company
much stronger financially to obtain credit, investors and strategic alliances. This
allows the merged company to grow faster with capital investment for
development, marketing and talent. So, the merger results nothing but financial
gains from Daraz’s business point of view.

IMPLEMENTATION STRATEGY

Strategy implementation is a term used to describe the activities within a

workplace or organization to manage the activities associated with the delivery
of a strategic plan (Wikipedia, 2018). Strategy implementation requires
organizations to put initiatives in place which are focused and realizable. A
strategic focus should encourage an organization to develop disciplined
processes for feeding strategic initiatives across the organization in a
meaningful, realistic and achievable way.

The marketing strategy of Daraz is different from competitors which make them
able to create superior value for the company. The effective implementation of
marketing strategies of Daraz is discussed in details in the following section.
 Fatafati Friday

Daraz launches the Black Friday campaign as the “Fatafati Friday” in

Bangladesh. They launch this campaign in the month of November every year in
collaboration with different brand shops. They give up to 80% discounts during
this campaign. Daraz is the company who has introduced this type of campaign
for the first time in Bangladesh. The sale of Daraz gets tripled during the
“Fatafati Friday” campaign that breaks all the records.

BMY on Pohela Boishakh

The campaign called BMY is basically the Pohela Boishakh campaign. It is a part
of the marketing strategies that Daraz does. It lasts for nearly a month. Daraz is
the only e-commerce company in Bangladesh who are giving campaigns on
Pohela Boishakh at that big scale.

Online Marketing of Daraz

Daraz is an e-commerce company so they focus mainly on the online marketing

to boost up their sells. They uses the social media websites for their online
marketing like Facebook, Twitter where they give regular updates on their
products, upcoming campaigns and also give advertisements on the YouTube.
Daraz gives advertisements on different websites all the time. If any visitor
clicks on those advertisements they will directly go to the webpage of Daraz.

Offline Marketing of Daraz

Even though the online marketing is overtaking the field of Offline marketing
now-a-days, the offline marketing still did not lose its ground. Daraz also does
offline marketing. Some of the mediums that they use for offline marketing are
advertisement on the daily newspapers, participating in different types of fairs,
locating banners, giving vouchers to its consumer to get discounts in different
restaurants.
CORPORATE SOCIAL RESPONSIBILITY (CSR):

Corporate social responsibility (CSR, also called corporate conscience,

corporate citizenship or responsible business) is a form of corporate self-
regulation integrated into a business model. CSR policy functions as a self-
regulatory mechanism whereby a business monitors and ensures its active
compliance with the spirit of the law, ethical standards and national or
international norms (Wikipedia, 2018). Corporate social responsibility (CSR) is a
business approach that contributes to sustainable development by delivering
economic, social and environmental benefits for all stakeholders. The way CSR is
understood and implemented differs greatly for each company and country.
Moreover, CSR is a very broad concept that addresses many and various topics
such as human rights, corporate governance, health and safety, environmental
effects, working conditions and contribution to economic development. The
purpose of CSR is to drive change towards sustainability.
 Support To Charitable Organizations:

Many companies in Bangladesh have now started acknowledging the importance

of Corporate Social Responsibility as an integral driver of a strong business
strategy. CSR in has become the need of the hour as it is the corporate sector that
can work towards urging positivity in a country that is otherwise at a high level
of despondency. Online shopping portal, Daraz, recently take up this cause,
planning their first online Fashion Week that will organize in the upcoming Eid-
ul-Fitr 2018 collections reach men and women in all parts of the country. While
the privileged enjoyed the luxury of getting the latest in fashion at the comfort of
their homes, it was absolutely imperative for Daraz and its customers to
celebrate Eid and Ramadan with those who deserve it just as much but are
unable enjoy the same luxuries. The company launched its “Together, We Can
Make a Difference” campaign, in a bid to celebrate Eid and the holy month of
Ramadan with the less fortunate of the society. Following this CSR activity, which
is posted on the company’s social media platforms, many customers are now
encouraged to play their part and visited different charitable organizations.
Daraz’s philosophy of sharing happiness and spreading positivity throughout
Bangladesh, highlighting the positive aspects of CSR which need to be recognized
and endorsed for the positive image building of the country. Daraz has taken a
pledge to continue supporting such causes and resolved to join hands with its
customers and other companies to work towards spreading smiles and
promoting positivity because they believe in making a difference through CSR.

Contribute To Build Future Leaders:

Daraz Group has taken up an initiative to build future business leaders of the
nation and has an open door policy for all potential employees. The program
titled “Daraz Future Leadership Program (DFLP)” is designed to help
participants to be next leader and provide opportunities to prove their
capabilities and pursue full growth potential. This program is periodically
organized in the leading universities of Bangladesh like BRAC, North South, IUB,
and AIUB. This program offers its participants future leadership positions within
a time frame of 18 months by rotating them across 3 departments according to
their preferences. Each department will develop participant’s expertise in
various areas. Personal growth will be accelerated through excellent top
management coaching & leadership training.

RECOMMENDATION & FUTURE CHALLANGES

Bangladesh is a late entrant in platform business. So, the paramount challenge is

to compete with other global players by reaching its full potential in shortest
possible time (Ahmed, 2016). For a country like Bangladesh, nationwide
affordable and un-interrupted Internet connection can also be challenging. On
the other hand, Daraz has to eliminate their over reliance on cash-on-delivery by
going full online as far as payments are concerned. Lastly, ensuring doorstep
delivery outside Dhaka in the shortest possible time may require a strong
distribution channel throughout Bangladesh (Rahman, 2016). To have a
sustainable future, Daraz need to create loyal and happy customer base. The
recommended solutions for Daraz growth and sustainability are described
below-

Firstly, they need to ensure their product quality. Even if they have huge
number of sellers but if the product quality is not good customer will not
shop from them longer and will switch to other ecommerce sites easily.

As they do not have their own delivery team, they are struggling to deliver
faster or emergency deliveries. As this company has grown bigger with time.
It is high time for them to create a strong personal delivery team and better
follow-up teams to ensure timely deliveries.

While choosing the pricing strategy, company must keep in mind that their
price matches the current market prices. Price must be competitive enough
to influence customers to purchase product from Daraz. If the price is high,
there should be a valid reasoning of it.
 Many customers has complained that they are unsatisfied with customer
service. That means they are not available, follow-ups are not done properly,
replies are not as prompt as expected and they do not have enough
information about products or the process to reply promptly about them.
And product status is often not provided promptly from the outbound team
of Daraz supply chain. So the service is delayed. A huge number of calls and
queries are received every day. So, the number agents should be increased
to ensure effective and prompt service from the department.

Another way of sustaining the customer base is offering unique products

and offers. Offers must be one of a kind. So that customer will only think of
shopping from Daraz as there is no alternative as such.

Lastly to save its sales drop if big companies start their operation in
Bangladesh Daraz will have to be in good ties with their sellers and
distribution channels to maintain delivery associates and customers
reliability on the brand. Therefore ensuring high quality service is a must for
Daraz.

CONCLUSION

The platform business is nascent yet evolving every day. Besides being one of
Asia’s leading online platforms, Daraz certainly is pushing the envelope in terms
of technology to usher in a new dawn for Bangladesh e-commerce sector. Daraz
offers a shopping experience that is unparalleled in Bangladesh, Myanmar, Sri
Lanka and Pakistan by providing a service that has unmatched levels of
personalization and security. This online shopping platform also showcases a
wide range of products from a range of brands that includes established foreign
names to local retail entities. Daraz Bangladesh Limited is one of the largest e-
commerce website in Bangladesh and it has made the status of top online
marketplace of Bangladesh. It is relentless in detection of business revolution
and development. Their latest big move was merger with Kaymu and hopefully
they will utilize Kaymu to make them even stronger than before, continue to give
Bangladeshi market always something to look forward to. Compared to other
countries, Bangladesh is a late entrant in platform business. In spite of some
shortcomings, immense potentials put e-commerce industry apparently
attractive in such position where it could be the next big source of national
earnings for Bangladesh.