Adapting to Change: Strategies for Thriving in South Asia's E-Commerce Landscape

In conversation with Prisila, Correspondet, Asia Business Outlook Magazine. Bart Van offers insights into the tactics that e-commerce executives can implement to enhance their digital payment procedures and establish a smooth customer experience, all while mitigating risks associated with payments.

Bart van is a seasoned leader at the forefront of e-commerce and financial services, boasting a distinguished career spanning over 8 years. He plays a pivotal role in guiding the company's strategic expansion and market presence. He is deeply committed to delivering seamless user experiences to buyer and seller communities and spends time working with stakeholders to reduce friction in user journeys.

Key Cultural and Logistical Challenges for E-commerce in South Asia Compared to Other Regions

South Asia (excluding India) is still in the adoption phase of e-commerce, and estimates suggest that in Pakistan, Bangladesh, Sri Lanka and Nepal, e-commerce as a share of the total retail spend is only about 2% and internet penetration is on average around 45% across all markets. Many brands and businesses understand the importance and potential of e-commerce and are working on incorporating it into their business plans and strategies, but brands struggle as their distributors and logistics networks are set up for retailers and not for consumers. Logistics wise, this means brands would be required to set up elaborate last mile delivery networks and customer service operations to directly answer customers and connect with them. At Daraz, we are building capabilities to help brands with these challenges and connect them with service providers.

Culturally, consumers act more like CFOs than CMOs on our app and even on other online platforms. Liberal spending is concentrated in a few categories, like education, health and weddings. Outside of these categories, consumers are prudent and constantly review how to save money. When I got hired, I was told there are 3 reasons why customers buy online: price, assortment and experience. In our markets, it is price that dominates most categories.

E-commerce: Digital Payment Challenges and Opportunities in Sri Lanka and South Asia

Digital payment adoption hovers at approximately 25% to 30% in many markets across South Asia, and this trend is not forecast to change in the short or medium term. In some countries like Sri Lanka adoption is even lower, with around 80-90% of transactions happening in cash. Initially, when Daraz started operating in South Asia, we attributed this low adoption of digital payments to the lack of debit/credit card and wallet adoption. However, insights derived from customer focus groups revealed that the hesitancy towards pre-payments stems from a deeper issue of trust in the products via e-commerce applications or websites.

Therefore, for digital payments to increase across South Asia, the e-commerce industry needs to proactively cultivate trust and develop incentives to encourage buyers to shift from conventional offline transactions to a digital payment ecosystem. Daraz, for example, has developed several initiatives like our round-the-clock customer support, hassle-free returns, and other customer-centric programs that bolster confidence in the online shopping experience and encourage digital payments. However, this effort must occur simultaneously with initiatives taken by the banking sector and government to encourage consumers and foster a digital payment-friendly environment.

Optimizing E-commerce Payment Processes for a Seamless Customer Experience

E-commerce leaders can employ a number of different strategies. At Daraz, we are dedicated to finding the right balance between safety and seamlessness or user-friendliness. This year, we reduced the number of steps users need to complete before checkout and have started to experiment with OTP-less payments for our most loyal customers. Furthermore, we have enabled instant refunds through our wallet, with the aim of reducing refund lead times, which in turn encourages digital payments. Daraz is also pursuing new partnerships with  Buy Now Pay Later (BNPL) applications like Koko in Sri Lanka to optimise digital payments and create a seamless user-experience, while minimising risk. Financial technology like BNPL targets a market segment that has been traditionally ignored by the formal banking sector or financial institutions. E-commerce leaders need to take a multifaceted approach, while ensuring that every step of the digital payments journey is marked by trust, convenience, and innovation.

"Innovation within e-commerce organisations comes from encouraging teams to relentlessly pursue inventive solutions for longstanding challenges."

Ensuring E-commerce Team Adaptability in a Dynamic Industry

In the South Asian e-commerce industry, adaptability is crucial, especially amid challenges like foreign exchange controls, import bans, high inflation, and low consumer spending. To ensure our teams remain responsive, we prioritise continuous learning and feedback channels. Data-driven insights specific to each market in the region also guide our decision-making in real-time, and forming cross-functional teams encourage innovative solutions. This adaptability not only equips us to navigate evolving market conditions but also positions us to proactively shape the future of e-commerce in South Asia. For instance, because of the way in which our teams function, they have been able to proactively align our offerings with the evolving trend of value-centric consumers, drive innovation in supply chains by exploring direct connections with manufacturers, and they have been able to leverage partnerships like our partnership with Alibabs to execute strategies effectively.

Fostering Innovation Culture in E-commerce: Effective Employee Engagement Strategies

From my experience, innovation within e-commerce organisations comes from encouraging teams to relentlessly pursue inventive solutions for longstanding challenges. For example, to solve a wide variety of problems faced by our partner sellers, our team recently introduced a feature that allows sellers using platforms like Shopify and WooCommerce to list their products on Daraz while managing their inventory in one centralised location. This change resulted in a notable threefold increase in product variety per seller and streamlined the inventory management process, which made it significantly easier for sellers to maintain their stock levels and sell via multiple platforms.

These ideas are developed through intensive brainstorming sessions, where teams focus solely on generating groundbreaking ideas without any constraints. Additionally, two strategies businesses can employ to encourage employees to contribute their best ideas is to periodically encourage teams to sit with different teams in other departments on a regular basis and establish casual, recurring meetups or spaces (both virtual and in-person) where employees can freely exchange ideas, fostering a culture of open dialogue and innovation.