Navigating Market Waves: Strategies for Handling Demand Fluctuations and Seasonality in E-commerce

In a conversation with Prisila, a correspondent in Asia Business Outlook Magazine. Ahmed discussed optimizing e-commerce operations for efficiency and scalability. To foster innovation in e-commerce teams, employ continuous improvement strategies.

Ahmed Tanveer oversees the Logistics, Digital Payments and Customer / Seller experience functions. Under his leadership spanning 10+ years, Daraz has expanded its coverage across Pakistan and established 3 core verticals of logistics: Daraz Express, Fulfilled by Daraz and Logistics Marketplace while putting customers at the heart of everything.

1. How do you approach developing and implementing operational strategies to ensure the efficiency and scalability of an e-commerce business?

In our markets where e-commerce is still in its nascent stages as opposed to similar regional markets where the penetration is much higher, the approach to operational strategies have user experience, scalability and efficiency at its core. In areas such as logistics and digital payments we have room for improvement at a grass root level where the infrastructure needs an upgrade, Strategies with the lens of driving improvement not only for us as a business but for the entire ecosystem. At any new-age tech company, the problems that need to be addressed are countless, and it is very easy to get tempted and succumb to quick fixes. However, what keeps us grounded is that we are trying to build a business that will be here for the next 100 years, which every strategy should need to implement based on thorough research and long-term goals. We also benefit immensely from the learnings and guidance of our parent company Alibaba International Digital Commerce Group.

"The key to long term success is to create the right balance between speed and agility, cost and revenue, risk and innovation, lead time and cost etc. "

2. In the context of e-commerce, how do professionals handle and adapt to fluctuations in demand, seasonality, and other market dynamics? In the context of e-commerce or any business what has become a necessity is building agility in every aspect of business. Our approach involves a highly cross-functional team, engaging all relevant stakeholders in planning and forecasting so we cover all aspects. This strategy is particularly effective during high-demand periods such as the 11.11 mega campaign, where we have to adapt to seasonal demands.

To efficiently adapt to fluctuations in demand and seasonal uplifts, automation of different aspects of business becomes an important topic specially operations, we also collaborated with Cainiao (Alibaba logistics arm) and launched the first Smart Distribution Centres in South Asia, located in Karachi and Lahore. These centres are outfitted with state-of-the-art technologies, including automatic assembly lines and smart distribution setups, enabling us to sort nearly one million orders daily. This increased our sorting capacity in an automated manner helping us absorb fluctuations and reduced manual errors by more than 90%.

Additionally, recognizing the expanding geographical spread of our orders as our penetration increases, we initiated the Logistics Marketplace Partners (LMPs) program. This involves creating business opportunities in semi-urban and rural areas, empowering locals to operate independently under the Daraz umbrella while we provide them the tech and business expertise. This strategy leverages their local expertise, ensuring efficient delivery beyond urban areas.

3. What strategies can be employed to cultivate a culture of innovation and ongoing improvement among the operational teams within an e-commerce organization?

Culture of continuous improvement has to be the centre of everything and this ensures innovation. In any organisation a culture where learning from failures is valued and challenges are viewed as an opportunity rather than threats so innovative ideas and improvements get embedded in the culture. The key to achieve this is creating psychological safety where everyone feels safe to try out new things and learn from it. 

4. How do you balance the need for speed and agility in operations with the importance of maintaining quality and compliance in an e-commerce business?

The key to long term success is to create the right balance between speed and agility, cost and revenue, risk and innovation, lead time and cost etc.  Businesses who are able to achieve that from an initial stage are the kind of businesses that get built for 100+ years and they last, to get there is challenging and understanding has to be developed across all functions, all levels top to bottom that no one thing is important and creating the right balance is the way to go.

The strategies, key objectives and performance indicators need to be set up in a manner where the balance is well maintained and when everything revolves around these set strategies and key objectives so automatically this gets ensured that everyone will strive towards achieving this right balance.