Farooq Tirmizi, our contributing editor isn’t too confident about the viability of Daraz.pk, as is plain to see in his write-up on page 22.
And he thinks Alibaba chief Jack Ma should take a good, hard look at the bottomline before going ahead with his rumoured acquisition of the company. Daraz.pk might be the market leader in local e-commerce, but it is said to be haemorrhaging financially. Instead of shelling out the Rs 15 billion valuation that Daraz.pk is currently going by, Tirmizi thinks Alibaba could set up an outfit of its own at a fraction of the cost and destroy Daraz.pk.
Though the analysis is astute, when push comes to shove, the variables at play might not remain the same to begin with. Both Daraz.pk and Alibaba are rational players. Rocket Internet, which runs Daraz.pk, seems to have developed a speciality in incubating a business, plumping it up and then selling it off. Given that experience, we’re sure they would know their weak negotiating position and might not demand their current valuation. And with that, Alibaba could hit the ground running in Pakistani e-commerce, albeit at the risk of inheriting all the legacy costs that Daraz.pk comes with.