How Daraz used cricket as a customer acquisition strategy

Daraz used a classic shoppertainment strategy to acquire customers. It worked

The Daraz mobile app was terrible. Customer reviews were bad, it had a low rating on different app stores, and even though it should be easier to shop through a mobile app than through a website a vast majority of Daraz sales continued to come through people logging in on their computers. 

This was a problem for Daraz, and while they have not been open about the exact numbers, it was enough of a problem that Daraz was seriously workshopping and troubleshooting their app. Much has been said about Pakistan’s eCommerce potential and shopping online has increased since the pandemic. In FebruaryPakistan’s e-commerce market size posted a growth of over 35 per cent in the first quarter of the fiscal year 2021 to Rs96 billion compared to Rs71bn over the corresponding period of last year. 

This is only a fraction of the projected potential that the eCommerce industry might have in Pakistan. And Daraz, from the very beginning, has both been a frontrunner and a gamechanger for eCommerce in Pakistan. In 2018, when Chinese eCommerce giant Alibaba acquired the Daraz Group for an estimated $150 to $200 million, it became clear that this was a game where big money was involved. Which is why it was natural for Daraz to want a better mobile app. 

What did they do? They used the ICC T20 World Cup as a crutch and it worked out brilliantly for them. You see Daraz had a serious problem with customer acquisition for their app. People simply had no incentive to download the app. Which is why Daraz decided that even though it had nothing to do with their product or with being an online eCommerce platform, it would add an option on their app to live stream the matches of the cricket world cup. 

This was a smart move. Pakistan’s first match in the world cup was against India, a competition that is famous for being the most watched sporting event in the world. While rumours have circled in the past that 1 billion people tune in to watch the matches, in reality things are different. The estimated viewership for the 2017 Champions Trophy final was around 400 million. The group game in the same tournament was watched by 324 million people, slightly more than the 313 million that watched the group game in the 2015 World Cup. The 2011 World Cup semi-final remains the second-most watched cricket game in history, with 495 million viewers.

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Daraz was betting on a good audience. Of course, most people were still going to watch on television, but there were going to be plenty of people with smartphones and internet connections stuck at work, at school, at a wedding, or anywhere else that wanted to watch the match. With no livestream link available on youtube, the easiest way was to download the Daraz app and start watching. 

Daraz has not revealed how much money it spent on acquiring the livestream and how much they spent on marketing. What we can assume is that it was a pretty big amount of money. Luckily for them, it worked out. Pakistan won the game against India, for the first time in World Cup history, launching a wave of popular support and a surge in viewership. The following matches were closely watched and Daraz has now said that it has made up for its investment. The exact results? Their monthly average users more than doubled, and ever since the end of the tournament the Daraz app has continued to see higher downloads. 

As matches continued to be streamed, Daraz continued to have its app downloaded and acquired customers. The only question is, with the world cup over now, what is stopping people from deleting the Daraz app? And while their customer acquisition strategy might have worked, how is Daraz planning on retaining those customers? 

The ethos 

Daraz is essentially an online mall. It owns space, it does not own products. All of the things they sell are posted by Daraz sellers and Daraz simply provides a platform. Even shipping is provided by multiple different partners, depending on who the seller chooses for their products. And while it might be an online mall, a lot of Daraz’s best ideas are inspired by classic brick and mortar malls. Including the idea to use the cricket world cup to acquire customers. 

Think of it this way. Almost every time you go to a mall you’ll notice mall activations or BTL activities. Sometimes they’re sponsored by brands, sometimes by the mall management itself. Why? So you are lured into the mall and then spend more time there. Malls are theoretically designed to make you spend more money. The layouts are confusing so you get lost and walk through more of the mall than you had intended to, especially because the more stores you visit, the more you’re likely to spend. This is also why the food courts are on the top floor so you stop by stores as you make your way up.

Malls rarely have general seating areas. If you want to sit, you’ll either have to sit in a store or the food court. This again drives you to spend more. Clustering similar shopping categories also helps push sales as while you may resist one store, do you have the strength to resist more?

To mess with you more, you’ll also find that malls do not really have clocks so that you lose a sense of time. Basically, the longer they keep you around, the more likely you are to spend.

Lastly, have you ever wondered why malls have activations, BTL activities, concerts, book signings, and events? The purpose is to lure you into the mall. Once you’re there, you’re likely to stick around and potentially shop. This is shoppertainment.

Essentially all this is done to prop up footfall which is used as a metric to gauge purchasing opportunities that present themselves. Not everyone that enters the mall ends up buying something, however, the more people that enter, the higher probability of making a sale.

Shoppertainment isn’t a new concept. The term popped up in the early 1990s, however, the concept has existed for decades. It is the provision of entertainment or leisure facilities within a store or mall as a marketing strategy. This is done to attract customers. However, with the world going digital through the use of ecommerce, one wonders how ecommerce sites can lure in customers through entertainment. This is where Daraz entered. 

How they played it  

As we’ve mentioned before, Daraz has had it pretty good since it started off in Pakistan. However, while ecommerce may be the future for some people, some prefer old school shopping primarily because of the shopping experience. With ecommerce, it is generally very straightforward, you either log onto an app or a webpage to buy something you want and look for it, or you glance through all the options like a window shopper and buy something if it catches your eye.

The only way to compete with the segment of the market that prefers old school shopping is to make sure the app is easy to use, the payments process is seamless, and the returns are hassle free. However, shoppertainment has existed in the ecommerce world too. Before we talk about how Daraz has made a major move in shoppertainment let’s take Shopee as an example.

Shopee is a Singaporean multinational technology company which mainly focuses on ecommerce. It was launched in 2015 and now serves consumers and sellers throughout Southeast and East Asia along with several countries in Europe and Latin America. Shopee used shoppertainment to increase their traffic and enhance engagement in their platform. The app can be used to stream events, play in-app interactive gains, and participate in live giveaways as well.  

In Singapore, Shopee reported that users have spent 40% more time in-app and on live streams by brands and sellers, increasing by 40 times while regionally it increased 70 times. Similarly, in Indonesia, the usage of live streaming towards the second quarter of 2020 got the app 30 million viewing hours. Moreover, usage of in-app games rose too, with Singaporean users playing 60 million times while users in Indonesia playing 10 billion times.

So what really is Daraz doing?

Usually when you’re making a marketing campaign you decide who your target audience is and design your campaign according to that. However, what do you do when you are trying to target practically all smartphone users in the country? Cricket is a common factor for nearly all Pakistanis. While the toxic love-hate relationship is beyond the scope of the article, the basic fact is that an extraordinarily proportion of Pakistanis watch cricket.

It is also interesting to note that while Daraz is using Cricket to bring in customers, Cricket has also been used as a political and diplomatic tool in the past as well. For instance between India and Pakistan by Zia Ul Haq in 1987, Pervez Musharraf in 2005, and Yousuf Raza Gilani in 2011. Keeping in mind the major role cricket plays in our society, Daraz decided to use cricket to lure in customers and make a bigger pivot towards the shoppertainment sphere.

“Basically, all you need is a Smartphone with the Daraz app to watch the ICC Men’s T20 World Cup. You don’t even need to make an account to access the streaming. That is how accessible we wanted to make cricket,” says Wali Khan, a sports marketer serving as Head of Sports Strategy, Marketing and Entertainment at Daraz Asia. “We are not using this as a way to drive sales. We just want to make the shopping experience better. We’ve added a fantasy league option too to make customers feel more engaged and involved.”

But what about since the world cup has ended? Well, the app continued the streaming service for the Pakistan vs Bangladesh series too. This means you don’t need to be near a tv screen or spend hours finding the right streaming link to watch the match.

The numbers

“The number of streamers exceeded all our expectations. Our team back in China kept having to increase our bandwidth because the numbers kept growing,” says Khan. “Pakistan and India is a match that even people that are not cricket fans watch. We got the most traffic on that day. The Pakistan vs New Zealand match attracted a lot of traffic too.  However, even with regular pool matches, the traffic has been beyond expectation. We were the only ones to stream the practice matches/ warm up matches too. That gave us an edge and had people streaming before the world cup even began.”

Overall, during the course of the world cup, the Daraz app saw more than 350 million views of the cricket match through its platform. Before the tournament, the app had 6.7 million active users and since then that number has increased by more than double. With a 118% increase in active users, the app now has nearly 15 million users signed up. On average, the downloads for the app have increased by a lot. Before the streaming began, the average was 63,000 daily downloads and after it began that went up to 320,000 daily downloads. 

What’s the catch?

However, to bring cricket to a phone near you, Daraz had to cough up 2 million rupees. However, why would Daraz merely spend that much just to get you the rights to watch cricket on your phone?

While this seems like shoppertainment, it is also a customer acquisition cost (CAC). The customer acquisition cost is the marketing costs, broadly defined (advertising, but also costs of promotional giveaways, etc.), and divided by the number of customers the company is able to add. This is the money a business spends in order to acquire new customers or to encourage them to use their platform.

In the case of the cricket streaming, Daraz was able to get more people to download their app and stream matches. While they made no compulsion to sign up or shop to be able to access the cricket matches, the app is playing on the odds that once someone is on the app, they will be likely to make a purchase. Just like malls feel once you’re in a mall, the longer you stay you’ll be making a purchase.

However, “burning” VC or parent company money through customer acquisition costs isn’t always the best move. This is because you cannot really guarantee the fact that the customer will stay after the promotion, deal or incentive is taken back. Essentially, if CAC does not bring in average revenue per customer (ARPU) or add to the lifetime value of a customer (LTV), the business decision isn’t as fruitful as one would have hoped.

Usually in the case of ecommerce platforms, they are able to bring in customers through their deals, vouchers and incentives. The customers do not stay and switch between apps based on where they get the best deal in terms of money spent.

The decision to use cricket streaming as a customer acquisition cost is actually a smart move by Daraz. They are spending money on bringing more new users onto the app and getting existing users to use the app more. However, the cost is recovered through ad revenue. While speaking to Profit as the World Cup was ongoing, Ammar _ CMO Daraz said, “We’re at breakeven in terms of our streaming.” One would assume that as the matches increased and Daraz was able to convince marketers through user stats, they may have even entered profit territory, something which their core business is years away from.

Let us take a hypothetical example to illustrate this. Assume you’re a shopkeeper in Hyderi Market, Karachi. You love cricket, but don’t have a TV screen at your shop yet you don’t want to miss a second. You also don’t want to listen to the commentary over the radio; you want to see the live action. You heard you can watch the match on Daraz for free, so you download the app and watch. You keep the app on your phone even after the match because you want to have it handy for the next time there’s a cricket match. Moreover, you may even end up making an account and actually exploring the products they have on offer. You might even end up making a purchase.

The Daraz App isn’t considered the best app in terms of UX. Not many are fans because of the cluttered layout and confusing process. However, if you’re using the app for the first time for the cricket streaming, you’re bound to have a positive sentiment towards the app. Therefore, your shopping experience may be better than someone that is using the app for the first time to shop. This is using positive sentiments to build a better relationship.

The future of Shoppertainment on Daraz

In the past we’ve written about startups spending large sums on CAC and realizing it’s unsustainable. We used Careem as an example and how Careem took a step back and worked on customer retention. While we do not think that Daraz will start pulling back on CAC, we do feel that it will now be spending more on CAC that actually does not cost them as much and helps improve the customer experience. This shows that they are thinking beyond discounts, vouchers and sales.

However, regardless of how much you spend on CAC and how creative you get, in the ecommerce world, everything ends up falling back to customer experience. The app and website layout and design have faced their fair share of criticism. Moreover, Daraz has had problems with fraudulent deliveries. The move to shoppertainment at this time is something to keep your eye one. It is because, in the first quarter of 2021, Daraz is rebranding itself. Sources in Singapore and Pakistan say that you shouldn’t expect a facelift for the app, but a drastic change that will “revamp and redesign” the shopping experience. The move into shoppertainment, however, opens the door for more possibilities.

Football fans often have to go stream to stream to figure out how to watch their match. The streams don’t always work well. Khan said, “It is a possibility that we may even go into football streaming, possibly even a web series too.”

“I’m sure football fans would appreciate that,” said Khan. However, the possibilities do not stop there. Earlier this year, Netflix created a shipping site that allows it to bring in cash through sales of items from shows and movies. This is not merchandise; you can literally buy things used in the show from the Netflix store for a few shows. This is a way for the streaming giant that does not rely on commercials to generate greater revenue. While this has not been introduced on Netflix in Pakistan, it is an exciting idea.

How many times have you seen a TV show or movie and wanted something the characters were wearing or using. Think about it, imagine how cool your OOTD (Outfit of the Day) snaps would have been if you were able to buy Gossip Girl outfits while watching the show without the unnecessary hassle of finding the brand or a dress that looks similar. The ability to shop directly and seamlessly makes this service seem like we’re living in the future.

Sources in Singapore have revealed that Daraz may be looking into this through a potential web series where you can buy things used in the series on the app. This is a step up from influencer marketing whereby bloggers endorse or use products and people go search for them and buy them online.

Ariba Shahid
The author is a business journalist at Profit. She can be reached at [email protected] or at twitter.com/AribaShahid

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