Evaly, one of the most hyped e-commerce platforms in Bangladesh. In a report published by Shared Today on the share of voice of e-commerce in Bangladesh in 2019, the country’s top e-commerce company Daraz was in first place with 68% share of voice. Evaly, which was established in 2018, was in second place with 21% share of voice. According to SimilarWeb, Evaly’s website was visited about 5.9 million times in October 2020. On the other hand, Daraz’s website was visited 48 lakh times in that same month. Only 2 years have passed since the company’s inception, yet the company will be ahead in various parameters starting from web traffic generation, than any other e-commerce platforms in Bangladesh at present. In the meantime, the company has been criticized for its questionable business model as well as for its many business activities.
Former banker Mohammad Russell’s business career began in 2016 with the Kidz Diaper brand. Within a few days, the brand gained a good reputation in the market and later he thought of establishing an e-commerce store. Following this, Evaly started its journey in December 2018. With the advent of 3G technology in mobile communications, Bangladeshi consumers have started to actively participate in online shopping. In the beginning, it was city-centric, but with the advent of affordable broadband networks and 4G technologies, the richness of e-commerce business has gradually reached Moose ball. As a result, as the e-commerce sector grew, so did the eCommerce businesses.
According to a recent report published by The Business Standard, there are currently 1,200 eCommerce companies, large and small, and 2,000 web-based retailers in Bangladesh. There are also about 50,000 entrepreneurs connected to e-commerce through various Facebook pages and groups. According to the data from E-Cab till August this year, the e-commerce market size of Bangladesh stands at Tk 16,617 crore, which was only Tk 560 crore in 2016. In such a boom of e-commerce in the country, Evaly came to the market as a disruptive player.. The company, which initially continued to operate through a handful of employees and websites, was able to achieve quite a good traction in a very short period of time through its unique and aggressive business model.
Rise of Evaly
At the beginning of 2019, Evaly started their activities with various big offers and campaigns. They continued to do a huge amount of advertising and promotion online and offline. Evaly’s CEO Mr. Rassel informs that within a few days of the launch, the Facebook group of Evaly reached more than 45,000 members in just three months. Evaly released the smartphone app in August of the same year which was downloaded more than 50,000 times in just two months. In September-October 2019, the Gross Merchandise Value (GMV) of Evaly was around Tk 60 crore. Moreover, Net Merchandise Value (NMV) was around Tk 50 crore. In November of that year, the company achieved the monthly order power milestone of 50,000. In 2019 alone, an average of more than 15,000 users visited Evaly’s website daily. The numbers multiplied in 2020. From the beginning, Evaly’s goal was to have a full-fledged “Everything Store” for all digital market products. More than 4,000 categories of products, from construction materials to cars, are sold at Evaly. The main objective of this strategy was to achieve merchandise value of a large amount by keeping large basket sizes.
At present, an average of 1 million orders are placed on the company’s platform every month, and the transaction is worth Tk 300 crore. Already, Evaly has more than 3.5 million customers. In order to be a proper everything store, retailers are an important part as well as products. There are more than 25,000 sellers in Evaly – including brand sellers, large retailers and small offline retailers. Initially, there was a preponderance of Dhaka-based retailers but recently many sellers in other district towns have also been on-board. Evaly has followed the Lean Operation method in their operational strategy. In other words, despite the constant increase in the number of customers and orders, the company limited its resources. Currently, Evaly has expanded its activities to a larger extent, taking on new office space and increasing the number of staff. The company employs about 1,500 staff members and more than 15,000 registered heroes for product delivery. Despite spending a lot on marketing and advertising from the beginning, Word-of-Mouth Marketing has acted as a growth factor for Evaly. Due to their continuous campaigns including discounts and cashback, they have been able to make good use of the benefits of Evil Word of Mouth Marketing. However, there has been a lot of negativity surrounding Evaly due to various other allegations, including delays in delivery. Most of the established e-commerce countries in the country do not have their own logistics network. Evaly Express developed its own logistics network on March 24, 2020 by setting up 26 Express shops in 13 areas of the capital in a very short period of time. So far, more than 200 express shops have been set up in more than 25 districts of the country. Evaly largely follows Amazon’s model when it comes to product delivery. In this case, after receiving the order, the product from the seller first comes to the warehouse of Evaly. The product is then delivered from the warehouse to the Express booth and from there following the ride-sharing model; the nearest Evaly verified commuter delivers the product to the customer.
Evaly didn’t want to limit their business to just e-commerce. In addition to Evaly, the company has come up with several more applications for consumers like eFood, eKhata, eBazar. With the launch of eFood in June 2020, Evaly started food delivery service. Initially limited to Dhanmondi, Gulshan and Uttara, but now food delivery service is being provided in the whole city of Dhaka and Chittagong. Several restaurants including Secret Recipe, Hakka Dhaka, bbq Bangladesh, North End Coffee Roaster, Chillox have already been added as partners of eFood. The number of eFood’s partner restaurants is also growing. Evaly has also recently signed a contract with cloud-based digital food court Kludio. Evaly customers can order food through eFood using their cashback balance. As a result, eFood has started to capture more market share compared with Foodpanda and Pathao Foods and others in the food delivery market.
Business Model of Evaly and How Evaly Makes Profit
Mr. Russell, CEO of Evaly, aims to become the best e-commerce player in Bangladesh. And so the company has focused more on market development, starting with New Customer Acquisition, integration of sellers to Evaly’s platform from the beginning. Through discounts and various offers, the company has been able to attract customers as well as sellers to its platform quite well. While this is a kind of perception in the minds of ordinary consumers, Evaly probably loses a lot more. But even if they can’t make a profit at all, the amount of net loss will not be so much. An E-commerce business does not have to be profitable from the beginning. On the contrary, many of the biggest giants in the world have been losing money for years. In the case of eCommerce, the key is to keep the cash flow flowing and increase the number of customers, which is clear from CEO Russel. It will be possible to have a clear idea about this by reviewing the business model of the organization.
The first thing that comes to mind while analyzing Evaly’s business model is its incentive model. From the beginning Evaly has been more focused on selling products by attracting customers through various discounts and cashback campaigns, voucher offers, gift cards, etc. The most popular aspect of Evaly’s incentive model is its cashback offer. Offers cashback from 10% to 150% on purchases made at Evaly. As soon as you order the product and confirm the payment to get the cashback, the cashback amount is credited to the customer’s balance and you can buy another product with that balance. Suppose a product worth Tk 100 has 100% cashback. In other words, if you buy the product, Tk 100 will be credited to the customer’s balance as a cashback offer. Suppose the profit of the first product was 10% or 10 Taka. Now the customer will be able to spend 60 percent or 80 takas from the previous cashback when buying a product of 100 takas again and will pay the remaining 40% anew to finish the cashback money. Now if the second product also has a profit of 10% or Tk 10, then the total cost of the two products is 90 + 90 = 160 taka.
Meanwhile, the company collected 100 + 40 = Tk 140 cash from the buyer. As such, the loss of Evaly is 40 taka or 22%. But, it is not the actual case. In fact, there is still cashback of Tk 40 on the customer’s balance, which can be used to buy another product. In this way, the company can generate a profit in the third or fourth purchase. Since the high cashback method has an effect on customer psychology, users become so accustomed to cashback that they lose a lot of self-control when it comes to cashback. As a result, the number of orders increases, as does the profit margin. Also, in many products, Evaly’s profit margin is much higher than 10-percent. According to an article in Harvard Business Review, acquiring a new customer can cost up to 25 times as much as retaining an old customer. On the other hand, if customer retention can be increased by only 5 percent, it is possible to increase the profit margin in the business up to 25 percent. Evaly’s cashback incentive model has helped the company raise its customer retention rate.
It’s not that Evaly has come up with something completely new in its business model. Mr. Russell basically follows the strategy of some established Chinese ecommerce companies like JD, Pinduoduo, DHgate and Alibaba. One such strategy is “Group Buying”. Group buying is basically a strategy where if a large number of customers order a large quantity of a particular product at a time, huge discounts are given on the basis of that order. Evaly collects a large number of orders from customers through various cashback and discount offers, taking payments. Then when Evaly goes to the manufacturers to buy a large quantity of product in bulk, the brands can easily give the product to Evaly, at a big discount. Because the manufacturers’ warehouse cost, showroom cost, transportation cost, dealer’s commission, sales person’s salary and other ancillary costs are saved from the cost of a large amount, even if they give huge discounts to Evaly, the brands can make their own profit as well. Evaly pre-orders as part of the group buying model.
Although shopping on a pre-order basis is very common around the world, its mass implementation in Bangladesh was just as effective. Following that model, in the beginning, Evaly was offering a huge amount of cashback on home appliances, electronics, laptops, cars, that is, products that are not essential. Since these products do not fall into the essential category, if a large amount of cashback is available after waiting for some time, it is to the customer’s advantage.
Evaly implements the wholesale ecommerce model for low-price products. In the case of low-priced products, Evaly, like most Chinese e-commerce companies, offers large discounts on large quantities. In some cases the company even creates bundles by increasing the quantity of single products in the same category, offering on those bundles. As a result, customers place bulk orders even if it is more than they need just to avail the offer.
Customers as well as suppliers are a very important part of any e-commerce. There are basically 3 categories of suppliers in Evaly’s supplier network. Relatively large retailers and brands manage their own stores. Evaly handles the issue of store creation and managing of second category retailers. In the third category, vendors who have a physical store or a Facebook page are allowed to open a store on Evaly’s platform. Evaly’s biggest success in the supplier channel can be said to be that when Evaly launched the Grocery, Daily Essentials, Fish and Meat section, the company started with big brands such as Shapna, Meena Bazar, Unimart, Bengal Meat and very small grocers and small meat traders. They were able to bring it to their own platform. As a result, their supply chain became richer and stronger.
Most of the people of Bangladesh reside in the rural areas. Along with the socio-economic development of the country, the rural areas also have a touch of modernity, and with it the buying power has increased. As a result, the ability to buy electronics, home appliances, motorbikes has increased, but no e-commerce has been able to deliver that service to rural customers. However, in a very short period of time, Evaly has reached the remote areas as well as the district towns, which has made a good impact on their sales.
The people of this subcontinent as a nation are quite emotional. If the passion of the customers can be used as a tool of business promotion and customer engagement, then trust can be gained very easily. From the beginning, Mr. Russell used to come to Regular Live regularly, giving various offers and delivery updates. He also said that customers are always the main priority of Evaly, as well as the products that customers want to offer, Mr. Russell tried to bring offers to those products.
Because of his direct engagement with customers, he has empowered customers just as much as he has been welcomed by customers. In addition, in case of any mistake, he has admitted his mistake live. Such an attitude of Mr. Russell is the complete opposite of the traditional culture of the business sector of Bangladesh and the eloquence of this attitude has created a loyal fan base. This loyal fan base defended and promoted Evaly in various groups. In addition, the CEO himself updated everyone by coming live and giving interviews in various media when there was a controversy about Evaly’s business in recent times. In the midst of all this, will Evaly be able to create a sustainable business model by following the established Chinese ecommerce success model and establishing itself as one of the top e-commerce companies in Bangladesh?