Monday, September 20US News

They said I was crazy leaving Silicon Valley for Bangladesh

From Silicon Valley to Dhaka, what barriers did you have to break to make Chaldal what it is today?

I did work in Silicon Valley and when I had left my job there to come and start something in Bangladesh, I was perceived to be a crazy man.

I have also seen that prejudice among many graduates who fear coming back and losing the opportunity for a foreign citizenship.

When I was about to start the venture I even heard someone say, “Torkari bechbe deshe!” (He will sell groceries back home) which was funny.

Other than that, there was the market that was ready to adapt to online grocery shopping but no one had tapped into delivering perishables, which itself was a big barrier.

What are the challenges in regard to delivering perishable goods? How does Chaldal undertake such challenges?

The main challenge is that people are used to physically visiting the market and handpicking produce.

If the product, by chance, turns out to be of inferior quality after reaching home, they do not get upset, but in the case of doorstep delivery they get easily upset.

Assuring customers of our service quality takes a lot of effort. We had to invest a huge amount in just the supply chain to ensure customer satisfaction.

Complaints are monitored heavily, as we are in the perishable business which means products can go bad very quickly.

However, our continuous effort of analyzing, controlling the damage, and ensuring freshest products through a trained workforce that knows how to handle the products avoiding any damage have enabled us to face that challenge head-on.

For example, recently we sold around 3,000-4,000 dozens of eggs and received only four complaints. We strive to even reduce that further if it is scientifically possible relying on technology.

Having a trained and skilled workforce itself is a big challenge, I must admit.

How does Chaldal integrate technology?

We love being at the edge of technology.

We believe there are plenty of fundamental problems that technology can solve in the developing world.

We started off in 2013, by building the world’s first 1-hour grocery delivery service in the world’s most densely populated city, where it used to be an incredible chore to get daily necessities.

We use a cloud-based inventory system that allows users to see what items are available in real-time.

We believe software development itself can be better, and we regularly experiment with home-grown frameworks, algorithms, thought processes, programming languages, and DSLs.

We run our own cloud from local data centers and work directly with country-wide information infrastructure providers.

We also carry out internal communication with our own software that allows our call centers and various wings to coordinate, and help disburse products such as vegetables from warehouses or relevant places.

Such an ecosystem helps track movement, analyze what we have monitored, and take steps accordingly.

 

How much is Chaldal worth today?

In terms of market value, I would not be able to say it as we have not had any recent evaluation in that regard.

However, Chaldal currently has a family of approximately 2,600 people. Last month we delivered 300,000 orders to 120,000 customers and average customers shop around 2.4 times (recurring).

 

How has the market evolved since the platform’s inception?

There has been a positive evolution; people generally do trust online marketplaces although the recent trend has been worrying.

However, I will say that Pathao, Shohoz, Hungrynaki, foodpanda, Uber, alongside Chaldal have enabled a level of trust with online transactions.

It has been very apparent that Bangladesh is becoming a middle-income country.

The demand for shampoos, diapers, is encouraging for the economy. Consumption has increased which has enabled diversity as well.

Previously, for example, we only had Thai or Chinese restaurants, or just noodles or macaroni.

But the consumer taste has evolved with the market.

We now have Dragon fruits and avocado consumed locally.

Considering the local demographic, even the niche market is very big.

 

How much of the products have to be subsidized for Chaldal to access the market? How much does Chaldal spend on average to acquire a customer/consumer?

Chaldal does not charge a premium for convenience.

Instead, it competes with brick-and-mortar stores by buying directly from wholesalers and offering lower prices.

Grocery margins are too slim to support huge discounts, but most of Chaldal’s prices are about 1-2% lower than other stores.

Our promotion or marketing budget is hardly Tk7-8 crore.

We mostly incentivize customers which may cost around, say, Tk100-200. Instead of subsidization we actually charge less in terms of our service (delivery) or incentivize bulk buying for example if you buy 3 you get a lower price for ex Tk27 instead of Tk30 (Tk10 for each).

 

Who are your investors and where do you need the most funding?

Building technology is not easy. You have to acquire talent.

Moreover, the return on investment often takes time.

Enabling value generation and service enhancement through technology, as well as acquiring talent and enabling a skilled workforce with a network of distribution centers is where most of the funding goes into.

We have a good line up of investors backed by Y Combinator and 500 Startups, IDLC among others. Startup Bangladesh also made early investments in Chaldal.

 

Does competition make you healthy and enable you to provide better service? What has been Chaldal’s expansion plan in terms of setting up more hubs or distribution centers in contrast to competitors?

It is a country of 160 Million, we barely reached 500,000. It is not actually time for competition.

Rather we should focus on how we tap into the remaining big pool of markets and get them into e-commerce.

Just to give an example, Australia’s population is 26 million. Bangladesh’s niche market that buys diapers, for example, is that big.

The grocery market is huge as well, and it is not a niche market.

The market here is already very big, so we do not need to expand to other cities in order to get bigger challenges.

In Dhaka, groceries are probably a $4 to $5 billion market per year, so if we provide cheaper prices, more variety, and better quality, there is no reason why we should not be one of the biggest retailers in the city, if not the biggest

 

With the recent revelations on the e-commerce sector clouded by uncertainties and allegations, how do you see the future of the Chaldal marketplace and the industry?

We operate with fixed vendors and hold our own inventory. Most deliveries happen on a daily basis.

The Ministry of Commerce has taken the right step, protecting the customer’s trust and we are in compliance with regulations. We have to keep in mind that the industry is very new.

Regulators should also understand the fact that you cannot start regulating from day one, but there is no doubt, there needs to be some sort of standard. Any regulation is a disincentive for an entrepreneur to try something in that sector so regulators should have the right balance.

 

Where do you see Chaldal in the next 5-10 years?

Being accessible in most of Bangladesh at any point anywhere and providing Chaldal’s service, not just in metropolitans.

A happy customer base is all I want and the dream is to go global.

By taking local innovation to the global market I want to show the world that tech giants such as Uber can come from Bangladesh and not just San Francisco.

 

What are some of the ongoing CSR projects that you are proud of?

Throughout the pandemic we have seen a lot of interested parties who wanted to donate.

We had a wing that assisted people in donating. We did not donate ourselves, but we helped prepare packets with the necessary essentials and helped deliver it.

We even marginalized reducing the cost per pack. The donation went to all the right places.

From there we even opened a page where customers or citizens can assist people who had been impacted by the pandemic and could not afford daily food.

This is still an ongoing campaign which any one can participate in.

Additionally, we measure our success by the amount of positive global impact we achieve.

Since our inception we have gone on to redefine supply chains, ease commodity trading, support refugee camps and reduce food wastage.

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