Khondoker Tasfin Alam is the Chief Operating Officer of Daraz Bangladesh and Managing Director of HungryNaki. Prior to joining Daraz Bangladesh, Mr. Alam worked for some of the leading telecom operators in Bangladesh and spent years working in the telecom industry across markets in Europe and the Middle East. Initially trained as an engineer, he later studied business at London Business School and IBA, Dhaka University.
In this fascinating conversation with Future Startup’s Ruhul Kader, Mr. Alam talks about his journey to what he is doing today, the real value of engineering education, and his takeaways from working in several international markets as a young professional in the early days of his career, his work as the Managing Director of HungryNaki, HungryNaki’s business, operation, challenges, and ambition, dynamics of online food delivery business, online food delivery market in Bangladesh, various aspects of online food delivery business, the changing world of work, his take on success, career, life and much more.
This is an absolutely brilliant read in its entirety. We hope you enjoy reading the interview as much as we enjoyed doing it. Happy making!
Ruhul Kader: Thank you for agreeing to this interview. Can you please tell us about your journey to what you are doing today?
Khondoker Tasfin Alam: I am an engineer by training. I did my BSc. in EEE from the Islamic University of Engineering and Technology, an OIC institution. I graduated in 2003 and started my career in the telecommunication industry by joining Citycell, the first telecom operator in the country.
After about a year, I moved to Banglalink during its launching month. I worked at Banglalink for the next 12 years in different positions.
I worked in two phases in Banglalink. From 2005 to 2010 I worked in Bangladesh. After that, I was posted to the headquarter of Banglalink, which was Egyptian Giant Orascom Telecom at the time. There I served several years. I was fortunate to have opportunities to work in different countries including Italy, Lebanon, Algeria, and Egypt. After some time, a merger happened between Orascom and VimpelCom, and rejoined the Bangladesh office of Banglalink where I worked till 2016.
After that, I briefly worked for local conglomerate Rangs Group. They had four different entities in the telecom and IT domains — PSTN, IGW, ICX, and ISP OperationOpration. I oversaw four different companies for the Rangs group and that’s where I ended my telco career to an extent.
Around this time Alibaba came to Bangladesh and took over Daraz. I was approached for the Chief Operating Officer (COO) position. I took the opportunity and joined Daraz Bangladesh in 2018. I was the first Bangladeshi COO of Daraz Bangladesh at the time. Before me, this post had mostly been led by expatriates.
Since then it has been an excellent journey for me working in an industry and doing things that are quite different from what I used to do in my previous jobs.
After joining, I made several changes in the customer experience and logistic infrastructure, which were the core challenges for the growth of e-commerce in the country. Many of those changes have helped unlock growth for not only Daraz but also for the entire ecommerce ecosystem of the country. It has been a fulfilling experience to see the work we have done for Daraz also helping the entire e-commerce ecosystem of the country.
Daraz runs the largest logistics infrastructure in the country and one of the largest in Southeast Asia. After India, our ecommerce fleet base, and logistics infrastructure is the second largest in the Southeast Asian region. So working at Daraz Bangladesh has been a simultaneously challenging and rewarding journey for me.
In this continuation, I was approached to also take over the operations of HungryNaki with some new visions and objectives. I was quite involved in the entire acquisition process of HungryNaki. I know the ins and outs of the operation. Although I’m just a couple of months into my role as the Managing Director role of HungryNaki, it is not something new for me.
So this is my career journey so far. I have had challenges all the time and that's what I like about it.
Ruhul: That's an excellent summary of your journey. When we decided to reach out to you for an interview, we thought we would do two interviews. One on your work at Daraz and another on HungryNaki. We eventually decided otherwise because it would be a very long interview if we do two interviews at once. Probably some other day about Daraz.
Tasfin: Yes. Daraz is a fascinating and long story. It is a universe in itself. Lots of things to cover. Let's keep it separate.
Ruhul: You studied engineering, worked for multinational companies across markets for many years, and then transitioned to e-commerce and now food delivery. How do your education in engineering as well as working in large companies in telco contribute to your thinking and your approach to e-commerce and the food delivery business?
Tasfin: You already know that I'm a graduate of electrical and electronic engineering. Although I started and spent a significant part of my career in telco, there was no telecommunication-specific subject back in early 2000.
We were the first generation of engineers who came into the telecommunication field. The majority of us came from the EEE background and a few from the CSE background. The funny thing was that we did not study much related to telecommunication. We didn’t exactly learn what we were supposed to do on the job.
What helped was my analytical and problem-solving skills and the approach to looking into problems that I developed while studying EEE. That is basically the takeaway from studying engineering. Although we did not exactly learn anything job-specific, we could navigate the telecom world because we learned how to tackle difficult challenges and approach problems.
If you look at the statistics today, many of the top CEOs across industries are from engineering backgrounds. Maybe you develop certain traits when you study engineering which helps.
I have always wanted to be in a leadership role from the beginning of my career. It was very clear in my mind. So maybe subconsciously, I was always preparing myself for leadership roles, even in those early days. I was always learning different things, even outside of my engineering role. I never wanted to confine myself to an engineering role that might create a stereotype. This is how I was already preparing myself.
When I was posted to Orascom, I also received a diploma from the London Business School, a capstone course run by LBS. The program helped me to develop a better understanding of how international companies work. It was a great learning experience for me—an excellent combination of practical problem solving and theoretical understanding of things about starting and running businesses, operations, strategy, international operations, how markets function, entrepreneurship, and so on. That was quite helpful.
Later on, I also did an MBA from the IBA of Dhaka University, which helped solidify my theoretical knowledge of business making me more confident about my approaches and complementing between practical and theoretical knowledge.
Ruhul: You mentioned this excellent observation about engineering grads leading companies across the world. We interview founders and leaders from across sectors. And interestingly, many of the founders we meet are engineers. Then you mentioned this problem-solving skill that engineering grads develop which is basically about every job. To that end, what are some other skills that you think engineering grads develop that help them to perform better than others? Just trying to decode what's the secrets there.
Tasfin: It is hard for me to properly compare engineering and other backgrounds. Because I didn’t study other subjects. What I can say is that engineering is a high-paced and extremely demanding discipline. You have to study a lot. You are always under pressure. As a result, engineering students learn to operate under pressure. You have to learn new things and that too quickly. We had to learn time management. To cope with a fast-paced environment, you need to develop traits such as quick learning, competitiveness, managing difficult things, and staying calm under pressure. These are some of the practical skills that you also need throughout your life.
Moreover, engineering students usually come from very competitive backgrounds. The gap between the best students and the next best is slim. It is a hyper-competitive environment.. They already know how to navigate a competitive environment and are used to it. Competitiveness and adaptability are two skills engineering students learn that are very useful in the modern professional world.
Ruhul: You are thinking very clearly here. As you mentioned, the fast-paced and competitive environment pushes people to work hard. They need to be disciplined. They need to wake up early, work late, and so on. That's excellent training and an advantage they carry throughout their professional life.
Tasfin: Yes.
Ruhul: This is a related question. You have worked for multinational companies and have experience working across markets that include markets in Europe and the Middle East. What are some of the lessons you’ve learned from those roles that you carry with you?
Tasfin: The biggest lesson is about the critical importance of learning about the market and the customers. The telco is a quite generic industry — voice network, SMS network, and internet network. Ideally, it can’t be that different from country to country. Yet it is very different from one place to another. The ARPU is different, the usage pattern is different and customer demands are different.
For example, when I was in Algeria, they had the highest usage of SMS in those days. It was unique for that particular territory. People were more comfortable texting than talking over the phone. In Lebanon, it was the exact opposite scenario. People were more comfortable talking. And they had the smartest devices available in the market at the time.
Every market has unique traits and demands. So regardless of the industry, you have to understand your market and the demand of your customers very well. In the end, business is all about productivity, efficiency, and the bottom line. In every industry, there is always something you need to crack first to make your business successful. Unless you understand your customers and the nature of your market, you can’t make it work.
Europeans can pay more but the population isn’t that high. So you have to earn more per customer to make the business sustainable. Bangladeshis are price sensitive and hence you always need to be competitive. But you can make it work with the scale. You have to understand the nature of a market.
Every culture, market, and industry has certain traits and fundamentals that you have to grasp. Everything comes down to giving your customers what they want. If your customers are happy, you have a business. The opposite is the road to doom.
Ruhul: One last question about your work and journey. You are now working in the leadership role of the largest e-commerce company in Bangladesh and running one of the largest food delivery companies in the country. You have worked for some of the largest telecom companies as well. What are some of the traits or habits that you think have contributed to your professional journey and played a role in your success?
Tasfin: I believe I have a long way to way. To answer your question, success in your professional life is not about the seriousness or amount of time you spend on your work, it is about taking ownership.
I have been in the leadership role for the last 4-5 years. Before that, I had a 15-year-long career. Throughout my career whatever role I’m given I’ve always taken full ownership of it. I always try to go beyond that role and do things that can benefit my organization. Regardless of my role, I have always enjoyed my work. The rest of it is the byproduct of it.
Yes, I have always wanted to be in a leadership role and made decisions accordingly. Probably some of those strategic decisions worked in my favor. But regardless of my aim, I have always been honest and dedicated to my work. These are the qualities that have helped me to reach where I am today. Although I think I’m just getting started.
Ruhul: Coming to your work as the MD of HungryNaki, can you please tell us about your philosophy of work, and how you approach and manage work and people?
Tasfin: I’ve recently taken up the position of Managing Director of HungryNaki and I’m loving the challenge. Piloting a challenger brand has always been my motivation as you need to continuously innovate and improve to stay competitive. HungryNaki needs a transformation in every facet of its business operation. It needs to start from within, and thus I along with my team are working on some key areas to build efficiency and improve the overall customer experience.
I believe in people-centered management while being practical. By being practical I mean ensuring business profitability over the long run. And to build a sustainable business, you need a highly motivated and dedicated team to work relentlessly toward that cause.
I give autonomy to my people and believe in the potential and individualities of people. While doing so, I make sure that everyone is working in synergy and for the same objective.
Ruhul: Can you please tell us about the state of HungryNaki’s business today?
Tasfin: Established in 2013, HungryNaki is Bangladesh’s first online food delivery service. We’ve more than 5000+ restaurants and 4,00,000+ items on our platform and it is growing every day. We have over one million registered users on our platform with more than 2.5 million orders served so far.
Currently, we are serving in 15 zones comprising Dhaka and Chittagong. We are working to expand our reach across Bangladesh with top-notch service.
Whether you are a deshi foodie and Biryani-Khichuri-Chui jhal-Kala Bhuna is your menu or you like your western cuisines like Pizza, Pasta, Burgers, and more; HungryNaki brings the best restaurants to your doorsteps at any time of the day. This is made possible by our ever-growing Food Delivery Tigers working diligently.
HungryNaki also provides all your necessary groceries. While the service is still at its early stage, we will come in a better and bigger way in the near future.
Ruhul: Can you give us an insight into HungryNaki’s operations i.e. how it operates in relation to Dazar, operational dynamics of food delivery, operational pillars, etc?
Tasfin: Daraz took over HungryNaki in March 2021, and from then onwards it has been a story of transformation. Although food tech and e-commerce are different industries, there are scopes to leverage and we’ve tried to build on that. The users are the same. Those who shop from Daraz also order food online. We’ve integrated both the systems internally and externally to ensure convenience for the users. Customers can go to the Daraz app and find HungryNaki easily. We also run cross-platform campaigns regularly.
However, the operational dynamics of food delivery are different from e-commerce. Food delivery is real-time and frantic. Your end-to-end operational setup needs to work perfectly to meet customer demands. A customer will not even wait an hour for his food. The limited time frame between demand generation to delivery requires all the key stakeholders — riders, restaurant partners, and the HungryNaki team — to act coherently to deliver on time. Thus, our operational pillars are based on speed, compliance, and efficiency.
Ruhul: What are the secrets of the food delivery business?
Tasfin: There is no secret sauce for the food delivery business. Everything is tried and tested. Lots of new experiments are also taking place in both global and local markets. But, I feel there are certain areas where the industry needs to work to make it a sustainable business.
First, from demand to delivery, end-to-end operational visibility and timely execution is a must. Whatever set-up or investment is needed to ensure that must be looked into. Secondly, it’s a highly subsidized industry. Customer acquisition is important, but at what cost. We need a smarter play. It’s important to retain users and build a loyal base in the long run. Third, riders are one of the most crucial pillars of the ecosystem. There are challenges of rider supply at times. Continuous rider recruitment, training, and retention are important.
Ruhul: Four secrets of HungryNaki.
Tasfin: There are no such secrets, but there are a few things worth mentioning: a) HungryNaki is a loved brand. There is always a first-mover advantage and that’s the emotional connection you build with your customers over a period of time. We have had customers ordering from our platform for the last 7-8 years, b) Human touch is one of our differentiation factors. If there are any issues with an order, we call the customer and explain c) HungryNaki is a part of Daraz, the country’s number one e-commerce platform. We’re building an ecosystem where customers of both platforms are rewarded d) We’ve our highly experienced in-house technology team which gives us the flexibility to solve real-time problems with a quicker turn-around time.
Ruhul: Can you please talk about the organizational culture of HungryNaki?
Tasfin: We’ve put together a young and dynamic team at HungryNaki. At the center of all, we do at HungryNaki is the technology that empowers it. The challenges in a hyperlocal environment are much larger than anyone can anticipate. You need a team of highly skilled and dedicated members who understand the challenges and are willing to go the extra mile. We have that at HungryNaki.
The times have changed. Today, the world of work is more flexible, which is why we are constantly evolving our culture. From hybrid work options to free wellness consultations to robust upskilling opportunities; we want to ensure employees have all the support they need to unlock their productivity, creativity, and innovation.
We know people work best when they are happy and this is a guarantee when you work at HungryNaki.
Ruhul: What are the challenges for HungryNaki today?
Tasfin: The first and primary challenge is to live up to the customer expectation of delivering a quality service. By quality, I mean good user experience, quality food, and timely delivery. For that to materialize, we need to build a product that is at least at par or better than the competition and build an efficient operation.
Another challenge is to build a sustainable business model where we can achieve user growth while being efficient in key business parameters. Customer retention is important for HungryNaki. Also, spending is needed to acquire new customers. So, there has to be a perfect balance between scaling and efficiency.
Ruhul: What are your expansion strategy and plans going forward?
Tasfin: As mentioned earlier, HungryNaki is currently serving 15 zones in Dhaka and Chattogram metro. We have plans to expand in other zones as we improve our product and service experiences along the way. We do not want to jeopardize our customer experience at the expense of expansion. We will only move to certain areas when we can assure 100% of the service.
In terms of new business verticals, we have a grocery segment that is running at a limited scale for now. Since quick commerce is one of the growing businesses in food tech, we also don’t want to miss out on the opportunity. We’re working to develop the infrastructure and assortment to grow that business too.
Ruhul: What do people generally misunderstand or don’t understand about the food delivery business from the outside?
Tasfin: From the outset, food delivery may seem like a simple task. As a customer, I’ve placed an order on the app, and the delivery person is delivering the food to me as per the stipulated time. But it’s not an easy task by any stretch of the imagination, and a lot of things need to fall in place to make this happen.
Every stakeholder in the process — rider, restaurant, HungryNaki personnel needs to be on top of their game. Rider needs to accept the order in time, the restaurant needs to respond and start preparing the food, then the rider goes to the restaurant, picks up the food, and delivers it to the customer's destination. Everyone in this chain has to be monitored and make sure they maintain a timeline. If any of the chains break, delay happens and customers get hampered.
Ruhul: You mentioned this interesting observation about today's work environment earlier in the conversation. Can you briefly tell how much the workplace culture and people’s expectations of their working environment have changed over the last 10-15 years?
Tasfin: The work culture has changed a lot since the time we joined the corporate sector. The number and the quality of graduates have changed over the same period. We were the first lucky ones who got the advantage of joining the telecommunication industry. It was the beginning of the industry in the country. Later the industry has become very competitive.
When I started my career, the salary was one of the primary factors for taking a job, which later shifted towards the brand value of the company, etc. Now things are completely different. Today, it is a combination of many things including salary, quality of life, work-life balance, etc. Money still plays an important role but people are also concerned about the quality of life. People also want to understand if we are earning more, how are we spending that money?
People have more options today. The economy is growing. The world is more open. So people have more liberty in choosing their career, which has made recruiting the right talents harder for companies. People want everything: a good salary, a good working environment, a good work-life balance, and so on. So things have changed a lot in the last 10-15 years and they will keep changing.
The best thing any employer can do is to adapt to the changes and make it work. Because if your employees are not happy, you will not get good results.
Ruhul: That's an excellent answer. In terms of retention, what you mentioned is absolutely true. One of my observations is that for startups it is really difficult to retain people. If you can't retain people, it affects every aspect of your operation. You can't execute a coherent strategy if your team continually changes every few months. Do you have any tips for companies to improve their employee retention rate?
Tasfin: For startups, it is even more challenging. Startups are usually fast-growing, dynamic organizations. The environment in an early-stage company is completely different from traditional companies. Things move fast. You joined a company doing X number of deliveries and orders, and in a couple of months, it is now doing 4-5 times of that. This breakneck speed creates many challenges. The person who was a good fit for 100 orders a day might not be suitable anymore when the company is doing 10,000 orders a day. The challenges come from both sides.
Sometimes the company does not find the person any more suitable for the growth they are projecting. Sometimes the employee, despite having the quality, is not ready for the job. This is a unique yet very common challenge for startups. Consequently, not having a high employee retention rate is quite understandable for a startup.
Now if the above two reasons are not the source of your retention problem, it warrants your attention. One potential solution is showing the employees the bigger picture. It is common for people to change jobs for a raise or a promotion in the early days of their careers. So mentorship and motivation can influence your retention a lot. The job of a leader in this context is to make his employees understand the importance of their work and contribution and what their journey looks like 2-3 years down the road in the company.
I have been with Daraz Bangladesh for 3 years only. We have grown almost 400 times in this period. In our early days, many of our talented colleagues wanted to go and join other companies. In those situations, I usually would make them understand their growth potential in the company. I would show them if you go now, after six months you will not grow, but Daraz will grow double. So I would give them the option to either stay, be a part of the growth of Daraz and get the experience of growing a company within six months, or to work for another organization that might not have the strength for this kind of growth.
The early days of your career are all about learning. After all, we all are professionals and we want to grow in our careers. If your base is strong and your learning experience is there, then you can sell that experience for the rest of your career.
Everyone has different goals. It is the leader’s job to retain the right talents by understanding their needs and showing them the bigger picture. It is easier said than done. But I do not see any alternatives to this.
Ruhul: You briefly mentioned that HungryNaki asked you to take over the role of the Managing Director when the company has been working on a new vision and mission. Can you briefly talk about this new vision?
Tasfin: If you look at the startup ecosystem of Bangladesh or South-East Asia or any major ecosystem, we always talk about growth and rarely talk about sustainable growth. It is easy to show growth as long as you are burning cash.
For us, it may seem early to consider sustainable growth given the numbers that we do at HungryNaki, but with the way Daraz has matured over time and with the understanding we have, we believe it is the right time.
We now want to position ourselves differently in the market. We do not want to grow by burning money and giving subsidies. Because that is not sustainable. Instead, we want to understand the needs of our customers and cater to their needs better and more efficiently. The market is big. It can easily accommodate 3-4 players initially and maybe 2-3 players once the market matures.
It is important for an organization, especially when it is in its early stage, to know where to position itself in the market. For HungryNaki, it is clear to us that we want to be the customers’ choice platform. Customers’ choice platform doesn't mean you have to frequently give vouchers, discounts, and gift cards. You can give away those things occasionally. But we want to build a sustainable ecosystem. We don't want to give 20% to 30% discount vouchers to customers and make them wait two hours to get the food. Rather we wouldn’t give any voucher, but deliver your food in 30-35 minutes—hot, good quality and you can enjoy the meal. That's our aspiration.
We are reassessing our position relative to the market dynamics. We want to build an ecosystem where all of our stakeholders benefit. We want to build an ecosystem for restaurant owners, our delivery heroes, and our customers. We are here to serve the customers and we want to do it as best as we can.
Food delivery service is different from traditional parcel delivery or ecommerce. For regular e-commerce, delivery time is not that important unless it is said so. Delivering a few hours late is not a big deal. But not in food delivery. Here you have to be on time. If it is raining outside, you can start your e-commerce delivery service late. But in food delivery, no matter how the weather, you have to deliver on time. It is very very hard to do that. This is what we want to master and build efficiency.
Ruhul: You mentioned that HungryNaki is a challenger brand. There are a couple of players in the market and a few of them are quite aggressive. You briefly touched upon the strategic direction of the company that you want to provide efficient food delivery service to your customers, provide excellent service, and so on to differentiate. I want to dig deeper into your strategy to differentiate yourself, operate sustainably and gain market share given that the market is already quite competitive and you want to balance sustainability and growth.
Tasfin: I’ve already explained a few things related to this. On the differentiation side, we always want to maintain the human touch. We want to be available to our customers, attend to them and listen to them whenever they need us. We will have processes and systems in place as we scale, but we don't want to get to a place where we will never interact directly with our customers.
HungryNaki is the first food delivery company in the country. We have a long history of serving our customers. We have already served 2.5 million orders so far. In today’s context, it may not look like a great number. But it was a good number when HungryNaki started if you put it in context. If you look 4-5 years back, HungryNaki was the number one food delivery company in the market. We have a certain connection with our customers, which we want to retain. We have a customer base whose demand is unique. We want to serve them. And we want to do it sustainably.
Growth is easy. We know it from our experience at Daraz. But sustainable growth is difficult. And we want to do the difficult thing. We want to take a step back and be sustainable first before starting to grow. When you grow sustainably, it is financially positive for you. This is where we want to be.
In the current market situation, the number of orders and growth can be easily gained. We just want to make our life difficult. That's what we are looking for.
Ruhul: Can you give us some numbers or metrics that reflect the state of your business today? It can be the number of orders or any other metrics that you look at or any other general pointers in relation to your competition or the market that can offer an understanding of your business.
Tasfin: I can’t reveal internal numbers. Regarding the industry, we do not have that kind of trade data and I do not want to give a number with respect to the competition, which I am not sure about.
To complement your question I can say, the reason Daraz decided to join the food delivery service is that we want to serve our customers everything they want. There has been a demand from our customers for this service. We wanted to fill the gap. We aspire to serve the existing customers of Daraz for their food needs. We want to give Daraz customers an option to order food online. To that end, we have a huge potential to grow because we don't even serve 10% of Daraz's customers today. That's a way you can say we want to grow within our internal ecosystem. If we can serve Daraz customers well, it can make us the number one online food delivery platform in the country. That's where we want to focus.
Ruhul: You mentioned earlier in response to another question about the integration between Daraz and HungryNaki where people who use Daraz can also order food from HungryNaki from the Daraz app. From your answer what I gather is that the integration is going to be even more seamless going forward.
Tasfin: Yes. That's where we plan to position ourselves in future
Ruhul: HungryNaki and other online food delivery platforms follow a commission-based structure to earn revenue where they get a certain percentage of commission from the restaurants. Some food delivery companies have been trying Cloud Kitchen, others have been trying to do white label brands of food items to improve margins. How does HungryNaki’s commission structure look? Do you have anything on the cloud kitchen side of things?
Tasfin: We do not have anything like a cloud kitchen at this moment. However, it appears to be quite a popular model in the ecosystem. Although we don’t have any plans in that line in the short run, we may think of something similar in the future.
In terms of commission, we are the most competitive in the market. As I mentioned earlier, we want to build an ecosystem where all of our stakeholders benefit equally. We carry the same philosophy at Daraz. We want to be the largest e-commerce platform in the country and we want our partners to grow along with us.
We want to do the same in food delivery. To our knowledge, we offer the most competitive commission structure in the market for the majority of our cases. We want to remain so because we want our partners to grow as well.
Ruhul: This is interesting. This connects to my next question. There have been questions about the commission structure of food delivery companies. Many restaurant owners claim that platforms charge a higher commission which makes it difficult for them to do business. It creates an interesting problem for restaurants. They have been on these platforms for a while. Many of their customers now order foods through these platforms instead of coming to their restaurants and dine-in. So they have lost some of their customers to the food delivery platforms. Now when the platforms increase commission, for the restaurants it is difficult to say I don't want to be on the platform anymore because a lot of their regular customers now prefer to order through these platforms and a significant percentage of orders now come through these platforms. Do you think this situation will change in the near future? Because from the demand perspective, platforms have more market power than individual restaurants. How do you see this?
Tasfin: It is a tricky question to answer. Generally speaking, we are in a transition now and we all have to adapt to this new reality. This is true for restaurant owners as well as for the platforms. We have to find the right balance.
It is true that for some restaurants the percentage of dine-in has gone down. But I'm sure the amount of additional sales they get through the online food delivery platforms is significant compared to the loss. There is always a balance and trade-off.
We need to understand the current dynamics in the market. The pandemic has changed the lifestyles and habits of people. Restaurant owners need a model where they can self-sustain by balancing their online and offline sales. It is evident that online food delivery platforms will continue to grow. Ordering food online is convenient for customers. And it makes sense for them. It is the customers who decide this. We can’t dictate that decision.
But how we all can benefit is where I want to conclude my answer. We can’t kill each other. If restaurants don't exist, the food delivery platforms don't exist. We are here because of the restaurants and the customers. From a strategic point of view, online platforms are the bridge between the buyer and the seller. We are just a middleman, a facilitator. We need to create a controlled ecosystem where every stakeholder benefits.
As a platform, if we don’t let the restaurants survive, eventually the ecosystem will fail. If restaurants keep shutting down, there will be no restaurants to serve the customers. This is why it is crucial for online food delivery platforms to know how they want to position themselves in the market.
Ruhul: Excellent observations. You mentioned earlier that food delivery is almost a real-time service. People order foods because they want to have them and you need to deliver the food within 30 minutes. How do you ensure fast delivery? How do your logistics and infrastructure work? Also since you mentioned the integration between Daraz and HungryNaki, does it extend to logistics and infrastructure as well? Does HungryNaki share the logistics infrastructure of Daraz as well?
Tasfin: I will try to make it simple for the general audience to understand. The logistics of an e-commerce company and an online food delivery platform are fundamentally different. E-commerce delivery is usually a point to multipoint delivery, whereas food delivery is a point-to-point delivery. In food delivery, once a customer places an order, the rider goes to the restaurant, picks up the food, and then delivers it to a single customer in the majority of the cases. Unlike ecommerce, there is no clubbing of orders. This is the key difference between the logistics of e-commerce and food delivery services.
Food delivery, in most instances, happens in almost real-time. There is no room for error. Planning and projection are important. Usually, a logistics nightmare happens because of the things that are out of your control, such as bad weather, heavy traffic, a sudden surge of demand in a particular area, etc. Hence, the success of any food delivery company lies in its flexibility — how fast you can adapt to changes, how good you are at projection, and how good you are at assessing the market, forecasting, and preparing yourself.
People often think that operation is all about manpower and goal. It is a wrong concept. Operation is 90% planning and 10% execution. In food delivery, your margin of error has to be always close to zero. If you go out of track once, it can take weeks or months to get back. So it is important to prepare, plan, and forecast well.
Ruhul: You talked about sustainable growth and one strategy to get there is through customer loyalty — building customer loyalty so that your customer acquisition cost goes down. The question is how do you ensure loyalty? Similarly, what are your main cost centers and where do your revenue and gains come from? What does your unit economics look like?
Tasfin: It is difficult to answer all these different questions in short because there are a lot of parameters involved here. To answer your first question, loyalty comes from the services. If you provide quality service, retention is easy.
If you are asking about the scale and the dynamics of the business, I would say, it evolves continuously. Our business in the next five years will be different from what we did in the past.
The scale is the core essence of any startup and of any online platform. It is the only thing that drives efficiency and productivity. At the same time, if your unit economics is not right, the more orders you deliver, the more money you will lose. There is always a right balance between growth and sustainability. I think that is the role of management — to see the bigger picture and devise a strategy to achieve that.
The cost centers are the logistics, the marketing, and the people. Since we are not a manufacturing business, we do not have any production costs. We earn revenue through commissions and delivery fees.
Ruhul: How does your customer acquisition work? How do you see the market evolving going forward?
Tasfin: In the growth phase of any company you will always have different groups of customers. Some customers will come for discounts. Others will use the platform for genuine value such as convenience. Our goal is to offer convenience and variety. Now we have to gradually make this transition. If you continue using a discount-driven strategy, over a period you will not know who your customer base is. If you rely too much on a discount model, it will become hard to get a loyal customer base.
At HungryNaki, we know what percentage of our customers come for discounts and what percentage actually use the platform. Knowing your revenue mix and the customer mix is important. If you are confident about these numbers, decision-making gets easier.
The ecosystem needs to come out of the voucher-dependent model. Relying on incentives alone is unsustainable. Instead, we should focus on quality and customer experience, and try to build a sustainable business.
Ruhul: To that end, do you see any difference in customer behavior compared to a year ago?
Tasfin: Of course, change is happening. Generally, people come to a platform for the first time to try it out. And it is okay to bring new customers by giving them some sort of incentive. This is an excellent basic idea. The real question is: are you being able to retain some percentage of these customers?
It is easy to make a customer use your platform for the first time by giving them a discount. But the value you add through your service will determine the retention of that customer. Retention depends on the service, not necessarily the discount. This change is happening quite fast.
For example, we run four big campaigns every year at Daraz. One campaign per quarter. It is an acquisition strategy for us. Our ultimate success depends on whether we can retain the customers we get through these campaigns.
Ruhul: The success of online food delivery platforms depends on the scale and mainstream adoption of the service. People use a couple of points in favor of food delivery such as the rise of dual-income households where husband and wife work outside, are time starved to cook food, and thus, rely on online food delivery services. Do you see this is already happening? Is food delivery a mainstream trend now where a significant percentage of families in cities use food delivery regularly?
Tasfin: I think it is happening. A couple of changes are happening at once here: lifestyle change, habit, and income.
Several factors are playing an important role in favor of online food delivery services. As you rightly said, in many families nowadays both husband and wife work outside. This percentage is growing fast. These people are already time-starved. Moreover, the heavy traffic in Dhaka eats away a lot of our time, which makes it hard for people to cook after returning home from work. Hiring maids have become complicated and expensive. These inconveniences favor online food delivery services.
All that platforms need to do is stick to the basics and give people quality service and quality food at a reasonable price.
In the past, you could only order rich and expensive foods on food delivery platforms. The options were limited. It has changed. You can now order everything from breakfast to snacks to home-cooked foods to expensive dishes. So the market for online food delivery services will continue to grow.
Ruhul: How big is the food delivery market in Bangladesh?
Tasfin: We don't have any industry-wide data. From our judgment, per day the food delivery industry serves around 200,000 households. The growth potential is huge. There are some challenges such as smartphone penetration and so on. But the market has been growing pretty fast. The average ticket size of orders is about $6-7, so you can get a number from there.
Ruhul: You are in a couple of cities outside Dhaka? How does the adoption look outside Dhaka?
Tasfin: The growth percentage is higher outside Dhaka, which is quite encouraging. Partly because many of these cities are still green fields. I think we will soon get to a point where there will hardly be any gap between the growth outside Dhaka and the growth inside Dhaka.
Ruhul: How do you see the competition in the market?
Tasfin: When you have capable competitors, it is healthy for the growth of the industry. Food delivery has a long way to go. We are just getting started. So the competition is not necessarily among the online platforms. Rather the real challenge lies in changing the habits of people and bringing people online. The market potential is huge. When the market grows, it increases the pie for everyone.
In my opinion, there should not be any meaningful competition in the next 3-4 years. Rather everyone should focus on growing the market share of online food delivery. So I am absolutely in favor of competition at this phase of the industry.
Ruhul: There are questions about the jobs gig economy companies like yours create. Many people want to say that these jobs significantly lack in terms of pay, security, and quality of life. How would you respond to that criticism?
Tasfin: We all have to agree that it is a tough job. Our delivery heroes are one of the most important stakeholders of the ecosystem. Without the riders, the industry wouldn’t even exist.
From the platform perspective, we always try to give them job security and better opportunities. At the same time, it is a growing industry and I believe things will only get better from here. A lot of it depends on the platforms and how they treat their delivery partners. You also have to understand that these jobs weren't common two or three years ago. These jobs are new. And we have to accept that it has created new employment opportunities. The job of a delivery man is like freelancing and there are some positive sides. At the same time, it is a stressful job and sometimes it can be hard to meet the demand of the job. This is how things are.
That said, it is a growing industry. I believe things will only get better from here. The online platforms should provide a quality working environment for their riders.
Ruhul: Do you have any initiative for your riders that addresses these questions?
Tasfin: Yes, we do. We tremendously value the contributions of our riders. We have introduced an insurance policy and try to be there whenever they need any help. That said, there is more to do. But the industry itself is not profitable yet. It highly depends on discounts and vouchers to attract customers. At some point, when the ecosystem becomes sustainable everyone related to it will benefit.
I wouldn’t say things are bad now. Rather I would say, compared to our neighboring countries, the current state of our food delivery market is average. There is room for improvement.
Ruhul: There is satisfaction, beauty. and experience in cooking your own food. There are also many subtle psychological aspects to it. It takes patience and practice. In your experience, does food delivery make people impatient? Because when we order food we just push a button and get the food delivered. This immediate gratification is so tempting that in other areas of your life you suddenly start expecting things to happen with the push of a button. What do you think about that? Do you see that as a potential social impact on all these on-demand industries?
Tasfin: This perspective actually varies from person to person. There is always a counter-argument to what you have just said.
How many of us actually cook at home given the lifestyle we have? The majority of us have a maid in our houses who does the cooking depending on the class we belong to. So the majority of us do not actually cook. It actually depends on making the choice between homemade food and restaurant food.
I wouldn't deny that cooking is fun and the people who enjoy cooking cook whenever they get time. Cooking is an art.
I think there are a lot of things that make people lazier than the food delivery service. Social media and many other influences around us should come way higher on the list than online food delivery when it comes to making us impatient and changing our habits.
Ruhul: How do you stay productive? How do you organize your work?
Tasfin: I juggle a lot of responsibilities. So I try to manage my time efficiently. We are a big team and it is a difficult job to manage a large operation. There are always challenges that need your attention. I try to pick my battles wisely and dedicate my time to the challenges that are worth paying attention to. I empower my people and they have the authority to make decisions. I do support them when needed so that they can make the right decision. I don’t micromanage. I only get involved when something needs my attention and I see that I can add genuine value.
I listen to my people and try to understand their points of view. When people are confident that they are going in the right direction, I do not get involved in that. I check with people regularly, inquire and ask questions, it helps to clarify things and identify areas where I need to get involved. Otherwise, I try not to be an obstacle.
Ruhul: Advice for young people who are getting started in their careers.
Tasfin: For potential entrepreneurs, you have to know your product and service and the market, and your value proposition very well. You must have a clear understanding of why anyone should buy your products or services. You have to understand your path to becoming the best in your vertical. These are the basic things every entrepreneur should figure out before starting a business.
If you are going for a career, prioritize learning over everything else in your early days. Try to figure out what you enjoy, and what makes you come alive. Try different things. Be open and courageous. When you enjoy your work, it can change everything.
Ruhul: How do you see life given that life is finite and we are here for a very short time?
Tasfin: We all know that we will die one day. The essence of life should be doing something meaningful. Now the definition of meaning can vary from person to person. People remember us for our deeds. Some people are remembered for their fame, while some are remembered for small things. Some people are remembered by a lot of people, while some people are remembered only by their family members. I don’t think one is better than the others.
Everybody has their own timeline in this world. We should try to make this as meaningful as we can. We should make sure that our work has a positive impact on the lives of other people. This should be the true essence of life.
Ruhul: What are some of the realizations that you have about life and work?
Tasfin: The only constant in life is 'change'. Things will change and new challenges will come your way. So life is about facing challenges and things usually get better over time.
Hard work and honesty, in everything you do, are the two most important things. In life, you do as best as you can in things that you can control. Then there are things that you can’t control. You have to learn to accept that and make peace with that.
