When Berlin-based Internet incubator Rocket Internet
launched the online marketplace Lazada in five Southeast Asian countries in early 2012, it has
placed a big bet in the region.
Unlike other regions of the world, which have dominant
destination websites such as Amazon in the Western World, Alibaba's Tmall in
China, or Flipkart in India, Southeast Asia is a territory of niche players. It
also lags behind other regions in e-commerce maturity.
According to Maximilian Bittner, CEO of Lazada Group, “The
main opportunity that we took advantage of is two-fold: one is that people are
becoming more Internet savvy and the mobile phone penetration is also going up;
and second, Southeast Asian countries have strong developing economies.
Economic growth is not only in the capital cities but also across the whole
countries. What you have in these countries is a lot of offline retail presence
moving to second and third tier cities. We are also taking advantage of the
opportunity to bring these offerings to people who, for the first time, can
spend money and using disposable income."
Bittner added, “The vision is to build a general merchandize
destination website that shoppers would think of as a place to find good buys
from consumer electronics to fashion to home appliances to books to about
anything that they need. This was from same company that also built Zalando in
Europe, Linio in Central America, and Zalora in Asia-Pacific.”
Bittner explained, “The challenges are huge, but learnings
come everyday. We really tried to address the key challenges that exist on a
day to day basis, including challenges in logistics or being able to bring
packages to anyone across the country at an acceptable time, finding the right
mix of products in specific markets and being able to offer them at good
prices, and supporting third-party sellers using the platform.”
Early on, the company realized that to make it as the
dominant regional e-commerce player, it has to be very innovative and use its
strengths as well as opportunities in the market.
ONLINE SHOPPING
Bittner, said, “Each of the Lazada markets—Indonesia,
Thailand, Malaysia, Vietnamn, and the Philippines have stengths. Indonesia, for
instance, has the biggest population, with close to 300 million people.
Malaysia and Thailand are more developed from the GDP perspective and people
have more disposable income. Vietnam's GDP is catching up and has a
geographically dispersed population, which makes it a good market for online
retail. And the Philippines also has a big population—a steady market and increasingly
becoming investment friendly.
"Initially, we focused more on consumer electronics—mobile
phones, tablets, cameras. In the last six to 12 months, we started focusing on
lifestyle products from home appliances to fashion to sports. In the
Philippines, we are selling more small home appliances, in Thailand beauty
products rule, in Malaysia the electronics side is strong. Our product mix is
getting diverse," he said.
Meanwhile, Stein Jakob Oeie, CFO & CMO of Lazada
Southeast Asia Pte Ltd, said, “Southeast Asia is a region dominated by
Facebook. Thus, Lazada’s effort is big on social media.
Oeie shared, "We not only use Facebook but social media
overall for engagement to attract new customers and retain customers. What we
did initially was start on the engagement side. We started communicating with
the customers and we started getting feedback—what we were doing good, what we
were doing better, what we did wrong and we adjust to that. Its a very cost
efficient way to get feedback. Its much easier to get people aboard.”
With a fan base of over six million people on the social
networking site, Oeie said Facebook has become its main customer acquisition
platform. Facebook works to Lazada's advantage because of its regional
presence. Currently, its advertising and customer engagement efforts have
yielded impressive results: 90 percent reach of the online population in
Philippines, 80 percent reach of online population in Indonesia, Malaysia, and
Thailand; and 60 times fan growth in one year to five million fans.
"This strategy has three big benefits for us: almost
everyone here is on Facebook, they are on Facebook most of the time and we can
target them and very customized personalized messages, which make it incredibly
efficient for marketing," added Oeie.
Another strategy, Oeie further explained, is the shifting
focus from the big cities to rural areas where consumers are looking for
products they wouldn't have access to in the neighborhoods.
Bittner believes “that while US and Europe and even second
tier of BRIC (Brazil, Russia, India and China) nations were ahead of the
e-commerce development curve, the Southeast Asian market has a lot of potential
and room to grow. "he market is still very young and we are helping
pioneer that market. The population is very tech savvy, willing to try new
things. So we strive to provide them with tools they need to have a good online
shopping experience, gain their trust by providing safe payment methods, and
introduce mobile apps so they can have access on any device.”
Despite its success in the online space, Bittner said
building a physical store is not part of the plan. Lazada will remain a
pure-play e-commerce destination website. And this strategy has its advantages.
You have the ability to provide offer to anyone who comes to your website. Your
reach is much bigger. You can have unlimited shopping.”
