The Rise of Lazada
Is the South East Asian marketplace catching up?
Lazada started in 2012 with the business model of selling inventory from it’s owned and operated warehouses, but it wasn’t long, before they realized in 2013 that the marketplace model allowing third-party sellers was much more profitable.
By the end of 2014, 65% of Lazada’s sales were from the marketplace. It didn’t take long for Lazada to show up the Asian E-Commerce giants Alibaba’s radar. In 2016 they purchased a controlling stake in Lazada, and earlier this year they replaced the CEO with one of their own staff and injected another 2 billion dollars into the company.
Based on average monthly web visits, Lazada is the biggest e-commerce company in the Philippines, Malaysia, Vietnam and Thailand.
If you are familiar with the Wish app, then you will recognise the similarities with Lazada. The home page follows a similar format of being bold and bright and also favours the tile format. Marketplaces that operate like Lazada and Wish give the customer the benefit of being able to view a number of different products from different sellers on the homepage.
On Lazada’s home page you’ll find things like gadgets, clothes and beauty products. You might wonder why the Filipino market would be inclined to buy things like shampoo online when they can get it at the nearest mall, but Lazada offers customers significant discount on products like this, sometimes reaching up to 50% off the normal retail price. Larger, more expensive products can also be found on Lazada, like motorcycles for example.
Now that Alibaba’s influence is seeping in - the verification methods used by Lazada look set to get a lot tighter. Although they are currently dominating the Southeast Asian marketplace, companies like Lazada make no secret of the fact that expansion across the globe is a future option.
If Lazada want to try and corner some of the market in places with tighter restrictions on things like online brand protection, then it is likely it will become slightly more difficult for the sellers. Much like the model companies like Amazon use for third-party sellers, Lazada requires some identification to get registered and get your shop live. One of the things that makes it so appealing to sellers is the fact that you only pay a commision to Lazada when your product actually sells.
Lazada is incredibly easy to use, being accessible by smartphone app, smartphone browser or desktop device. Lazada favours the “tile” format that is preferred by a number of different E-Comerce platforms which makes it easy to use for anyone registered to other online selling websites.
One of the more beneficial features of the Lazada marketplace is the ability to track your order straight from the homescreen.
This feature is available on both the desktop and smartphone. The ordering process is very straightforward and Lazada have obviously taken notice that consumers want the shortest amount of steps towards a purchase.
Customers can either use a Lazada wallet or a debit card to pay. Another feature that stands out among competitors is the availability of a “payment plan”.
We’ve carried out test purchases on many items on the Lazada marketplace. The actual Lazada website is easy to navigate. Once you have all of your items in the cart you can pay with a credit or debit card, Paypal or cash on delivery for some items.
This is one of the ways Lazada really understands its market, because there are still some people in parts of Southeast Asia that do not have a bank account or a debit card to use to pay for goods.
Delivery times can vary. The only issue that arises is that sometimes, it isn’t actually Lazada that are to blame for delivery delays. Unreliable post is an issue in some countries in general, so there can be issues outside of the marketplaces control that delay the item in getting to you.
There is also still a bit of work to be done on the customer service at Lazada, but hopefully Alibaba will start to improve things as part of their renewed investment into the marketplace.
Lazada has a number of positive reviews from customers in the countries it is available. While the marketplace may still be slightly immature compared to others, recent developments have seen it take a step in the right direction towards becoming a global player.
One of the main things customers pick up on is the fact that products are offered at such a reasonable price. A lot of reviews also state that even if the products are not up to standard - the returns process is very easy.
Now that Lazada has the bolstered strength of an Alibaba investment, it looks as though they will try a “mobile-first” strategy and try and capitalise on the lowered head culture that is sweeping South East Asia.
South East Asia has more than 641 million consumers, of which 51% are using mobile devices. With this growth set to increase within the next 18 months - it is a great time for Lazada to get their foot in the door of the ever growing mobile E-Commerce market.
As part of our popular test purchase service, we continuously put marketplaces like Lazada to the test. Electrical items are a big seller on Lazada so we ordered a small mp3 player to test the process. The Lazada website is very bright and colourful and although it may be preferential to the younger audience, this set-up could potentially be a bit overwhelming to older users.
The ordering and payment process is simple and quick. We considered the fact that the item was travelling quite a bit to get to us, but it actually came shortly before the two week time window we were given. The item itself was exactly as it was described, with no damage done during the shipping process.