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Lazada aiming to dominate ecommerce in South East Asia and act as a ‘new brands incubator’

Alibaba-owned online shopping platform Lazada has declared its intention to own the ecommerce space and supply chain in South East Asia, in the same way as Amazon does in America.

The firm, which started under Rocket Internet in 2012 before being bought by Alibaba in 2016, claimed at its first ever Brands Future Forum event in Singapore today that it would dominate the future. It would do so thanks to it efforts to make shopping fun by way of blending it with entertainment to create “shoppertainment”, it was said.

Explaining the concept, Lazada Group chief executive officer Pierre Poignant mapped out how the newly-introduced livestreaming by sellers on the platform meant that customers could actually “engage with brands”.

Poignant sees ‘shoppertainment’ as Lazada’s unique selling point

The company has also integrated gamification, influencers and real-world events like concerts into the app – helping it to harvest rich customer data that is indicative of buyer behaviour and trends.

“That’s how we will win, by combining shopping with entertainment,” Poignant told an audience of more than 300 sellers at the JW Marriott hotel in Singapore today.

Also at the event – which would have cost hundreds of thousands of dollars to host and was a statement of intent to the market – were more than 120 journalists flown in from China, Indonesia, Philippines, Malaysia, Thailand and Vietnam; with all presentations being simultaneously translated from English into Mandarin, Bahasa, Thai and Vietnamese.

Besides Alibaba, the investors in Lazada have included British supermarket group Tesco and Singapore’s sovereign wealth fund Temasek. In 2017, Lazada also acquired the online groceries platform Redmart – which has now been incorporated into the Lazada app.

Lazada has innovated with measures such as payment on delivery, next-day delivery where possible and customer pick-up points.

Besides revenue from commission on vendor products sold on the site and sales of its own product range, Lazada also receives advertising revenue. Like Amazon, it owns most of its own supply chain and logistics – another potential revenue source as this infrastructure could be used by other suppliers at a charge.

This would work in much the same way that Amazon sells its supply services to others due to the fact that it owns so many planes, ships, warehouses and delivery mechanisms.

“We control 80% of our own logistics and supply chain, which helps us build trust with customers,” said Poignant.

“We have done a lot to integrate with Alibaba. We want to accelerate progress in South East Asia through commerce and technology.”

Alibaba has already stated its ambition to hit 300 million customers by 2030, at the same time creating 20 million new jobs and eight million small and medium enterprises as sellers on its platforms.

Lazada itself boasted that its consumer base was 60% female, as women were the buying decision makers in Asian households. The top-selling segments on the platform were said to be electronics, fashion and fast-moving-consumer-goods.

Poignant acknowledged that container ships had changed the world in recent decades with globalisation enabling widened and deepened international trade. However, he said small businesses would be the source of progress going forwards and promised that small-scale vendors would have just as much prominence as big brands on Lazada.

Historically, luxury big brands have steered away from platforms like Amazon because of the competition such online sites present to their established high street stores in the offline world.

“The next big wave of change will come from the parcel, not the container,” said Poignant. “ We want to create and establish those connections in the next decades and we are only at the beginning. We are building a legacy and a long-term sustainable business.”

He also claimed that Lazada had the best technology, the best platform, the fastest delivery time, the best logistics and the best payment capability in Alipay.

Despite the positivity, Lazada avoided any questions around competition from Amazon or what the firm’s path to profitability might look like. Before being acquired by Alibaba, the company was losing hundreds of millions of dollars every year.

Yin waxes lyrical about Lazada

Speaking to Mumbrella, Lazada Group president Jing Yin refused to discuss Amazon or the projections for when profitability would be reached. He did, though, confirm that Lazada had no ambitions outside of South East Asia – perhaps due to the competition from Amazon and the parent company Alibaba in other territories – and no plans to open high street brick and mortar stores, as Amazon had.

Explaining the strategy for the six countries where Lazada already operated – Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam – he again said the focus would be on initiatives like “shoppertainment” in order to deepen connections with the millennial audience and the creation of an “end-to-end closed loop” supply chain.

“We want to stay young and be the pioneer ahead of the curve through engagement with the youngsters,” said Ying. “That’s how the ideas come, detecting the trends and empowering the countries.

“We are ambitious and bullish about 2019. The e-commerce market is still very young, but we firmly believe we can empower hundreds of thousands of entrepreneurs to run their business on Lazada.

“We want to be the incubator for new brands in South East Asia. It’s about giving the opportunity to the young dreamers. We want to address the key pain points with empowerment, experience and efficiency.”

During the event, Lazada also launched its inaugural Brands Future Forum Awards. They were designed to celebrate those brands doing interesting things on the platform.

The winners were:

  • Best Marketing Innovation – Unilever
  • Best Product Launch – Wurdah
  • Best Social Media Activation – Pampers
  • Fastest Growing Brand – Coocaa
  • Customer Choice Award – Philips
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