Lazada eyes further expansion in Malaysia
Online retailer aims to set up warehouses at strategic locations
ALIBABA-owned Lazada Group is eyeing further expansion in the Malaysian market as it not only plans to further penetrate rural households but also aims to set up warehouses at strategic locations.
Lazada Malaysia CEO Hans-Peter Ressel tells StarBizWeek that currently more than 80% of its business comes outside of Kuala Lumpur and the Klang Valley, and there are plans to offer more online products and services to the rural segment, including Sabah and Sarawak.
“There have been good demand for various product brands using Lazada online platform in the rural areas like in the east coast, the northern and southern parts of the peninsula. Besides this, Sabah and Sarawak are growing markets for Lazada. In view of the good penetration of Internet in the rural segment and the higher usage of smart phones, people in the rural areas are now buying more online.
“Also because of the limited choice of products available in the brick and mortar shopping malls, people living in rural areas prefer to shop online as they can pick and buy a variety of brands at their own comfort. Our focus is to reach every different customer segment in the country and deliver products and services as prompt as possible,’’ he says in an interview.
Sabah and Sarawak are another growing market for the online shopping platform as currently it has three warehouses - two in Kuching and one in Kota Kinabalu. “By having warehouses, we can procure products much cheaper and save on shipping fee etc. We see huge demand in Sabah and Sarawak for the range of products under Lazada’s online platform.
“At the same time, we have also expanded our selling by offering cash upon delivery in Sabah and Sarawak as credit card usage is relatively lower than in the peninsula,’’ Ressel adds.
In order to get closer to its customers, he says Lazada may open more warehouses in Johor Baru, Penang and also in the east coast to meet growing demand for its product offering.
At the moment, he says it is still deciding whether it should set up warehouses on its own or team up with logistic providers, adding that Lazada has yet to decide on the matter. “At the end of the day, we want our customers to get their products soonest and relatively cheaper,’’ he notes.
On the growth of Lazada in Malaysia, Ressel says it is among the fastest for the group in the region. Sometime last year, Malaysia was the fastest growth market for the group in South-East Asia, he says, nothing that currently it is Singapore due to its smaller base.
He stresses that since it started operations in the country in March 2012, the online retailer has ramp up its products range to 45 million currently from about 20,000 then.
In 2013, it embarked on a strategy of having third party sellers to market their brands using the Lazada platform and this currently accounts for more than 80% of its business. The balance is from the retailer buying and selling brands on its own and not via third parties.
According to Ressel, Lazada has expanded its portfolio from selling online products to ancillary services offered by the product itself. For example, through Shell online store on Lazada, car owners not only can buy Shell Helix motor oil online but are also offered engine oil service packages at selected authorised workshops in the Klang Valley and Johor. There are about one million automotive products currently available on its Lazaada’s platform, including oil and fluids as well as accessories.
Customers can also now, among many other services, have access to tyre fixing services and many more through the Lazada platform. On the digital side, he says a customer can buy his or her prepaid top-up as one of the services offered in the platform.
The best selling product on Lazada at the moment is diapers, he says, adding that every one out of 10 sold is from Lazada. On the prospect of Lazada’s business this year, Ressel says he is confident it will do well.
“More people are placing greater trust when purchasing or doing online transactions. There is a big adoption of e-commerce and the online environment is flourishing in the Malaysian market. There are seven million people who have downloaded the Lazada app, almost a third of the population. This is expected to increase further.
“For us the first quarter sales was higher then the fourth quarter of last year. July and August sales for this year have also risen, so we are confident Lazada will do well this year,’’ he explains.
He says Lazada’s competitive edge over other players is that it is very consistent of its focus in providing new assortment of products and services and also the platform for flagship international brands. This also, among others, include Taobao collections which are gaining prominence among many Malaysians.
Lazada, which was founded by German Internet company Rocket Internet, has a presence all over South-East Asia. China’s Alibaba Group last year invested US$1bil in a controlling stake in Lazada,
Lazada Malaysia recently partnered with AIG Malaysia, subsidiary of American International Group Inc (AIG), to provide a more convenient, accessible, and seamless purchase of insurance for Malaysians on its platform.
Customers who shop on Lazada are now able to shop from the “freestanding” AIG shop-front to easily purchase travel, snatch theft and personal accident coverage. These premiums will be priced between RM8 and RM115.