Lazada Philip­pines to ex­pand part­ner­ships with brands, MSMEs

Business World - - Corporate News - Cathy Rose A. Gar­cia

LAZADA Philip­pines is plan­ning to ex­pand its part­ner­ships not just with tra­di­tional brands, but with mi­cro, small and medium en­ter­prises (MSMEs), as aims to keep its lead in the in­creas­ingly com­pet­i­tive e-com­merce mar­ket.

“We grew very fast the en­tire year and we have ag­gres­sive plans for next year. We are re­ally con­vinced that Philip­pines will con­verge with other mar­kets in ecom­merce pen­e­tra­tion and we will def­i­nitely be the main player here,” Car­los Oter­min Bar­rera, chief op­er­at­ing of­fi­cer of Lazada (Philip­pines), told Busi­nessWorld in an in­ter­view at the com­pany’s of­fice in Bonifacio Global City on Nov. 28.

He es­ti­mated the per­cent­age of on­line re­tail sales in the Philip­pines is around 2% of the to­tal re­tail mar­ket, which is “very low” com­pared to China or United States which is around 25%.

“There’s def­i­nitely a lot of room for growth. It’s higher in the metro ar­eas be­cause peo­ple are more In­ter­net savvy or they nor­mally used to shop­ping on­line. But we’re also see­ing some re­gions, prov­inces where Lazada is big be­cause they don’t have many choices,” Mr. Bar­rera said.

For next year, Lazada aims to in­crease the num­ber of brands un­der LazMall. Launched in Septem­ber this year, LazMall has over a thou­sand brands in­clud­ing The SM Store, Robin­sons Ap­pli­ances, Sam­sung, Huawei, MAC, L’Oreal, May­belline and Unilever.

“We will in­crease num­ber of brands, num­ber of par­tic­i­pants. We are quite con­fi­dent of the value we are bring­ing into the mar­ket,” he said.

Mr. Bar­rera at­trib­uted LazMall’s success to the fact that Filipinos value au­then­tic­ity and qual­ity when shop­ping on­line.

“We wanted to set this up as the stan­dard for the branded (on­line) mall ex­pe­ri­ence. It has very good prom­ises — bet­ter re­turns, next day de­liv­ery, 100% guar­an­tee. We work with the main prin­ci­pals of the brand so they also give us lots of ex­clu­sive items,” he said.

Lazada, which is ma­jor­ity owned by Chi­nese ecom­merce giant Alibaba, is also look­ing to ex­pand its lo­cal mar­ket­place with par­tic­u­lar fo­cus on mi­cro, small and medium en­ter­prises (MSMEs). At present, there are around 20,000 Philip­pines-based MSMEs on Lazada.

The com­pany has part­nered with the gov­ern­ment, par­tic­u­larly the De­part­ment of Trade and In­dus­try, to help MSMEs en­ter the e-com­merce mar­ket.

“One of the rea­sons why we are so suc­cess­ful is we’re get­ting more and more busi­nesses on­line. We be­lieve Lazada is the big­gest op­por­tu­nity. Even if you have small store in the prov­ince, just by go­ing on Lazada, you will get na­tion­wide reach,” Mr. Bar­rera said. “We are very con­vinced that in a coun­try like the Philip­pines with over a mil­lion SMEs, we will be in the hun­dreds of thou­sands very soon.”

Lazada also plans to in­tro­duce new tools on its web­site to serve its cus­tomers bet­ter and help their sell­ers’ busi­nesses grow.

CHAL­LENGES

De­spite stel­lar growth, Lazada still faces chal­lenges, mainly in pay­ments, lo­gis­tics and trust. Mr. Bar­rera said the com­pany has in­vested heav­ily in pay­ments and lo­gis­tics.

“Our lo­gis­tics is def­i­nitely the best in the Philip­pines and we con­tinue grow­ing our foot­print. We re­cently opened our Davao ware­house and we con­tinue open­ing our lo­gis­tics cen­ters, hubs. For pay­ments, we have the Lazada Wal­let and part­ner­ships,” he said.

To ad­dress trust is­sues, Lazada has rules on the sale of coun­ter­feit items on the plat­form, as well as re­funds and re­turns.

“The way our site works is we give more traf­fic to the au­then­tic, ver­i­fied, strong sell­ers… In fact, we re­cently started sell­ing cars for the first time in the Philip­pines. It makes you re­al­ize the bar­ri­ers are re­duc­ing since peo­ple trust Lazada to buy a car, a big in­vest­ment,” Mr. Bar­rera said, re­fer­ring to the sale of Mini Cooper S Monte Carlo Edi­tion cars dur­ing Lazada’s 11.11 event.

Lazada was crit­i­cized by many cus­tomers when it stopped of­fer­ing free ship­ping for or­ders in Metro Manila last July. In­stead of stan­dard free ship­ping, stores and sell­ers were al­lowed to set the min­i­mum spend re­quire­ment for ship­ping dis­counts.

“When you look at the items and our dis­tri­bu­tion, what we do now is as a plat­form is we also want sell­ers to dif­fer­en­ti­ate them­selves and to do bet­ter ser­vice. To­day we have over 30-40% of our items with free ship­ping shoul­dered by the seller. But also what we did thanks to that is re­duced the cus­tomer ship­ping fees across the Philip­pines. Yes, it was a bit of bad PR that free ship­ping was gone but in re­al­ity, a lot of our sell­ers are of­fer­ing free ship­ping on their own,” Mr. Bar­rera said.

He noted many Lazada cus­tomers now con­sol­i­date their or­ders to take ad­van­tage of free or dis­counted ship­ping of­fers by the sell­ers.

This month, Lazada also low­ered its ship­ping fees around the coun­try, even for bulky items.

LAST BIG SALE

Com­ing off the success of the 11.11 sale, Lazada is hold­ing an­other sale event called 12.12. Un­like the one-day 11.11 event, the 12.12 event runs from Dec. 10 to 12.

“We fo­cus on all the rel­e­vant themes mostly for Christ­mas. The theme is ‘Shop with heart’ for your fam­ily, your friends. It has a lot of gift­ing me­chan­ics, spe­cific bas­kets, lots of beauty prod­ucts. It’s our big­gest sale of the year in the Philip­pines. De­cem­ber is the main month here,” Mr. Bar­rera said.

He noted the 12.12 sale of­fers a wider num­ber of deals and prod­ucts, mostly un­der the gro­cery, fash­ion, beauty and per­sonal care cat­e­gories.

Lazada is com­mit­ted to en­sur­ing that prod­ucts or­dered dur­ing the 12.12 event will be de­liv­ered be­fore Christ­mas, ex­cept if the item is shipped from abroad.

De­spite in­creas­ing com­pe­ti­tion from other ecom­merce plat­forms such as Shopee and Zalora, Lazada is still up­beat on its prospects next year.

“There are some com­peti­tors but we are also happy that the e-com­merce mar­ket is grow­ing. We are very con­fi­dent in our busi­ness model… Other plat­forms are more of a C2C (cus­tomer-to-cus­tomer), sec­ond­hand item mar­ket­place… We are the plat­form of the top brands and the top sell­ers,” Mr. Bar­rera said. —

CAR­LOS OTER­MIN BAR­RERA, chief op­er­at­ing of­fi­cer of Lazada (Philip­pines)

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