Online shopping Zalora experiencing explosive growth in PH market

Zalora Philippines, an online shopping e-tailer, is implementing an aggressive expansion binge all over the country in response to its “explosive” growth which the company believes could double in the next three years as more Filipinos are getting hooked into shopping online because even those in remote areas with no physical access to the fashion brands of their choice can now purchase these items via the Internet.

Paulo Campos, Zalora Philippines co-founder and CEO, said in a press conference the company is investing in a new bigger warehouse in Carmona, Cavite and is expanding its delivery service hubs --Zalora Express -- in four new locations within the year. It is also relocating to a new office in Bonifacio Global City shortly.

The new warehouse is a 10,000 square meter area with storage capacity of 2 million products as against its existing 6,000 square meter facility in Parañaque, which can only handle an inventory of 700,000 items. The new Zalora Express hubs will be opened also this year in Iloilo, Cagayan de Oro, Bacolod and Pampanga. They have existing hubs in Metro Manila (with 50 motorycle riders), Cebu (5), Davao (5) and Zamboanga (5). Metro Manila is same day delivery after a 12 noon cut off and next day delivery for the provinces. Zalora delivers free shipping cost for orders above 1,000 and a 30-day free return policy.

All these will support a robust growth in the next three years. This year, Campos said, they expect this year to double its 2014 sales growth.

“We have an explosive growth in all matrix,” Campos said citing that the company grew 400 percent in sales on its first full year in operation in 2012 to 2013. It also doubled sales or 150 percent growth in 2013-2014. Last year, the company grew 100 percent over 2014.

“We are projecting to double our sales in three years or 100 percent growth each year,” Campos said. “We are quite big in sales but growth is still explosive in terms of value of transactions,” he said.

Campos explained they have been experiencing phenomenal growth rate despite the fact that their prices are at par with the items sold in the regular retail stores.

“We have the same price with the retail stores, we are not cheaper. We have been able to achieve scale without undercutting prices, so the shift is fundamental. All we do is to play on the imagination of our online shoppers,” Campos said.

Campos attributed these achievements to three mega trends fuelling e-commerce adoption in the Philippines. First is the strong uptake of internet users. At least 41 million Filipinos are now online and expected to grow to 70 million by 2018 with the usage of smartphones. Second, the rising disposable income as GDP is growing much faster than in mature economies. Third, rising trust in online transactions.

Within three years, Zalora Philippines has established over 500 plus local and international partner brands, over 370 independent Marketplace sellers and over 50,000 products online. It has an average of over 3.5 million site visitors a month. A total of 300 direct employees, excluding motorcycle riders, are working to please Zalora customers.

In addition, Zalora customers have now shifted. Data showed that 60 percent of its customers are in the provinces and 40 percent Metro Manila from what used to be 60 percent Metro Manila and 40 percent provincial when it started operations three years ago.

This is largely because shoppers in remote areas do not have access to brands that they want to buy but they can purchase it via the internet. Its data also showed that local brands account for 60 percent of its sales and foreign with 40 percent.

Company Managing Director Constantin Robertz noted that its peak month is December. It had experienced over 30,000 orders or 1 item per 3 seconds shipped in just one day in one December.

Since credit card usage in the country is not that high, Zalora allows payments on cash basis upon delivery. As such, 70 percent of its payments are on cash basis and this business model has 90 percent success rate.