eCommerce success: the story of Lazada (1)
Laia Ordoñez
13/07/2021
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Today we are going to talk about the story of Lazada, the Southeast Asian eCommerce giant, as an eCommerce success story. Don't miss it out!
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There are many variables that determine the success of any business. One that modifies all the others is the socio-demographic context, because where our customers are and what they are like will determine the entire strategy.There are companies that take this into account and others that do not. Undoubtedly, Lazada is clearly in the first group.We are going to write two complete posts about an initiative that goes beyond e-commerce, as it was understood in its area of activity.
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Lazada´s vision
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The entire eCommerce universe seemed to focus on the same markets: the United States, Europe, Asia.... It is common to find global marketplaces competing with local online stores.However, there was one region that was not getting all the attention it deserved in terms of potential and volume. We are talking about Southeast Asia, made up of different countries with common idiosyncrasies and characteristics.The region, made up of countries such as Indonesia, the Philippines, Malaysia, Singapore, Thailand and Vietnam (along with a few others), is a region with capacity and competitiveness when it comes to production, but not very well exploited in B2C eCommerce.
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INSIGHT: The business opportunity is often where others cannot see it, but, at the same time, very much in sight. Lazada saw the need to be filled and took on the responsibility of being the big e-commerce player in Southeast Asia and providing those users with a quality shopping experience.
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In addition, as a matter of proximity, the online consumer in Southeast Asia was previously served by other eCommerce and marketplaces in nearby countries. These use the purchase driver of price well above customer care and customer service.
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INSIGHT: The "where" and "who" are critical, but Lazada wanted to add the "how" to this strategy. They found in the search for the best shopping experience a differential value that was not being exploited.
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Lazada's foundation
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It was 2012 when that vision materialized into something much more concrete.With the Turkish Inanc Balci as CEO and the support of one of the most important startup accelerators in Germany, Lazada Group was born, a company different from what was on the market, based in the Philippines and initially operating in 5 other countries around it.Originally, they were focused on one of the niches that have historically worked best in Asia: consumer electronics and devices. Even so, their intention was always to become more horizontal in terms of catalog and categories, which they did as soon as they had the opportunity.
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INSIGHT: The right mix of region/community and product that this audience demands is the basis for the success of Lazada and so many other business models. It may not be so easy to find, but hence the importance of prior market research and validation of assumptions based on statistical data.
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Making a difference
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Lazada, in addition to its products and services, has some of its own characteristics that have to do with operational aspects that also help to make a difference.
- Own logistics: thanks to their well-designed structure and considerable investment in logistics (they have warehouses in 17 cities throughout the country), they are able to offer their customers a service in which they have absolute control of the distribution chain.
- Secure means of payment: another of the aspects on which they have focused is to offer customers the widest possible variety of means of payment and, of course, all possible security in transactions. It seems obvious, but they are in a territory where there is not the same control of fraud in general as in Europe or the United States.
- Advanced technology: their investment in these resources to implement their customer-centric vision, which combines shopping with an efficient but also, to a certain extent, playful service.
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INSIGHT: Set out your competitive differential value proposition and provide your business with the necessary tools and resources to shape it consistently.
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AliBaba buys Lazada
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It was only a matter of time before the Asian eCommerce giant par excellence set its sights on Lazada. The Chinese did not want to miss out on a piece of the pie that was juicier than they had initially thought.In 2016 the offer came in, and Lazada Group, while keeping its structure, brand and portals, became AliBaba's extension in its region.Thanks to the generous investment received, it not only benefited from the knowledge and resources of the parent company, but also took advantage of the liquidity to incorporate a powerful online supermarket from Singapore into its ecosystem, which allowed it to move into that area of the business.
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INSIGHT: Not always being bought by a larger company means disappearing as a brand. If both players are smart (as in this case), they can respectively benefit from the best of both.
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In the next post of this series we will go deeper into how they sell, their strategy, eCommerce, campaigns... Are you interested in learning more about Lazada's success story? Stay tuned!
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Images | Lazada, Unsplash.