eCommerce success: the story of Lazada (2)
Laia Ordoñez
15/07/2021
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Its marketing strategy is a key point of success in Lazada's history. Today, we delve into it to understand the relevance that the brand has achieved.
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In our previous post, we explained in detail what Lazada is and its importance within the eCommerce world in Asia. We have talked about its origin and its growth with a focus on a very specific geographic area and, surprisingly, little or poorly exploited until its arrival.
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Refreshing the initial premise
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This is a marketplace that aims to become a reference in Thailand, Vietnam, the Philippines, Malaysia, Singapore and Indonesia. The whole population of all these nations adds up to a potential universe of 550 million buyers.Its proposal was based on the highest possible quality of service, own logistics and secure and efficient means of payment, which, basically, is the optimum - but was not being offered so far.
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When, in 2016, Aliexpress arrived to take over the company, they had actually already achieved the goal of being number one in digital sales for all those countries. Lazada thus became an interesting internationalization alternative for the Chinese group, which was seeing a certain slowdown in its market.
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Lazada's business lines
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We have commented before that we are dealing with something that goes beyond eCommerce, or at least a type of eCommerce (although Lazada has also ventured into retail, as we will see in this analysis).
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#1 – Lazada Marketplace
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Originally they sold technology and electronics, but today they have been opening their catalog to reach 18 different categories with their corresponding subcategories. Electronic devices have been joined by women's and men's fashion, babies, home, cosmetics, sports...
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INSIGHT: Once you have gained access to a customer base and built customer loyalty, the next step seems to be to diversify the catalog. Recruitment will be much simpler and more efficient from here.
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#2 – LazGlobal
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At all times we are talking about Lazada as a customer-centric company, but they have never forgotten about their sellers. After all, a marketplace model will only work if they do.
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Lazada has an international line of business under the LazGlobal label. From here they give support to those brands that want to sell outside the limits of Southeast Asia. We are talking about reaching markets such as China, America or Europe.
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INSIGHT: If you have a powerful partner like AliBaba, use its logistics capabilities to add value to your sellers. This will make your platform much more attractive to them and, by extension, to end customers. Internationalization is very "juicy" when you do not have the capacity to do it in a simple way.
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Lazada Retail
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This part of the strategy is relatively new and, therefore, it remains to be seen how far-reaching it will be for the company. Even so, it seems to be a statement of intent.In reality, it is not that they have their own network of stores. What they have done is to reach agreements with retailers and local brands to jointly operate their stores.We are talking, for example, about the store they opened in collaboration with the Korean cosmetics brand Amorepacific under the name Amore by Lazada. Also of great importance in this part of the retail strategy is the use of ephemeral stores or pop up stores.
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INSIGHT: The boundary between off and on is becoming increasingly blurred for the customer: they just want to buy. In addition, with everything that has happened in retail in recent months in the wake of the pandemic, there may be an opportunity to acquire premises or reach one-off deals.
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Lazada´s marketing strategy
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They work hard to highlight their values (customer focus, local/national service and safety). This is something that is very clear on their website.In addition to this, they do not forget about price as a purchase driver. They have a multitude of limited time flash offers, coupons, daily discounts... Let's not forget that the economic aspect is critical for many online shoppers, especially in a particularly sensitive environment due to the huge competition -not always legitimate- that openly goes for the lowest cost.
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Evidently, they are in line with seasonal trends. One of its commercial milestones is always Singles Day, where it breaks turnover barriers year after year. This is a hybrid between the Western Black Friday and Amazon's Prime Days in its AliBaba version.Nor have they forgotten one of the strategies that works best in marketplaces of all kinds: affiliation. Users are very involved in communication and share products when they can get a return for it.
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INSIGHT: In the end, it is important to achieve a well-balanced mix of actions, and Lazada achieves this. Its structure is service + price + seasonality and use of the figure of the prosumer, which generates trust and social proof but also conversion.
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Lazada's keys to success
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- Focus on the shopping experience: it has been shown that satisfied customers are more recurrent and their average tickets are higher. This has allowed them to rapidly increase their turnover by diversifying their catalog without significantly increasing their customer acquisition by focusing on selling mainly to already loyal customers.
- Local/national approach: this is critical to explain their success, because they have been able to approach the market in a more personalized way.
- AliBaba's support is not so invasive: obviously having one of the largest in the market behind them always helps a lot, but they have been smart about not losing their idiosyncrasy and brand.
- Omnichannel and service: they are not closed to a single channel. They have web platforms, mobile app and even physical stores. Their marketing mix does not forget the price variable; the shopping experience is fabulous, reliable and secure; their control of logistics guarantees an efficient service; and, most importantly: their real customers, the marketplace sellers, they are in very good care and very happy selling on Lazada - perhaps more so than on other marketplaces, and we will not mention names.
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What do you think of Lazada's story? Do you find it an interesting success story? Asia is going strong and things may change in the world in the next few years. Are you ready?
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Images | Unsplash, Lazada.