E-commerce reinvented in Asia
As part of my #wwdigitour I attended the Asia SME Summit in Manila and discovered how LAZADA is redefining E-commerce in the Philippines. The company co-founded by the CEO Inanc Balci and the famous Chinese giant Alibaba developed an E-commerce platform now employing 2,800 people and handling 10k to 20k orders a day. The platform is currently ranking locally 7th most browsed website before Wikipedia and Instragram. Leveraging Alibaba experience and best practices LAZADA had to adjust to its market needs and create a whole new value chain for E-commerce. LAZADA CEO has even changed the name into M-commerce for Mobile-commerce or S-commerce for Social commerce. Indeed Filipinos customers first and foremost use their mobiles to go online and are avid users of social networks, the Philippines are very often referred to as the nation of selfies. The mobile penetration rate is 126% with 47 Million Filipinos on-line.
What strikes me most in Balci’s presentation is LAZADA creative approach transforming obstacles into competitive advantage.
Lack of on-line payment
Most of the customers in many emerging countries do not use plastic and pay cash. Until LAZADA the existing platforms delivered the goods to a point of sale where the customer collected and paid. This transaction did not offer the expected benefits of an online experience. LAZADA created a new company helloPay (e-wallet now rebranded Alipay) using email or phone number. In order to service the multitude the platform also offered the possibility to pay cash on delivery. To exceed expectations it granted a 14 days window to return the good with refund. The objective is to provide an outstanding customer experience and build trust in the platform. The logistics in the background is very complicated and costly. Collecting cash is always a risk and can add logistic costs. The last mile delivery company may need to do several visits to meet the payor. Once more to cover the 8000 locations in the islands LAZADA added LAZADA Express to the 15 different logistics company already servicing the merchants. LAZADA is still working closely with Alibaba to ensure profitability of the system due to the unpredictability of the returns.
Lack of digital savyness
Success of an online platform depends on its catalog and the range of products it offers to both satisfy the consumers and accelerate revenues for the merchants. Attracting a large number of merchants with popular items is essential. The merchants were doing business in traditional malls and outlets with sometimes a Facebook page, very rarely a website. Most of these small and medium business do not have the skills to sell on-line. LAZADA then built Marketplace Services proposing a range of marketing and design services, financing, equipment selling and fulfilment. In short LAZADA built a full eco-system with its end to end value chain. Last but not least LAZADA replicates the tricks of the trade by organising a major sales similar to Amazon and Alibaba black Friday.
Powerful analytics keep the company on edge. Mr Balci firmly stating that “if we cannot measure it we simply don’t do it”.
The whole presentation reminded me of the e-commerce giant and his CEO quote : “ I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out. “ Jeff Bezos