How Lazada Is Stepping Up Its Business to Regain Lost Ground
In 2018, when I first interviewed the CEO of Lazada Philippines Raymond Alimurung, the company was lording it over the ecommerce landscape in the country. Supported by Chinese tech giant Alibaba, Lazada commanded a whopping 91 percent market share of ecommerce in the Philippines (as of the first quarter of 2017), and left competitors in the dust in terms of search interest, social media presence, and app downloads from the iOS App Store and Google Play Store.
Fast forward to 2021 and the ecommerce landscape looks a lot different. Sea Group-backed Shopee seems to have overtaken Lazada, at least in some metrics. Shopee was the most downloaded shopping app in six markets in Southeast Asia last year (including the Philippines), and it recorded 54.6 million monthly web visitors here in the country during the first quarter of 2021, far outpacing Lazada, which had 38.3 million monthly visitors.
Just five years since it was founded in 2016, Shopee claims that about 57 percent of goods sold online and related transactions throughout Southeast Asia in 2020 were through its platform and courier networks, according to its latest financial report.
But because of the pandemic, ecommerce platforms have benefited from an enormous surge in online shopping the past year. And if you ask Lazada, it seems poised to retake its once commanding lead in the country.
Growth for Lazada
“So far, Lazada Philippines recorded a 2.5x increase in sales (vs. pre-COVID) and a 2x order growth (vs. 2020),” says Carlos Barrera, COO of Lazada Philippines, in an interview with Esquire Philippines. “We also continue to see a growth in sellers onboarding on the platform, with 3x more onboarded daily (compared to March 2020) and bringing consumers on Lazada a wider and growing assortment.”
On its LazMall, an in-app channel that features products from partner brands, Lazada says it now has more than 8,000 brands offering shoppers in the Philippines 100 percent authentic and quality products. The platform also recently launched LazMall Prestige, a highly personalized in-app portal for premium brands including La Mer, Samsonite, KitchenAid, and Polo Ralph Lauren.
“The pandemic has definitely reshaped the way consumers shop and how businesses across industries operate,” Barrera says. “In the past year, we pivoted the business in ways such as introducing new assortment categories like Lazada Fresh to meet shifting consumer needs, where consumers can purchase fresh and even frozen food direct from sellers, some of whose offline businesses had been impacted by lockdowns. LazMart was also an essential service during the height of the pandemic, providing Filipinos convenient access and safe deliveries of pantry staples and household daily necessities.”
Lazada Philippines COO Carlos Barrera
As COO, Barrera oversees Lazada’s daily operations, including seller acquisition and engagement, traffic and category management. Besides the general uptick in people turning to their shopping apps to while away the time and forget about what’s happening around them even for a while, Barrera and the Lazada team also uncovered a few trends and observations about online behavior during an unprecedented year. For one thing, there was a noticeable increase in the sales of grocery, household, and cleaning supplies; home-based hobbies pushed the sales of baking supplies, exercise equipment, gardening tools up; and there was also an uplift in home office equipment as more people shifted to work or study at home.
“We saw almost 2x uplift in home office supplies (2021 vs. 2020),” Barrera says.
In addition, Lazada reports that it saw a 5x increase in use of digital payments in its platform throughout the pandemic, 16x more visits to its in-app livestream, LazLive (compared to January 2020); and 17x uplift on total livestream sessions (also versus January 2020).
While other ecommerce platforms may have eaten into Lazada’s market dominance in the sector in recent years, the Alibaba-backed company isn’t sitting idly by and is doubling down on efforts to regain its lead. In the Philippines, Barrera says Lazada is focusing on its core focus of helping businesses, particularly small and medium enterprises digitalize and scale online.
“In the past year, we really ramped up our efforts to enable brands and local businesses to diversify their retail strategies in a digital space, and engage consumers and uplift the shopping experience,” he says.
At the same time, Lazada said it adjusted its business to provide for the needs of consumers during the health crisis. For example, it prioritized providing essentials on the platform at the start of the pandemic, and continued operations of its online grocery service, LazMart. It also established Lazada Fresh, where sellers offered fresh and frozen goods to consumers. (Lazada says it now has over 2,000 fresh sellers on the platform). And it also introduced Lazada Med to provide consumers convenient access to essential health and medical supplies.
“In response to the needs of our community, Lazada prioritized providing support to MSMEs and sellers affected by the pandemic,” Barrera says. “We established a P100 million stimulus program in 2020, supporting over 7,000 new and existing sellers on the platform; and continued to provide an avenue for local businesses to learn and thrive on the ecommerce space through our continuous partnership with (DTI) Department of trade and Industry).”
Lazada says it onboarded over 2,000 new sellers through the DTI and different industry groups (including Greenhills and Taytay Central Tiangge, Maker’s Market, different LGU collectives) throughout the pandemic, training them to navigate selling online.
“As a platform, we invest heavily in our tools and resources to provide consumers a safe and secure space to shop,” Barrera adds. “Our Sure Ka Sa Lazada campaign underscores our priority in giving consumers not only a secure shopping experience, but also reliable after-sales care. Our logistics capabilities also ensure that these products are safely and conveniently delivered to consumers’ doorsteps.”
Barrera says it was also Lazada that pioneered the “virtual mall” concept with its LazMall, which it is now spotlighting for its 9.9 Big Brands Sale (happening from September 9 to 11). Lazada hopes that offers like free shipping with no minimum spend and deals of up to 90 percent off will entice more users to shop on its platform.
Hyun Bin for Lazada
And because Filipinos are crazy over superstar brand endorsers, Lazada signed up Korean superstar Hyun Bin as its new global ambassador.
“The LazMall brand promises authenticity, quality and a trusted online destination for consumers to enjoy a convenient shopping experience, and for that, it has become a trusted online shopping destination for Filipinos,” Barrera sayts. “Hyun Bin greatly echoes this brand promise, given his genuine personality and nature as a dedicated actor who works hard to continuously develop his craft.”
Hyun Bin for Lazada
While the market size for ecommerce reached $3 billion in 2019 (up from only $500 millioon in 2015), Statista estimates that will balloon to as much as $12 billion by 2025. That’s an enormous market that the major ecommerce players like Lazada hope to dominate.
“Despite the rapid growth of ecommerce in the country, there is still a great opportunity to expand and onboard even more Filipino businesses on Lazada,” Barrera says. “There are over a million small and local businesses in the Philippines, and one of our goals are to work hand-in-hand in helping their businesses grow and scale in the digital space, especially as more and more consumers are rapidly adapting to ecommerce.”