A ‘better’ way of doing business
Credit to Author: MAAN D’ASIS PAMARAN| Date: Sat, 08 Dec 2018 16:22:13 +0000
COO Carlos Barrera talks about Lazada’s successful 11.11 sale and its coming 12.12 sequel
Lazada COO Carlos Barrera would not reveal figures but said that the Lazada 11.11 sale (so named because it was held last November 11) was bigger than anticipated. “You will be surprised at what people bought,” he shared.
“It was a range of fast-moving consumer goods (FMCDs), to electronics, to really niche categories. In general, for these main events like our flash sales where we have special mechanics, we do a lot of FMCDs particularly in the beauty items. Of course, the value is a bit low but we have tens of thousands of them. We look at electronics which are a bit more expensive, and they were moving too. So we are balanced,” Barrera said.
He said that the biggest growth they saw was from fashion. “It has been growing fantastically and a lot of it has been coming through small sellers. That has been one of the surprises for this year. We are happy to see local brands getting on Lazada.”
They have tens of thousands of sellers to date, and they are getting more. “We have a lot of these items coming from small sellers and that has made a huge impact. It has been very encouraging to see this on a day like 11.11, you have millions of customers who browse around so much that e4ven small sellers who don’t have so much traffic every day were successful as well,” he explained.
If not done right, something of this magnitude can quickly turn into a logistics nightmare. To hold a sale that big, Barrera said that they started planning five months ahead. The first phase was to come up with a forecast together with the marketing and logistics teams to see how much they were planning to sell and what the implications are. This information was then cascaded to the sellers, giving them advisories about the mechanics and helping them with their special executions.
Everything had to run like clockwork. “Imagine, on that day, we have tens of thousands of sellers, and when the seller is finished packing we need to be there to pick it up. We cannot waste any time. Our delivery time is very fast because we have a very good coordination,” he said. It also helped that they were backed by Alibaba’s expertise and technology.
Overcoming platform barriers
Admittedly, though, the tech infrastructure is not as good as it is in places like China, and he sees the pros and cons in that. “I think it is important to understand that the Philippines has 2-percent e-commerce penetration of total retail. Tech infrastructure is a bit more limited but we have all the tech in our website that is backed by the Alibaba team in China, so we are really state of the art. We are efficient in the way people use their data and the speed of loading the app.” According to him, all the customer’s information is protected too, through encryption methods similar to the ones used by Alibaba, and they are in very strict compliance with the local data protection laws.
With the country as an archipelago, there are geographic limitations, but the opportunity is also there, he added. “Logistics is very tough, but we are one step ahead with our own logistics company. We have warehouses in Cebu, Davao, and of course Metro Manila and Laguna to be able to save on logistics. We think there are some difficulties, but we will be able to overcome them. Proof if this is that business is booming today, and the customer and seller satisfaction ratings are high. This means that we are serving the people really well.”
The biggest barrier is to get people used to online shopping. It’s all about the service, he said. “E-commerce has to be a pleasant experience for the customers, so it will be very unlikely that they won’t repeat.”
Who’s buying?
Their aim since the beginning is to change consumer habits. They want consumers to view buying online as a “no-brainer”.
The success of events like 11.11 and their other promos, along with their growing sales show that people value their time. “They are trying to optimize their time and they are optimizing their time through us,” Barrera said.
It also shows the importance of convenience, with buyers ordering as much as 30, 40, to 50 items. Customers buy frequently, he reveals, buying their personal care products weekly, then waiting for sale events. “They even have a strategy, where they go online in advance, put the items in their cart, wait for the sale, and click ‘buy’,” he smiled.
Buy and sell
What sets them apart from the other selling platforms is that they are quite strict with the sellers. If you buy an item from Lazmall, it is 100 percent authentic with guaranteed next-day delivery, he said. “That is a big part of who we are. We have a very strong governance of our platform, so if a person complains of a fake item, we take it down. We have very clear standards of what it takes to work with us. Most of the other platforms don’t really have this. They leave a lot of room for the customers and the seller.”
Lazada is marketplace on a platform, so it is equally important that they also reach out to the sellers. “In reality, our objective in the past years is to get, everybody online not only the customer but also the seller. This how a platform becomes successful, when you get the entire country online. We have tens of thousands of sellers and we continue to grow this through partnerships with DTI, GoNegosyo, and Globe MyBusiness programs,” Barrera explained.
They want to get over a million sellers on the platform, he says. “We believe that there is no better way to do business than with us. We have a lower cost of doing business, and an entire market in all the islands. Then, you have the marketing and logistic support. We really see ourselves as an enabler so businesses can expand rapidly, and we have seen cases where small businesses really grow.” They now have a ‘millionaire’s club’ and have started featuring one successful seller a week on their Facebook page.
Changing the way we shop
There have been stories online on how consumer behaviour has shifted online and had led to the demise of several brick-and-mortar stores. Will malls disappear in the Philippines as well? He weighs in with his answer. “We continue to see malls opening in the provinces, and malling is part of the local culture, although what we have been seeing is that there are more food spaces than retail,” he said.
He emphasized, that e-commerce offers a different experience through special and specific executions such as their flash sales. “When we look at the market, most of the retail tenants in the mall are already present on Lazada. As we see e-commerce growing, malls also have a strong penetration in the Philippines. With many brands present online and offline, or what we call omnichannel, it is just about being present for the customers in many different ways and being able to leverage on that.”
For their next online shopping event 12.12, Barrera promised that it would be big. For starters, it would be longer, because it would be a three-day campaign from December 10 to 12, with more localized executions relevant to the holiday traditions of the Philippines.
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