Southeast Asia’s eCommerce industry has experienced explosive growth in the last few years, fuelled by the region’s accelerated digitalization amid the ongoing pandemic.
Speaking at Alibaba Group’s Investor Day 2021 last month, Lazada Group Chief Executive Officer Chun Li highlighted the potential of eCommerce in Southeast Asia over the next five years, including how its penetration rate is projected to increase to 20% – resulting in a USD260 million market – by 2025. In his presentation, Li shared how Lazada continued to grow in strength, as it successfully captured the digital shift in consumer consumption and enabled merchants to thrive on its platform. More importantly, the company has improved the quality of its growth and solidified its status as a global eCommerce leader by building on a sustainable buyer base and adding reputable sellers to its platform.
“At the core of our business, we have fostered a strong community of buyers and preferred sellers,” Li said. “As more loyal buyers are attracted to our platform, we have more traffic, which increases our purchase rate and provides more revenue to sellers. A growing number of quality sellers means wider product selections for buyers at better prices and service. With the revenue generated from the expanding seller base on our platform, we can in turn provide more benefits to buyers that will build brand loyalty.”
Backed by a robust technology infrastructure and platform ecosystem, Lazada has set a long-term goal of quintupling its gross merchandise value – the sum of transactions across its channels – to USD100 billion per year.
Key highlights from Investor Day:
Lazada exhibits strong growth momentum with quality sellers and buyers
Underpinned by its diverse eCommerce offerings and best-in-class infrastructure, Lazada achieved USD21 billion in sales for the 12 months ended September 30, 2021, while its net merchandise value increased by more than 60% year on year. Key performance metrics reflected how the platform successfully engaged with quality sellers and buyers: in the past 18 months, Lazada’s annual active consumers increased by 80% yoy to reach 130 million while its active monthly users grew by 70% to reach 159 million. In the same period, monthly selling sellers and monthly active selling products more than doubled to reach 922,000 and 33 million, respectively.
A superior tech-powered experience
As part of its efforts to deliver a superior customer experience, Lazada has continued to innovate and widen its platform offerings. Since the start of the COVID-19 pandemic, Lazada has launched a variety of initiatives to serve evolving consumer needs, ranging from demand for fresh foods to premium brands.
With its robust technology, Lazada is able to use real-time personalisation as well as smart search and recommendation capabilities to create targeted in-app experiences for consumers, offering a wide assortment at the best prices.
The platform also offers a full range of technology-enabled tools and solutions to help sellers join, scale up and improve their operating efficiency. Also of note are livestreaming and gamification initiatives that have allowed sellers to tap into the “shoppertainment” trend to engage consumers. Lazada is currently the only eCommerce platform in Southeast Asia to offer a “See-Now-Buy-Now” feature via its livestreaming channel, LazLive, enabling sellers to showcase their products in real time and increase customer reach and loyalty. As a result of such innovations, purchase frequency has continued to grow by more than 1.3 times year on year since June 2019. Last 11.11, Lazada achieved 18 million views on LazLive and saw a 187% yoy growth in GMV through livestreaming.
Smart logistics provide critical competitive edge
Solidifying Lazada’s control over parcel flow, data and service quality, the company’s in-house logistics business continues to be a critical competitive advantage and enabler for superior buyer and seller experiences in Southeast Asia.
Besides leveraging its advanced logistics technology to optimise parcel allocation across every step of the supply chain, Lazada also works closely with its 3PL partners to serve buyers and sellers in locales where it is not efficient to operate its own network.
Lazada Logistics processed over 5 million parcels on a daily basis in September 2021, handling about 80% of the first-mile volume and about 50% of the last-mile volume in house. As such, Lazada was able to reduce costs significantly, including by slashing its variable cost per parcel by 27% over the past year.
A sustainable eCommerce business in Southeast Asia
Wrapping up the presentation, Li discussed how Lazada aims to positively impact society and the environment. The company’s corporate sustainability strategy is built upon three core pillars: environment, socioeconomics and governance – known collectively as ESG. Early successes can be gleaned from two key ESG initiatives, including Lazada’s three-step approach with partners like L’Oréal and Starbucks to address plastic waste from packaging as well its partnership with Vietnam’s National Trade Promotion programme to sell farm-fresh lychees from Hai Duong as a way to close the digital divide.
Speaking on how the market will evolve in the future, Li reiterated that Lazada is well positioned to realise its vision of serving more than 300 million consumers and achieving its target GMV of USD100 billion per year.
“With our investments in technology and logistics and our committed resources, we will continue to compete and grow in a healthy and sustainable way,” Li said. “Execution is key to winning this battle, and we will continue our relentless focus on executing our strategies.”
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