Success Crafted

Lazada: Rising to the Top of Southeast Asia’s E-Commerce Industry

Lazada: A Breakdown of Southeast Asia’s Leading Online Marketplace

As the world becomes more digital, online marketplaces have taken an important role in the e-commerce industry. One of the most dominant in Southeast Asia is Lazada, a B2B2C platform where merchants can sell their products directly to consumers.

In this article, we’ll take a closer look at Lazada’s founding history, the challenges it faces, and the different ways it makes money.

How Lazada Works and Operates

Launched in 2012, Lazada operates in six Southeast Asian countries: Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines. With over 300 million SKUs (Stock Keeping Units), Lazada is the go-to shopping destination for a wide variety of products, from electronics, fashion, beauty, health, and more.

Lazada works by connecting merchants with consumers through a desktop website and mobile applications. Merchants can set up their own storefront and create listings for their products.

To ensure quality and authenticity, Lazada also has a verification and authentication process that merchants must go through before they can start selling.

Aside from individual merchants, Lazada has also partnered with big brands and retailers to create LazMall, an online luxury mall where shoppers can browse for premium products.

This partnership not only allows brands to tap into Lazada’s extensive customer base but also provides consumers with a luxurious shopping experience.

Founding History of Lazada

Lazada was founded by Rocket Internet, a German company that specializes in launching online ventures. Rocket Internet’s business model is to identify successful business concepts in other parts of the world, copy them, and localize them.

The idea for Lazada came from the success of online fashion retailer Zalando in Europe, leading Rocket Internet to launch multiple e-commerce platforms across Southeast Asia, including Lazada. Despite being labeled by critics as a mere copycat, Lazada quickly gained traction and has since become one of the most successful startups in the region.

Lazada’s Growth and Challenges

As the number of Asian consumers using e-commerce platforms has grown, so has Lazada’s market share. However, the company has faced several challenges along the way.

One of the primary obstacles for Lazada has been competing with local malls that provide a physical shopping experience rather than an online one. Another issue that Lazada has had to tackle is the issue of profitability.

Though revenue has steadily increased over the years, the company has yet to turn a profit. Lazada has attributed this to its high investments in infrastructure and technology.

In 2016, Lazada was acquired by Alibaba, a Chinese e-commerce powerhouse. This deal has allowed Lazada to significantly increase its product offerings and expand into markets like China and Hong Kong.

Ways Lazada Makes Money

Lazada makes money through various methods, and we’ll take a closer look at some of the most important ones below.

Lazada Marketplace

Lazada Marketplace is the core business model of Lazada, where merchants can create listings and sell their products. Lazada makes money by taking a commission on each sale.

To ensure that merchants are successful on the platform, Lazada offers training programs like Lazada University, which helps sellers optimize their pages and increase conversion rates. Lazada also supports Super eBusinesses, a program that provides incentives for high performers on the platform.

LazMalls

LazMalls is Lazada’s luxury online mall that exclusively features premium products. Lazada charges a higher commission on these products due to the luxury branding and criteria set for merchants.

Top Up & eStore

Lazada has also ventured into the mobile payment sector through Top Up & eStore. This feature allows users to top up their prepaid phones, buy gift cards, and purchase insurance policies.

In exchange for facilitating these services, Lazada takes a commission from the transactions.

Grocery Delivery Through RedMart

Lazada ventured into the online grocery delivery market by acquiring RedMart in 2019. While grocery delivery provides thin margins and high operational complexity compared to other sectors, the acquisition allowed Lazada to expand its product offerings and compete with other online marketplaces.

Payment processing platform Adyen also supports Lazada’s efforts in the mobile payment sector.

LiveUp Program

Lazada created a membership program called “LiveUp,” which provides users with exclusive savings, free shipping, and partner benefits. The program also allows partners to integrate their fintech solutions into Lazada’s checkout process.

Final Thoughts

As Southeast Asia’s leading online marketplace, Lazada has a significant role in the region’s e-commerce industry. With the challenges faced and the various ways it makes money, Lazada continues to adapt and innovate to provide the best experience for both merchants and consumers.

Lazada’s Corporate Mission and Vision

Lazada’s corporate mission and vision are centered around becoming Southeast Asia’s leading commerce and technology platform. Since its foundation, Lazada has been committed to providing the best possible online shopping experience for consumers, as well as supporting merchants and brands to grow their businesses online.

One key aspect of Lazada’s mission is to bridge the gap between the online and offline world through its “shoppertainment” initiatives. Lazada organizes events and campaigns that blend entertainment and shopping, providing consumers with a unique and engaging experience while simultaneously promoting products on the platform.

Through these efforts, Lazada aims to enhance the online shopping experience, making it more interactive and fun. Moreover, Lazada aims to be at the forefront of the technology industry and serve as a digital economy leader.

The company has invested heavily in building up its technology infrastructure, providing consumers with seamless online transactions and opening up new opportunities for merchants and brands. Lazada’s technological advancements have enabled the company to build data-driven insights, create more personalized experiences, and streamline operations.

In addition to supporting the growth of e-commerce throughout Southeast Asia, Lazada is dedicated to giving back to the community. The company is committed to using its resources to help address social and environmental issues in the region, such as minimizing carbon emissions, reducing plastic usage, and supporting local communities.

Lazada’s Ownership, Funding, Valuation, and Potential IPO

In 2016, Lazada was acquired by Alibaba Group Holding Limited, a Chinese multinational conglomerate specializing in e-commerce, retail, and technology. Alibaba is the controlling shareholder of Lazada, with a 90% stake in the company.

Since its acquisition by Alibaba, Lazada has gone on to raise significant funding through various rounds of investment. In April 2018, Alibaba invested an additional $2 billion into Lazada, bringing its total investment in the platform to around $4 billion.

Other funding rounds have included investors such as Temasek, EDBI, and Sequoia Capital. Lazada’s valuation has also increased exponentially since its acquisition by Alibaba.

In 2018, the platform was valued at around $3.15 billion, and by 2020, that figure had grown to $6 billion. This rapid increase in value has been attributed to Lazada’s impressive growth and continued success in the Southeast Asian market, as well as the increased demand for e-commerce services brought on by the COVID-19 pandemic.

There has been speculation about a potential IPO for Lazada, particularly given the platform’s high valuation and success in the region. However, as of this writing, there has been no official announcement regarding an upcoming IPO.

Nonetheless, Lazada remains a highly attractive prospect for investors, particularly given the platform’s strong financials and potential for further growth. As Lazada continues to expand, it faces competition from other e-commerce giants such as Shopee and Tokopedia, as well as potential mergers and acquisitions.

The online marketplace industry remains incredibly dynamic, with companies consistently adapting to the changing demands of consumers and the market.

Final Thoughts

Lazada’s corporate mission and vision, combined with its strong funding and ownership, provide an excellent foundation for continued growth and success in the Southeast Asian e-commerce industry. Moreover, the platform’s potential for an upcoming IPO makes it an attractive prospect for investors looking to tap into the region’s expanding digital economy.

As competitors continue to adapt, Lazada’s commitment to technology, shoppertainment, and social responsibility will be critical to staying ahead of the curve and continuing to provide consumers with an unbeatable online shopping experience. With Alibaba’s backing and the support of the wider e-commerce community, Lazada is exceptionally positioned to build upon its existing success and continue to make waves in the region and beyond.

Lazada’s International Shipping and Operations

Lazada’s rapid growth in the Southeast Asian market has led to increasing demand for international shipping. In response, Lazada has developed Lazada Global Shipping (LGS), a fulfillment service that allows merchants to ship their products to customers worldwide.

LGS provides merchants with a simple and cost-effective way to ship their products internationally. Through LGS, merchants can ship their products to Lazada’s warehouses in their home country, where Lazada takes care of the rest of the process, including transportation, customs clearance, and delivery to the customer.

LGS offers several benefits to merchants, including access to new markets and the ability to expand their customer base. LGS also provides merchants with end-to-end visibility and control over their international shipments, allowing them to track packages in real-time and monitor their delivery status.

To ensure that international shipments are processed efficiently and reliably, Lazada has developed a robust transportation infrastructure that includes partnerships with leading logistics providers. These partnerships enable Lazada to provide fast and reliable shipping services, helping merchants to deliver their products quickly and securely to customers around the world.

LGS also offers merchants a range of shipping options, including standard shipping, express shipping, and premium shipping. Standard shipping is the most cost-effective option, with delivery times typically ranging from 5-20 business days.

Express shipping is a faster option, with delivery times ranging from 2-7 business days. Premium shipping is the fastest option, with delivery times ranging from 1-4 business days.

To support its international shipping operations, Lazada has invested in state-of-the-art fulfillment centers located strategically around the world. These centers are operated by a team of fulfillment experts who are trained to manage international shipments and ensure that they are processed quickly and accurately.

In addition to its fulfillment centers, Lazada has also developed a global network of transportation partners. These partners are responsible for transporting packages from Lazada’s warehouses to airports and seaports, as well as delivering products to customers in their destination countries.

By partnering with a diverse range of transportation providers, Lazada is able to offer merchants a range of options for shipping their products internationally. To further support its operations, Lazada has developed a range of tools and resources to help merchants manage their international shipments.

These tools include customizable international shipping rates, automated shipping labels, and built-in customs clearance procedures. Lazada also provides merchants with access to a dedicated team of customer service representatives who can answer questions and provide support throughout the shipping process.

Final Thoughts

As Lazada continues to expand its operations and reach new markets, international shipping will play an increasingly critical role in its success. By investing in the development of Lazada Global Shipping and a robust transportation infrastructure, Lazada has created a powerful platform that enables merchants to reach customers worldwide.

With its commitment to providing fast and reliable shipping services, Lazada is well-positioned to continue to be a leading player in the increasingly competitive e-commerce industry. In summary, Lazada has emerged as Southeast Asia’s leading online marketplace, connecting merchants with millions of consumers in the region.

With a strong corporate mission and vision focused on becoming a digital economy leader and bridging the gap between the online and offline world, Lazada continues to innovate and provide a unique shopping experience through its “shoppertainment” initiatives. The platform’s ownership by Alibaba, significant funding, and high valuation have further solidified its position in the market.

Lazada’s international shipping and operations, facilitated by Lazada Global Shipping (LGS) and its extensive transportation infrastructure, enable merchants to expand their customer base globally. Lazada’s commitment to providing fast and reliable shipping services, along with its dedication to technology and social responsibility, sets it apart from competitors.

As Lazada continues to evolve and meet the changing demands of consumers, it stands as a driving force in the burgeoning e-commerce industry, leaving a lasting impact on the region’s digital economy.

Popular Posts