Lazada launches in its home ground of S'pore

SINGAPORE - E-commerce site Lazada has launched in Singapore, two years after setting up its headquarters here. The dotcom already operates in five other ASEAN countries.

According to a recent study by PayPal, Singapore's e-commerce spend is expected to reach US$4.4 billion (S$5.5 billion) by 2015.

BizIT first reported in February that Lazada was planning to launch here by Q2, with CEO Max Bittner saying in an interview then that the company hopes to be the Amazon.com of Singapore, and wants to move in before its US counterpart does.

Right now, Amazon.com ships to Singapore, but offers free shipping only on some items costing over US$125, and shipping takes 10-14 days on average.

Lazada has set up shipping partnerships with SingPost and logistics player Ta-Q-Bin, and offers free shipping on items, with delivery times of about a day or two.

Speaking at Lazada's launch event last week, Mr Bittner said he hopes that completing the fulfilment piece of the puzzle will pull customers over to Lazada as a top destination, the way US residents see Amazon.com.

Destination site

The company's head honcho said that despite Singapore's relatively mature e-commerce audience, there still isn't a "destination site" such as an Amazon.com, where people head to obtain most consumer goods such as household goods or electronics.

For now, popular sites such as Qoo10.sg and sister site Zalora offer a different experience, he said.

Zalora carries fashion items only, and although Qoo10.sg carries a wider range of goods, the decentralised marketplace acts more like a listing for various sellers' individual shops.

There is no cross-selling of goods, or a central catalogue of items on the site like that found on Amazon.com, and buyers on sites like Qoo10.sg can browse only within individual stores designed by each seller.

Lazada was set up in February 2012, and today operates in Indonesia, the Philippines, Vietnam, Thailand and Malaysia.

While it has had its HQ in Singapore from day one, the company has taken this long to launch here because the company was keener on penetrating the region's emerging markets, to catch the growing wave of users coming online.

"It's very different doing e-commerce in developing markets versus developed markets," noted Mr Bittner, on the difference in strategies needed to operate in Singapore compared with its neighbours.

For emerging markets, e-commerce's big advantage over brick-and-mortar stores is the ability to access a wider variety of goods compared with what's in the stores. This is especially apparent in second- and third-tier cities in Asia, where stores carry a far more limited selection of goods, he said.

In Singapore, this is hardly the case, because large malls are within a stone's throw of most places.

Lazada is instead touting the convenience of shopping online without having to hunt down an item, and hopes to work with more suppliers to drive better deals on the site to attract bargain hunters, Mr Bittner said.

In Singapore, Lazada carries all of its listed goods on consignment. When an order is placed, it picks up the item from the supplier and takes it to the buyer.

This is different from Lazada's hybrid inventory model in other parts of Asia, where it owns some of the items, and ships those out to buyers from its warehouse.

Marketplace

Maxime Lemiere, marketplace managing director of Lazada Southeast Asia, said that the third-party consignment model which it calls Marketplace is growing. About 40 per cent of volume shipped comes from the Marketplace, which has about 2,000 active sellers.

This proportion is growing in the region, and Lazada will increasingly lean on Marketplace as a source of goods, he said.

He added that Singapore will stay fully on the Marketplace model, because that transfers risk over to sellers, and allows Lazada to scale up its inventory much more quickly without dealing with warehousing of all the goods.

However, the hybrid model will stay in some of the other markets, because Lazada has managed to strike up some exclusive distribution deals in some places that allow it to carry goods more cheaply, or offer them to consumers ahead of time.

Lazada estimates that just one per cent of total shopping gets done online in the ASEAN region. In China, it is about 8 per cent, and in Brazil it is about 3-4 per cent.

The region is coming to the online shopping market later than other parts of the world, in part because the lack of Internet access poses a real barrier, said Martell Hardenberg, co-founder and managing director of Lazada. "That (issue) is strongly being overcome now," he said.

Lazada had 79 million visits in the first quarter this year, 41 per cent higher than in the corresponding quarter last year, he added. Last month, it shipped over 300,000 orders in the region, double the volume six months ago.

This article was first published on June 2, 2014.
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