Why Lazada is Rising in Southeast Asia
Writer: Zhang Zihao
Editor: Hao Jiaming
Lazada has become a prominent player in the Southeast Asian market, with its remarkable growth trajectory capturing widespread attention. According to data shared at Alibaba's Investor Day event in 2021, Lazada boasts over 130 million annual active consumers across six Southeast Asian countries, with monthly active users (MAU) surpassing 159 million.
During last year's Double 12 event, Lazada witnessed an extraordinary surge in consumption by Southeast Asian consumers, with spending exceeding the daily average by a staggering 22 times within the first two hours alone. This growth trend has been sustained, as Lazada's quarterly order volume has consistently achieved triple-digit growth over multiple quarters.
Originating as a Southeast Asian e-commerce platform, Lazada's core business strategy has been to establish a strong foothold within the region. It operates in six key markets, namely Vietnam, Thailand, Singapore, Philippines, Malaysia, and Indonesia.
These markets display both commonalities and distinct characteristics. While they share a youthful consumer demographic, there are notable differences in terms of developmental stages and market dynamics. Consequently, successful management of each market necessitates a deep understanding of localized insights and consumer preferences.
(Photo source: Lazada Official Website)
The Southeast Asian market exhibits clear defining features, characterized by a young consumer base and widespread adoption of social media. According to data from Zhiyan Consulting, the median age of the Southeast Asian population in 2020 was merely 30.2 years, with 110 million individuals falling within the 15-24 age group. Moreover, social media penetration rates in countries like Malaysia and Singapore hover around 80%, while Thailand and the Philippines boast approximately 70% penetration.
Recognizing that capturing the attention of young consumers is pivotal in the e-commerce landscape, Lazada has strategically embraced the concept of "entertainment consumption" By incorporating various elements of entertainment, Lazada has effectively positioned itself as an attractive platform for young consumers.
These entertainment-driven initiatives encompass diverse aspects. In addition to promoting live streaming, Lazada enables users to obtain coupons through engaging gamification features on the platform. The company also organizes offline events in bustling local business districts, which are seamlessly integrated with online activities. Furthermore, Lazada has enlisted popular Southeast Asian stars, cherished by young audiences, to enhance its appeal and amass a dedicated fan base.
Wen Ke (36), a market researcher from China, emphasizes the criticality of localization in Lazada's approach. Given the significant cultural and market variances among Southeast Asian countries, understanding the specific characteristics and consumer needs of each market enables Lazada to offer products and services that resonate with local consumers.
She cites an example, stating that Lazada tailors its promotions to align with local traditional festivals, such as Tet in Vietnam. This localization strategy not only enables Lazada to cater to the diverse requirements of consumers across different countries but also cultivates a sense of affinity and preference among local customers.
While targeting young consumers and leveraging social media dividends represents a crucial aspect of the Southeast Asian e-commerce market, market segmentation is equally significant. With varying levels of development and cultural diversity across Southeast Asian countries, Lazada devises market-specific strategies to optimize its presence.
In regions characterized by higher consumption levels, such as Singapore, Lazada's acquisition of RedMart, a local fresh food supermarket, has facilitated online accessibility to fresh produce for consumers.
In Vietnam, where Tet holds immense significance as the most important festival of the year, Lazada vigorously promotes New Year's products and festivities on its Vietnam platform.
The formulation and execution of these localized operating strategies are made possible through Lazada's dedicated local operating teams situated in each country. These teams possess intimate knowledge of their respective markets, enabling them to make informed decisions that align with local dynamics.
Lazada's localization practices have yielded tangible improvements, particularly in the realm of logistics. The company's emphasis on fast and reliable delivery services has resonated positively with consumers and merchants throughout Southeast Asia.
This success can be attributed to Lazada's establishment of comprehensive local logistics systems, with dedicated logistics teams operating in various markets and thousands of personnel facilitating rapid order fulfillment.
For cross-border logistics, closely intertwined with Chinese merchants, Lazada's partnership with Cainiao allows for expedited delivery of goods from China to Southeast Asian consumers within a remarkably swift timeframe of 6-7 days. Moreover, if products are already stocked in overseas warehouses, 88% of cross-border goods can be delivered to consumers within three days.
Today, Lazada's express delivery service extends to nearly every island and fishing village across the six Southeast Asian countries—an achievement that is unparalleled in the region's complex geographical landscape.
Kamalathevan R. Thevakadakshamz (27), a Lazada courier based in Malaysia, shares his experience, stating that delivering goods across various locations within Malaysia presents daily challenges, but it is also an immensely rewarding job.
He believes that Lazada's focus on providing fast and reliable logistics services contributes to an excellent delivery experience for both customers and merchants in Southeast Asia.
Expressing his pride in being part of the Lazada team, he concludes that the efficient delivery services provided by Lazada contribute to enhancing the overall customer experience throughout Southeast Asia.
Presently, Lazada boasts the second-largest business-to-consumer (B2C) logistics network in Southeast Asia, which is the most extensive logistics network established by an e-commerce platform in the region.
Lee Kee (27), a store owner who operates on Lazada, commends Lazada's exceptional performance in logistics. He appreciates the fully established local logistics systems and the commitment of the dedicated logistics teams across various markets, who ensure the prompt delivery of goods on a daily basis.
As a small merchant, he underscores the significance of Lazada's logistics service, which enables him to reach customers more quickly and provide an enhanced shopping experience.
Concluding his remarks, he expresses his utmost satisfaction with Lazada's logistics service, emphasizing its ability to deliver packages to even the most remote islands within the challenging geographical terrain of Southeast Asia.
Given the varying stages of development across Southeast Asian countries, different payment methods are prevalent in different markets. Lazada has developed a range of solutions tailored to each country's unique circumstances.