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Lazada Philippines to expand partnerships with brands, MSMEs

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CARLOS OTERMIN BARRERA, chief operating officer of Lazada (Philippines)

LAZADA Philippines is planning to expand its partnerships not just with traditional brands, but with micro, small and medium enterprises (MSMEs), as aims to keep its lead in the increasingly competitive e-commerce market.

“We grew very fast the entire year and we have aggressive plans for next year. We are really convinced that Philippines will converge with other markets in e-commerce penetration and we will definitely be the main player here,” Carlos Otermin Barrera, chief operating officer of Lazada (Philippines), told BusinessWorld in an interview at the company’s office in Bonifacio Global City on Nov. 28.

He estimated the percentage of online retail sales in the Philippines is around 2% of the total retail market, which is “very low” compared to China or United States which is around 25%.

“There’s definitely a lot of room for growth. It’s higher in the metro areas because people are more Internet savvy or they normally used to shopping online. But we’re also seeing some regions, provinces where Lazada is big because they don’t have many choices,” Mr. Barrera said.

For next year, Lazada aims to increase the number of brands under LazMall. Launched in September this year, LazMall has over a thousand brands including The SM Store, Robinsons Appliances, Samsung, Huawei, MAC, L’Oreal, Maybelline and Unilever.

“We will increase number of brands, number of participants. We are quite confident of the value we are bringing into the market,” he said.

Mr. Barrera attributed LazMall’s success to the fact that Filipinos value authenticity and quality when shopping online.

“We wanted to set this up as the standard for the branded (online) mall experience. It has very good promises — better returns, next day delivery, 100% guarantee. We work with the main principals of the brand so they also give us lots of exclusive items,” he said.

Lazada, which is majority owned by Chinese e-commerce giant Alibaba, is also looking to expand its local marketplace with particular focus on micro, small and medium enterprises (MSMEs). At present, there are around 20,000 Philippines-based MSMEs on Lazada.

The company has partnered with the government, particularly the Department of Trade and Industry, to help MSMEs enter the e-commerce market.

“One of the reasons why we are so successful is we’re getting more and more businesses online. We believe Lazada is the biggest opportunity. Even if you have small store in the province, just by going on Lazada, you will get nationwide reach,” Mr. Barrera said. “We are very convinced that in a country like the Philippines with over a million SMEs, we will be in the hundreds of thousands very soon.”

Lazada also plans to introduce new tools on its website to serve its customers better and help their sellers’ businesses grow.

CHALLENGES
Despite stellar growth, Lazada still faces challenges, mainly in payments, logistics and trust. Mr. Barrera said the company has invested heavily in payments and logistics.

“Our logistics is definitely the best in the Philippines and we continue growing our footprint. We recently opened our Davao warehouse and we continue opening our logistics centers, hubs. For payments, we have the Lazada Wallet and partnerships,” he said.

To address trust issues, Lazada has rules on the sale of counterfeit items on the platform, as well as refunds and returns.

“The way our site works is we give more traffic to the authentic, verified, strong sellers… In fact, we recently started selling cars for the first time in the Philippines. It makes you realize the barriers are reducing since people trust Lazada to buy a car, a big investment,” Mr. Barrera said, referring to the sale of Mini Cooper S Monte Carlo Edition cars during Lazada’s 11.11 event.

Lazada was criticized by many customers when it stopped offering free shipping for orders in Metro Manila last July. Instead of standard free shipping, stores and sellers were allowed to set the minimum spend requirement for shipping discounts.

“When you look at the items and our distribution, what we do now is as a platform is we also want sellers to differentiate themselves and to do better service. Today we have over 30-40% of our items with free shipping shouldered by the seller. But also what we did thanks to that is reduced the customer shipping fees across the Philippines. Yes, it was a bit of bad PR that free shipping was gone but in reality, a lot of our sellers are offering free shipping on their own,” Mr. Barrera said.

He noted many Lazada customers now consolidate their orders to take advantage of free or discounted shipping offers by the sellers.

This month, Lazada also lowered its shipping fees around the country, even for bulky items.

LAST BIG SALE
Coming off the success of the 11.11 sale, Lazada is holding another sale event called 12.12. Unlike the one-day 11.11 event, the 12.12 event runs from Dec. 10 to 12.

“We focus on all the relevant themes mostly for Christmas. The theme is ‘Shop with heart’ for your family, your friends. It has a lot of gifting mechanics, specific baskets, lots of beauty products. It’s our biggest sale of the year in the Philippines. December is the main month here,” Mr. Barrera said.

He noted the 12.12 sale offers a wider number of deals and products, mostly under the grocery, fashion, beauty and personal care categories.

Lazada is committed to ensuring that products ordered during the 12.12 event will be delivered before Christmas, except if the item is shipped from abroad.

Despite increasing competition from other e-commerce platforms such as Shopee and Zalora, Lazada is still upbeat on its prospects next year.

“There are some competitors but we are also happy that the e-commerce market is growing. We are very confident in our business model… Other platforms are more of a C2C (customer-to-customer), secondhand item marketplace… We are the platform of the top brands and the top sellers,” Mr. Barrera said. — Cathy Rose A. Garcia