By Krista A.M. Montealegre,
E-COMMERCE portals are poised to rake in record holiday sales this year, as malls pursue their expansion at a time when consumers can shop from the palm of their hand.
Lazada and Zalora are luring shoppers away from malls this holiday season by offering massive discounts in their respective platforms.
“I can tell you that e-commerce sales grew in 11.11 and it will grow even better in 12.12,” Lazada Philippines Cofounder and Chief Executive Officer Inanc Balci said in a recent interview.
Taking a page from its key shareholder and Chinese e-commerce giant Alibaba’s Singles Day, Lazada is anticipating “bigger sales” in the six-day “online revolution” that ended on Tuesday. The company saw a record $123 million in sales across Southeast Asia last Nov. 11, nearly three times last year’s performance.
Lazada has enjoyed dizzying growth in the last two years, with marked improvement in delivery time, cost of items and assortment of products.
“When we first started six years ago, there was no professional, large-scale e-commerce site. The change started with us and other companies improved their operations as well because of competition,” Mr. Balci said.
Like Lazada, Zalora is feeling the strong consumer spending, noting that its own 12.12 promotion “should be bigger” than sales generated last Nov. 11, which was more than double the previous year’s level.
“E-commerce adoption is very much mainstream; it’s something everybody is doing now. We’ve seen that the big shopping events in the Christmas season has really gained a broad knowledge,” Zalora Philippines Managing Director Constantin Robertz said in a separate interview.
The potential is huge for e-commerce since online purchases in the Philippines account for only less than 1% of total retail sales, the lowest among the six largest markets in Southeast Asia, according to a report by market research firm eMarketer.
E-commerce may have gained ground, but hurdles continue to prevent the industry from taking off, said Colliers International Philippines Managing Director Richard T. Raymundo, citing the need to improve the country’s payment and logistics systems.
“While we recognize that the influence of e-commerce will grow to be more relevant in the near- to medium-term, we believe that it will not adversely affect the expansion plans of mall developers, for now,” said Claro dG. Cordero, Jr., head of Jones Lang LaSalle (JLL) Philippines’ research, consulting and valuation advisory services.
Around 2.2 million square meters of new shopping mall space will be completed all over the Philippines in the next four to five years, including an additional 400,000 square meters next year, according to data from JLL.
The expected annual completion is around 25% higher than the average new completions in the market since 2010.
Even Zalora sees no competition with mall developer Ayala Land, Inc., one of its shareholders after the Ayala group bought into the company earlier this year.
“We’re working together to enable retailers to reach consumers. In the end, we have a similar and synergistic position as enablers of the retailers,” Mr. Robertson said.
To thrive in this age of e-commerce, mall developers will have to evolve to provide more experiential shopping and at the same time, become a center for showcase stores and facilitate distribution network for fast moving consumer goods to serve the online market, JLL’s Mr. Cordero said.
“The retail space we know of needs to change. It will change in character. Shopping needs to be a different experience — an experience you cannot get from Internet,” Colliers’ Mr. Raymundo said.