The author | Li Xindi
Alibaba is making every effort to increase its overseas quota.
In December, Alibaba announced the establishment of the "Overseas Digital Business" segment, and since then, the top executives have once again emphasized three major strategies, including "globalization", at the Investor Day event. The financial reports of the past two quarters also show that the Group continues to invest heavily in strategic businesses including Lazada.
Lazada has grown tremendously in recent years. According to the recent Alibaba Investor Day 2021 campaign, Lazada's annual active consumers in six Southeast Asian countries exceeded 130 million, and its monthly active users (MAUs) exceeded 159 million. In the first two hours of double 12 this year, Southeast Asian consumers spent more than 22 times the average daily consumption on the Lazada platform; in recent years, Lazada's quarterly order volume has maintained about three-digit growth for many consecutive quarters.
In the Southeast Asian market, Lazada is a special presence. It grew up locally and was later acquired by Alibaba, a Chinese e-commerce leader. This young platform has both a strong "growth" attribute and a set of mature technical support and methodology that have been tempered on a large scale.
Therefore, looking at Lazada requires a specialized framework.
This is also what sets Lazada apart from its peers. In the Southeast Asian market, which "symbolizes infinite possibilities", Lazada's opponents are fierce. For observers, only by understanding Lazada's differentiated route can they truly understand the e-commerce pattern and trend of the Southeast Asian market.
Rooted in the local area
Some domestic netizens often describe Lazada as "cross-border e-commerce", which is actually a misunderstanding.
Cross-border business is just one of Lazada's businesses. Lazada has been a Southeast Asian e-commerce company from the beginning, and its business strategy is to take root in Southeast Asia.
Lazada has six major markets in Southeast Asia: Vietnam, Thailand, Singapore, Philippines, Malaysia, Indonesia. The commonalities and personalities of these six markets are outstanding: they all have young consumers, but the development of countries varies greatly. Therefore, if you want to operate well in various markets, it is very challenging to test the localization insight of the platform.
The characteristics of the Southeast Asian market are very significant: the consumer population tends to be younger, and the social media penetration rate is widespread. According to data from Zhiyan Consulting, in 2020, the median age of the population in Southeast Asia is only 30.2 years old, and the number of young people aged 15-24 is 110 million; the social media penetration rate in Malaysia and Singapore is about 80%, and Thailand and the Philippines are about 70%.
Whoever can attract young people will be able to have an advantage in the e-commerce market.
Lazada uses the strategy of "entertainment consumption" to attract young people. This "entertainment" is reflected in all aspects, in addition to the implementation of live streaming with goods, Lazada also allows young people to obtain coupons in various "game play" ways on the platform, hold offline activities in the local bustling business district and link up with the internet, hold a double 11 party with a scale comparable to "cat night", and invite popular star performances loved by young people in Southeast Asia.
The young population and social media dividends are just one thing. Another feature of the Southeast Asian market that cannot be ignored is that the market is stratified.
Southeast Asian countries have different levels of development, and their cultural customs are also very different, both the country of a thousand islands and the city country; some countries are more Westernized, some countries have deep Buddhist culture, and some countries have a more solemn Spring Festival.
Lazada will launch different strategies for different markets. For example, in Singapore, where consumption levels are high, Lazada acquired the local fresh supermarket RedMart to provide consumers with online fresh products; the Spring Festival is the biggest festival of the year in Vietnam, and near the Spring Festival, Vietnam's Lazada platform will vigorously promote new year goods.
The development and execution of these local-based operational strategies is inseparable from Lazada's local operations teams in various countries. Lazada's local operation team is mainly composed of locals, and the various CEOs under their respective departments have been given sufficient authority to determine the business strategy of the local market, including but not limited to how to issue coupons and how to promote explosive categories.
The consideration of Lazada's localization operation is that the local team understands the local market best and can make the most correct choice based on the market.
For consumers and merchants, Lazada's localization practices bring a real upgrade experience. For example, the most profound point for Southeast Asian consumers is that logistics is very convenient.
This is because Lazada has built a perfect logistics system in the local area, has logistics teams in various markets, and thousands of people rush to deliver goods every day. In terms of cross-border logistics closely related to Chinese merchants, Lazada through cooperation with Cainiao, a cross-border merchant ships from China, and the goods can be delivered to Southeast Asian consumers in as soon as 6-7 days; if the goods have been sent to overseas warehouses in advance, 88% of the cross-border goods can be delivered to consumers within three days.
In August, Lazada renamed its original self-built logistics, Lazada eLogistics (LEL) and Lazada Express (LEX), to Lazada Logistics. Today, Lazada's courier can be delivered to almost any island or fishing village in six Southeast Asian countries, which is rare in Southeast Asia with complex geographical conditions. At present, Lazada has built the second largest B2C logistics network in Southeast Asia, which is also the largest logistics network built by e-commerce platforms in Southeast Asia.
Because of different developments, different markets in Southeast Asia are accustomed to using different payment methods. According to He Zhi of Lazada's buyer technical team, who is the leader of this year's Lazada 12.12 promotion team, Lazada has launched a series of solutions based on the situation of various countries, among which Lazada wallet can bind bank cards to provide a convenient payment experience for consumers who are relatively developed and accustomed to using bank cards; Lazada also pioneered "cash on delivery" in Southeast Asia, which allows consumers in some underdeveloped areas who are not accustomed to using bank cards to shop without hindrance.
Some of the changes in the daily use experience, Lazada's old users will have a clear perception. Nowadays, Lazada's double 11 and double 12 promotion activities, the platform experience has been very "smooth" - stuttering, crashing, data confusion and other issues are no longer there. This is due to lazada's ability to build a top-level scale promotion after joining Alibaba in 2016 and then joining Alibaba to reconstruct lazada's technology platform through the voyager project.
On the merchant side, Lazada provides a series of productization capabilities to help merchants improve operational efficiency and effectiveness, such as Lazada University, intelligent marketing, business staff, multilingual customer service workbench, etc. Kuang Hao, head of lazada seller technical team, said that compared with China, the operation experience of Southeast Asian merchants is not rich enough, Lazada University teaches e-commerce business knowledge, intelligent marketing and business consultants can help sellers develop more accurate sales strategies, and multilingual customer service workbench allows sellers to communicate with consumers from all over the world more conveniently and efficiently.
Some creations from scratch have also emerged in Lazada's practice of localization. In the past, the relevant information about the telephone, mailbox, main category and other portraits of merchants in the Southeast Asian market was scattered in various Excel tables. In order to help the local operations team to effectively attract investment in combination with industry strategies, Lazada's technical team developed the "Leads Center" system to digitize business information, achieve intelligent distribution and recommendation, and empower the operation team.
In short, Lazada operates from a "local perspective" in various markets in Southeast Asia, and the platform can use this "local perspective" efficiently and flexibly, driven by Lazada's "technology" gene.
Dividends from technology
According to the understanding of "Deep Sound", Lazada highly emphasizes the value of technology internally, and there is a kind of internal formulation called "asking for dividends from technology".
Such a gesture is quite unique. After all, when the outside world pays attention to the blue ocean market such as Southeast Asia, the eyes will always focus on the innovative gameplay at the front end of the platform and the growth rate of the number of users. And those "invisible" technologies are always much less attractive.
But Lazada wants to go down a longer-term, and irreplaceable path.
In 2016, Lazada was acquired by Alibaba and became an important part of Alibaba's overseas business. Prior to 2016, Lazada had been operating in Southeast Asia for four years, leading the local market, with strong localization operation capabilities and rich local data.
Backed by Ali, while the localization strength is considerable, after joining Ali, Lazada's unique technical system is more perfect: with the help of Ali's strong middle office capability output, as well as the implementation of projects such as "Voyager", Lazada has a good "innate conditions" and a high technical starting point, on this basis, matching Lazada's own existing local insights, the platform has a faster advantage and the layout of long-term development.
Taking the cross-border logistics that is most obviously felt in China as an example, the reason why Southeast Asian consumers can have a more convenient logistics experience in Lazada is because behind this cross-border logistics system covering Southeast Asia is the result of the combination of "lazada team's local service experience + rookie system accumulation + Ali's international security capabilities".
This reuse of experience leads to an all-round increase in logistics efficiency. Some of the measures that Taobao applied during the promotion, such as predicting demand and placing cross-border goods in overseas warehouses in advance, have now become the key to improving the delivery speed of Lazada during the promotion.
The above-mentioned "Lazada wallet + cash on delivery" payment system is also the result of the transformation of Lazada's technical team based on local conditions in Southeast Asia. Taobao Tmall has faced problems caused by "high concurrency" such as big promotion stuttering, flashback, and page failure to refresh, which also occurred on the Lazada platform. The Voyager project is equivalent to replacing Lazada with a set of mature technical supports that have been honed at scale. Today, Lazada's technicians no longer have to struggle to solve problems during various promotions, and consumers enjoy a smoother consumer experience.
Looking at the bottom, this is not simply a matter of saying goodbye to Caton and improving the smooth experience, after Lazada replaced the entire e-commerce system with Alibaba's technical support system "end-to-end" through the Voyager project, the dividends of technology-driven business progress began to show more in the blue ocean of Southeast Asia.
These are the practical results of the idea of "asking for dividends from technology". Lazada's ambitions are not just to solve the problems of the moment with technology, the dividends he is trying to win are long-term and structural.
The dividend comes first and foremost from a sound infrastructure. Lazada's technology system is built on Alibaba Cloud, and the cloud platform is not only stable, but also allows Lazada to use cloud resources on demand according to the actual situation. This not only improves Lazada's overall operational efficiency, but also reduces unnecessary costs.
With a sound infrastructure, Lazada also has more complete and efficient R&D and delivery capabilities because of Alibaba. Lazada's big promotion technical captain Beiyan described this dominant image as "not from 0 to 1, but from 60 to 100".
Beiyan introduced, "Originally, it took 100 employees to spend a year polishing the technical products, because Ali Middle Office can output standardized products, and the Lazada team may only need 20 people to achieve the same effect in three months." ”
Complete infrastructure, improved technology and delivery capabilities allow Lazada to deal with today's problems quickly and focus more on "the business of the future."
Taking "live broadcasting" as an example, live broadcasting has continued to be popular in the domestic e-commerce market in recent years, and this innovative format can obviously play a value in the Southeast Asian market. Kuang Hao believes that Lazada, which relies on Alibaba and can directly reuse the group's live broadcast technology and product capabilities, has the possibility of flexible layout in the future.
That's how it happened. Lazada is the first e-commerce platform to introduce "live broadcasting" to the Southeast Asian market, during this year's Lazada 11.11, Lazada live broadcasting platform LazLive achieved up to 18 million views in Southeast Asia, and the GMV achieved through live broadcasting also increased by 187% year-on-year.
In short, the significance of technology to Lazada is no longer just a simple "solution to the fault", but based on the local deep, heavy, deeper to improve the overall operational efficiency of the platform, driving business growth. Technology-driven logic put Lazada ahead of the market. The value of this advantage will continue to emerge in the fast-growing Southeast Asian market.
The goal is to the future
Rooted in the local, self-built logistics, technology-driven, in the blue ocean market of Southeast Asia, Lazada pays more attention to "heavy investment" and laying a solid foundation than other players who show their operational capabilities. This seems a bit out of place in the context of the Internet, which emphasizes short-term growth.
Understanding Lazada's differentiated route and its patience requires returning the focus to the Southeast Asian market.
SoftBank Son has a famous "time machine" theory: because the Internet in the United States is more advanced than japan, he first invests in the United States, and then returns to Japan with American experience when the time is ripe, as if sitting on a time machine and returning to the United States a few years ago.
According to the "time machine" theory, the development of southeast Asian e-commerce today is very similar to that of China in the past.
In 2011, China's e-commerce penetration rate was 3%, and in 2019, Southeast Asia's e-commerce penetration rate was 5%. In China in 2011, e-commerce industry participants began to see the potential of the e-commerce industry and carried out in-depth layout, forming a mature e-commerce ecology in the future.
According to reports from agencies such as Google and Temasek, e-commerce is southeast Asia's largest internet economic track, with GMV reaching $38.2 billion in 2019 and a figure expected to reach $153 billion in 2025.
Faced with a booming e-commerce market, and at the same time having a forward-looking understanding of the problems and opportunities encountered in the development of e-commerce, Lazada chose to redevelop in advance and build a moat, obviously for longer-term development.
What kind of results will be harvested by such an idea, you may wish to compare it with today's Chinese e-commerce market. The styles of domestic e-commerce players are very different, some emphasize heavy and stable, and some tend to be light and fast. After several years of competition, the former has shown more resilience, and the relevant "heavy investment" has also accumulated more potential energy for its long-term development.
Similarly, for Lazada, since the long slopes with thick snow have been selected, it will undoubtedly be more imaginative to pave the way for the future of 3 years, 5 years, or even longer.