Cross-border e-commerce became a booming market in China as the domestic market is highly saturated and China's per capita income increased significantly in just few years. In China, there has been an emerging trend that some e-commerce platforms expanding their business overseas and selling overseas goods to Chinese customers due to fierce competition. a few major players have been trying to follow the trend and entered into SE Asia Market.
Among them is Alibaba-owned Lazada Group. As the Nov. 11 Singles' Day shopping spree approaches fast, the company is working hard on bringing more Chinese and international brands to Southeast Asia, according to Alex Chung, Head of LazGlobal business development & service ecosystem, Lazada Group.
“For Chinese brands, Chu Hai (a Chinese word that refers to companies expanding business overseas) and cross-border e-commerce can be seen as a smart move to deal with the predicament that the domestic market have reached saturation” Alex Chung told PingWest during the SYNClub cross-border e-commerce conference in Hangzhou last week.
Speaking to audiences at Synclub cross-border e-commerce conference 2019, Alex Chung said that Lazada is seeking to boost its cross-border operations for Chinese brands and international merchants in an effort to expand its reach to broader group.
Launched in March 2012, Lazada is one of the largest e-commerce platforms in Southeast Asia based on average monthly web visits. With a business model that allow third party retailers to sell their products through its website and sell inventory to customers from its own warehouses, Lazada has grown exponentially over the past few years, its cross-border sales have quadrupled in the past three years, a clear indication that the SE Asia market is ready for more diverse and higher quality goods from China and the rest of the world.
“The partnership between Lazada and Alibaba will bring significant synergies that will enhance the online experience for both our buyers and sellers,” said Chung, adding that the partnership can also strengthen logistics and payment systems and support retailers from China and rest of the world to participate in the SE Asian markets.
Lazada was integrated into the Alibaba’s ecosystem in April 2016 when the Chinese largest e-commerce group bough controlling stake in Lazada. Since then the parent company has launched several market campaigns to introduce a select range of Taobao and Tmall merchandise to consumers in the Southeast Asia regions including Singapore, Indonesia, the Philippines and Thailand.
According to Alex Chung, in order to boost cross-border sales, Lazada recently launched a program called “Club 350”, under which the company aims to pick and nurture 350 brands among cross-border retailers in six Southeast Asia countries, including Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The program will allow these selected brands to grow their business and increase their presence such as high exposure of their products when users search and browse their products on Lazada site. To further boost retailers’ business, Alex Chung said that Lazada also offers sellers more opportunities to better engage and serve customers through new markets campaigns and equip them with better tools to sell more effectively on Lazada. For example, sellers will get a weekly report on the most-searched words and items on Lazada to enable them to better cater to the evolving wants and needs of consumers
Southeast possess immense market potential and offer huge opportunities for Chinese brands that are looking to expand their business overseas. According to the report ”e-Conomy SEA 2019” released by Google, Temasek, and Bain& Company, the Southeast Asia region has more than 570 million citizens, of which top 3 markets by population are Indonesia (264 million), the Philippines (105 million) and Vietnam (96 million), The population of internet users in Southeast Asia had increased fourfold over the past ten years , it has reached 360 million as of September 31, 2019, making Southeast Asia the most engaged mobile internet region in the world, . In comparison, the population of internet users in China had increased nearly threefold from 298 million in 2008 to 802 million in 2018, and the booming eCommerce market in Southeast Asia is on track to hit USD300 billion by 2025.
In addition to its immense market potential and geographical proximity to China, Southeast Asia region is home to millions Chinese immigrants, many of them already familiar with the products and e-commerce services that Alibaba and Tencent offer.
Chung told PingWest that the company aims to redefine the retail experience in Southeast Asia, building long-term competitive advantages in logistics, technology and payment with Alibaba-backed cutting-edge technology, to continue to contribute to the region’s e-commerce ecosystem as the leading shopping and selling destination for global merchants and local shoppers.
Despite the rapid growth of e-commerce in Southeast Asia, Alex Chung said there are two key challenges for retailers to operate in Southeast Asia: logistics infrastructure and digital payment system. “We believe that the best approach to tackle the supply chain challenges and digital payment in Southeast Asia is to build our own logistics and technology capabilities while deepening partnerships with third-party vendors. Lazada Express has covered over 250 cities and districts with more than 100 last-mile distribution hubs.”
To promote Lazada e-commerce ecosystem, Lazada has partnered with over 40 financial institutions including Mastercard to reinforce Lazada’s payment system to allow consumers to shop more easily.
To give sellers a bigger boost, Lazada will launch several marketing campaign and flash sale activities during the upcoming flagship 11.11 shopping festival, which is a part of Alibaba’s larger campaign to boost sale. Lazada adopted a recent online shopping trend in China, where shopper can form a group of 22 people to get reward such as discount and giveaway prizes by shopping during the promotional period and completing select missions.
"This is something following our shoppertainment strategy, which we felt is very fun to do and we want to connect with our consumers via social media, we believe shopping is not just about click, find and buy the products, it’s about the whole experience,” said Chung.