- Currently has 15,000 Indonesian SMEs on its platform
- Seven million products were available on the platform in January 2017
AS ONE of biggest e-commerce platform in Indonesia, Lazada contributes to the growth of Indonesia’s SMEs by connecting them with customers. There are currently 15,000 SMEs on Lazada’s platform.
“E-commerce in Indonesia helps the local or offline market in production, packaging, and delivery to several different areas. In addition, e-commerce is facing some challenges especially in infrastructure, logistics, and payment systems. Those are the main things that the Indonesian government is trying to work on,” says Indonesian Creative Economy Agency (Bekraf) infrastructure deputy Hari Santosa Sungkari M.H.
Lazada Express arrived in 2012 and provided Cash on Delivery (COD) services. At that point, banking penetration in Indonesia (loan-to-GDP ratio) was only 33% and credit card penetration from 2012 to 2014 was 11.9%. It made sense therefore, for Lazada to offer COD services.
“Back in 2012, there were only a few e-commerce players. In order to gain the trust of our customers, we used COD as our payment method,” says Lazada Indonesia co-chief executive officer Florian Holm.
In 2013, Lazada launched its mobile app. Holm believes that the mobile app is driving growth in Indonesia’s digital economy.
One year later, Lazada opened warehouses for all their merchants to fulfil and ship their products from. The warehouses are in Medan, Jakarta, and Surabaya.
“We were offering this because some merchants started off as a small business (from 10 to 15 orders), and they were experiencing tremendous growth. The other reason was to speed up the delivery time,” adds Holm.
In 2016, Lazada raised a large undisclosed sum from Alibaba. According to Holm, the investors gave them the confidence and knowledge to serve their customers better.
Lazada has been working to improve their services in terms of delivery time, number and types of products being sold on their platform as well as increasing the number of customers).
Delivery time has been reduced by half in the last two years and efforts are being made to reduce it even further.
The number of products available on the platform was seven million in January 2017, a 24-fold increase compared to January 2015. The products with the highest selling point are fashion followed by health and beauty, electronics, and household items.
The percentage of customers shopping online via a mobile phone app has risen to 86% in 2017 from 34% in 2015.
“Lazada is a platform. Our purpose is to apply the best technology and offer the best customer experience. To know how we will be able to improve, we look at customer reviews on products they purchased. It is also helps customers to decide on which product will be the best for them,” explains Holm.
“As an online marketplace, we offer various features to make shopping comfortable, such as, COD services, express delivery, and a simple returns policy,” says Lazada Indonesia co-chief executive officer Duri Granziol.
As an online market place, Lazada has collaborated with Telkomsel, Bank Mandiri and JNE for help in terms of logistics, mobile data provision and payment systems.
Lazada has worked with Telkomsel 2012 (Telkomsel) and with Mandiri as well as JNE since 2014.
“Data users on mobile phones, especially in terms of e-commerce, have been increasing since 2016. We work with Lazada at various events where Lazada offers promotions to our customers,” said Telkomsel Loyalty and Partnership general manager Kristin Rosa.
“In collaboration with Lazada, Bank Mandiri has offered education and provided efficiency in terms of payment such as a ‘one time password’ system and instalments. We make sure that customers will always be able to purchase online safely,” says Bank Mandiri senior vice president Vira Widiyasari.
“Lazada is the first online shopping platform to work with us on the COD method of payment and now we work together at their three big warehouses in Medan, Jakarta, and Surabaya as a logistics and delivery services partner,” said JNE deputy general manager Hasmeliani Suseno.
Challenges in the future
For the next five years, Lazada predicts that there will be major changes in the shopping experience for their customers.
Lazada wants to add more products to their platform. They aim to sell products that are usually sold offline so it is easier for customers to purchase all their products in one place. Lazada also contributes in the growth of the local market by encouraging young entrepreneurs to sell their products online.
Products produced in Indonesia will be sold through Lazada to other countries like Malaysia, the Philippines, Singapore, Vietnam, Thailand, and China.
“We want SMEs in Indonesia to be aware that e-commerce could help them to grow and fulfil their creative ideas. And through e-commerce, they can sell their products with a very minimum cost,” Holm explains to DNA.
“We want to make sure that goods get to our customers faster. We want to be reliable so we can be part of our customers’ daily lives,” said Holm.
Lazada is also working on its interactive platform for customers and merchants. Its mobile app will be designed to enable the homepage to reflect a customer’s shopping habits and interests.
“We hope that in the future, the content in Lazada will inspire customers through our review forum and search engine,” Holm concludes.
For their 5th anniversary, Lazada will host flash sales as well as offer vouchers, free movie tickets, and Lazada joy packets to loyal customers.
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