- Announces US$1.3bil of annualised GMV across its six markets, yet to break even
- Mobile the key driver, looking to expand its same-day delivery service
LAZADA Group claimed it recorded a total of US$1.3 billion of annualised Gross Merchandise Value (GMV) in 2015 across its six markets in South-East Asia, making it the region’s largest e-commerce player.
The Rocket Internet company runs a network of e-commerce portals in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
GMV is the total dollar value of merchandise sold on an online platform, which may indicate but does not necessarily directly relate to revenue.
Lazada Malaysia chief executive officer Hans-Peter Ressel attributed the performance to its mobile platform.
“Mobile contribution to GMV in Malaysia hit 55% at the end of 2015 as more customers embraced shopping on their mobile devices,” he told a media briefing in Kuala Lumpur on March 9.
He added that Lazada’s app on the Android and iOS platforms has garnered 30 million downloads across the region; in Malaysia alone, the app has over four million downloads.
Lazada Malaysia itself now has over 800 employees, over 10,000 sellers on its marketplace, five million SKUs (stock keeping units), and two warehouses – one in Subang Jaya, Selangor and the other in Kuching, Sarawak.
“2015 was a year for us to increase the gap between us and other e-commerce players in Malaysia,” Ressel proclaimed.
Malaysian buying habits, GST hits
In 2015, the top five products that Malaysians bought from Lazada were diapers, power banks, blenders, food containers, and USB drives.
“Our lifestyle category is becoming more predominant among our customers,” said Ressel, adding that the home and living category, together with the home appliances category, contributed to at least 40% of the business.
He however admitted that the implementation of the Goods and Services Tax (GST) in Malaysia last April did have an impact on Lazada’s sales.
“If we compare orders placed before and after GST was implemented, the difference in amount spent is actually 50% – which means people are spending 50% less on an order,” he said.
“But the good news is that they come back more often. They buy products in the broader range like power banks, diapers, smartphone cases and others, so it isn’t necessary for us to sell expensive items.
“We want to have entry-level products for people who want to spend less, yet have them coming back to us more often. This covers up for the 50% reduction in terms of average spending on an order,” he added.
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Ressel said Lazada Malaysia will open its third warehouse “soon,” which at 250,000 sq ft will be 16 times bigger than the current one in Subang Jaya.
“We are ready to grow massively. We will also help merchants who have problems in scaling up; they can just place their products in our warehouse,” he said.
Lazada Malaysia is also looking into a same-day delivery service.
“This will be exciting news for our customers in metropolitan areas. We are still experimenting with the concept, and as of today, we have delivered over 100 orders within the same day for customers who placed their orders before noon,” said Ressel.
He said he also hopes to increase the number of products in the Malaysian marketplace from the current 5.5 million, in 14 categories, to 10 million by the end of the year.
Lazada Malaysia chief marketing officer Andre Gnananantham said that the company will continue to push its value propositions: Accessibility, affordability and convenience.
“What we’re trying to espouse is that Lazada is a lifestyle choice, where we will push things out to our Malaysian customers according to their shopping patterns,” he said.
Growing the pie with partners
Lazada Malaysia has yet to break even, Ressel (pic above) admitted.
“I think the question here is when do we want to break even. For us, it’s about growth,” he said.
“Based on the way e-commerce works, you invest in your customer relationships to increase customer acquisitions over time, so when your customers come back to you, you break even with those customers.
“Hence, for us, it’s more a question of how long that is going to take and how much we are willing to invest in the same customer.
“We also see more value in growing the market by working with other players in the industry and increasing our market penetration rate,” he added.
In August 2015, Lazada Malaysia partnered with startups like HappyFresh, foodpanda, Uber and Zalora for a ‘Unity Sale’ in conjunction with Malaysia’s Independence Day.
“We want to show that e-commerce isn’t about competition, it’s about growing a bigger pie by doing this with other players,” said Ressel.
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