Lazada: Shop but you don’t have to drop

MANILA, Philippines — Once, not too long ago, a businessman sold his goods in Binondo. On a small table, he laid out a variety of small electrical appliances. He relied on the usual crowd of Binondo – the Mecca of cheap finds, from consumer goods to curio items to what-have-you – to make a living.

Business went well. But when he decided to join Lazada, it would become one of the best decisions he would ever make. His success in Binondo was nothing compared to the success he would enjoy when he joined Lazada.

Eventually, the man decided, he didn’t need to maintain his store in Binondo anymore. Being in Lazada was more than enough.

“The sky is the limit,” says Inanc Balci, the 31-year-old co-founder and CEO of Lazada in the Philippines in a recent interview with STARweek on the opportunities Lazada can provide to merchants. 

Balci himself is an innovator and a maverick. He graduated with a double degree in Industrial Engineering and Economics from Purdue University in the United States.

Lazada, he says, provides the biggest online market place in the country with roughly 24 million products for customers to choose from. Thus, it provides the biggest entrepreneurial opportunities for sellers. ?With a single click, customers can choose from a wide array of items that go with free shipping, secured credit card and payment system, return and fast delivery.

Its success, as in most success stories, did not happen overnight but today, it is no doubt the country’s top online shopping mall has successfully disrupted the retail scene across the archipelago. 

The company started operations in March 2012, setting up regional headquarters in Singapore. It then opened in Indonesia, Malaysia, Vietnam, Thailand and the Philippines.

It boasts of having the largest online assortment of products ranging from mobile phones and laptops to consumer electronics to books and media, health and beauty, home appliances, fashion and accessories – and so much more.

Indeed, it offers its wide customer base everything they need in one place and all at “effortless, risk-free shopping.”

Today or just five years since its establishment in the Philippines, Lazada continues to strive to live up to its objective of improving people’s lives by having a seamless retail experience.

Thus, it continues to offer products and retail solutions that combine sense and simplicity, with the end goal of providing superior value to its customers.

But Balci says Lazada’s secret to success was not just because of the products it offers but its ability to delivery these products. 

Things took a turn for the better when Lazada put up its own logistics company, Lazada Express.

“Success came from Lazada Express because we managed everything from Lazada Express. We managed the whole process. When we put all these things together, we are the only one to provide cash-on-delivery on a significant scale,” he says.

Lazada Philippines offers its shoppers nationwide cash-on- delivery (COD) payment mode, free shipping for Metro Manila orders or transactions above P1,000, and free returns within seven days – making online shopping more practical for every Filipino.

At present, the company delivers over 70 percent of its orders via Lazada Express. The balance or 30 percent of the volume is divided among 25 logistics companies.

“On average, the biggest one does three to five percent of our orders,” Balci says.

Now, he adds, Lazada Express is the second biggest logistics company in the Philippines.

Having its own logistics company and implementing an efficient COD system contributed to the success of Lazada, he says.  

“We are the first and only logistics company that offers cash on delivery. In the Philippines, credit card penetration is six percent, banking penetration is 30 percent so COD is really important,” he says.  

But COD is no laughing matter.  One common way was to go to a drop-off point to give the money but Balci says this wasn’t very effective.

“If you want to buy something, you need to go somewhere to make a cash delivery but we don’t like that. If you have to go somewhere, it’s not e-commerce anymore. If you have to go somewhere, you would rather go to the shopping mall,” he says.

Thus, he says, Lazada took the risky approach.

“It took us many years to perfect it. We invested a lot of money into this. Some of our competitors went bankrupt. We spent a lot of time, brain power and we built the process together with third parties. We spent time thinking about it and talking to third parties about how we can make this viable,” Balci says.  

When the company started in the Philippines in 2012, Balci recalls, it wasn’t easy.

“It’s one of the most difficult countries to start an e-commerce in. Logistics companies in the Philippines, they are good in terms of traditional logistics, but e-commerce logistics is very different,” he notes.

He almost runs out of words in describing just how complex e-commerce is.

“It is very difficult. It is as complex as the business gets. This e-commerce business is very different,” Balci says, explaining that once a customer places an order on the Lazada website, the order goes to a system which identifies if the system will go to a virtual marketplace or to the warehouse.  

“We have a warehouse in Manila. It’s a 30,000-square meter warehouse. This retail goes back to the order then goes back to the Lazada Express sorting center then it will be delivered,” he adds. 

Everyday, Lazada Philippines is busy fulfilling customers’ needs. It has a pool of more than 2,800 employees. 

“Everyday we pick up thousands of items. These orders then go back to Lazada for sorting. We manage 100,000 packages a day. We have 100 million visits a month between our mobile platforms and desktops,” he shares with pride.

But Balci says there’s still so much room to grow.  

“There are 63 million Facebook users in the Philippines and if they can roam Facebook, they can roam Lazada. We’re making it better everyday,” he says.

Moving forward, Balci says the company will introduce additional categories such as groceries.

“In the future we’ll go into groceries as well. We acquired a grocery in Singapore, Red Mart. It’s a grocery company. And they are doing a great job. At one point in the future we want to bring that to the Philippines,” he says, adding that it may happen in just two to three years.

At present, Lazada offers 24 million products in 14 categories.

“We recently launched digital books. We also launched a services category. You can buy food vouchers. We’re getting more and more digital goods and services,” Balci says.

More growth means more opportunities for customers as well.  

“In Lazada, we treat our merchants equally, whether they are the biggest conglomerates or the smallest merchants. We don’t charge anyone to open a store in Lazada. We only charge commission. It becomes light for our merchants. If you open a store there are a lot of costs but if you open a store in Lazada, you are on a level playing field. You can do a good job,” he says.  

Indeed, with e-commerce in the Philippines still having enough room to grow, the sky is the limit for Lazada.