Retail in Asia

In Trends

CEO Talking Shop: Lazada Philippines guns for more mobile footprint

Online shopping mall Lazada is cooking up a revolution. On the 25th of February, a national holiday in the Philippines observed annually to commemorate the anniversary of a popular uprising, it is holding a one-day shopping event exclusive to mobile shoppers.

Inanc Balci, CEO of Lazada Philippines, believes that the timing is right for the mobile power sale. Mobile traffic, he said, now constitutes more than 50 percent of daily traffic of The Lazada Mobile App downloads have also grown 18 percent month-on-month on iOS and Android since its launch in early 2014.

This, he said, is being driven in large part by the increasing adoption of smartphones and mobile Internet in the country.

“The smartphone penetration is expected to hit 50 percent within 2015, which means tripling the number within the year, increasing 22 percent year-over-year in the last two years,” Balci said.

The country’s 16.7 million mobile Internet users (in a population of over 100 million) is indeed a huge market and still has huge potential for growth.

While infrastructure remains a challenge in the country with often slow Internet connectivity, and expensive, limited bandwidth, local telecommunications companies are relentless in providing innovative mobile Internet solutions through mobile Internet bundles and freebies.

“The mobile Internet access is increasing tremendously in the Philippines. Thanks to telco companies, they are making more investments and more people can access the Internet. The mobile phone manufacturers – the local brands – are also coming up with new products that are making it easier for Filipinos to buy smartphones,” he said.

The availability of applications and the coming of music streaming services have also made it more appealing for digital consumers to increase their usage of their smartphones.

“Yes, people are buying smartphones but we want people to use their smartphones as well for various applications and to enable them to live easier lives,” Balci said.

Up for grabs in the upcoming one-day flash sale include consumer electronics devices, including Apple’s iPhone 6, Cherry Mobile’s Me Vibe, Meizu’s MX4 and a wide assortment of power banks at attractive price points.

Not surprisingly, Balci said 60 percent of those who shop via mobile are female customers between the ages of 24-35, which is slightly higher than the desktop average but at the same time significantly higher than the regional average. Overall, Lazada customers are between the ages of 18 and 25.

Fashion, health and beauty, electronics, as well as home and living items are currently the most search and bought items via mobile.

The Lazada chief disclosed that Lazada mobile also tend to shop during lunch breaks (from 11 a.m. to 1 p.m.) and before they go to bed (from 9 p.m. to 10 p.m. Each mobile app and mobile browser user spends an average of 5 minutes shopping online;

The holiday could give mobile users a breathing space from the daily grind and more time to shop.

Mobility and convenience

By pursuing a sales pitch anchored on mobility and convenience, Lazada is hoping more Filipinos will warm up to the idea of mobile shopping.

Balci noted that the Philippines has also over a one-million strong workforce in the business process outsourcing industry (BPO), working in shifts in all time-zones across the world.

“Their time shifts allow them to have more shopping hours. They are tech savvy and has high disposable incomes,” he said, adding that Lazada data shows that there is a sales increase after midnight during the graveyard shift.

In an interview with Maximilian Bittner, CEO of Lazada Group, last year, he told Enterprise Innovation the challenges in setting up general merchandize destination websites in Southeast Asia, are huge. However, the opportunity is equally big, given the steady rise of mobile phone ownership and growing economies in the region.

Since the launch of the e-commerce sites in five Southeast Asian countries in 2012 – Indonesia, Thailand, Malaysia, the Philippines and Vietnam – the company has been striving to address the specific needs each market.

Balci is pursuing the same track in the Philippines with its strong focus on the customer experience.

“We started investing in mobile early. When we came to the Philippines, we knew that despite mobile penetration being low, it is increasing very high,” Lazada

One of the important issues on online shopping the company has addressed in the Philippines is the low penetration of credit cards.

By offering to accept cash on delivery, it has allowed shoppers with no credit cards to shop online. Currently, majority of its customers said in a recent survey that paying for purchases upon delivery is what they like most about shopping on Lazada, followed by option to pay on installment and other flexible payment schemes. It has also thrown in other perks such as extensive warranty commitments and free returns.

In a price sensitive market, another strategy is providing dedicated deals and discounts on the mobile platform.

“Everyday, we curate a group of products and we offer them at the lowest prices on mobile in order to give the customer an incentive to use this new way of shopping,” Balci said.

This is on top of the big deals that the online shopping mall regularly provides customers such as the mobile power sale this week.

Shopper experience

“The user experience is very important because it is easy to come up with an app, but if you don’t come up with the right app, then you end up hurting the e-commerce experience because e-commerce, m-commerce or social commerce is a big ecosystem. You need to cover everything by providing the same experience.

Balci said Lazada works closely with smartphone brands, especially the local manufacturers, in working to enhance the mobile experience for users.

“Keeping in mind that the purchase rate is higher on the mobile platform, it is very important for us to meet the needs of these customers,” he said.

With its success in the online retail space, Balci said the company has no plans to venture into offline retail, and prefers to remain a pure-play e-commerce player.

“We are very focused on online marketing, which we think is the most efficient way of marketing and we want Lazada to be perceived as a purely online shopping mall,” he said.

Although mobile commerce started slow in the Philippines because of the limited infrastructure and low smartphone adoption, the growth is huge that Balci said the country is poised to be one of the largest e-commerce market in Southeast Asia in two to three years.

CEO Talking Shop is the Retail in Asia section devoted to interviews with brand CEOs and retail industry leaders.