Month: October 2020

Categories
Business & Commerce Inside Lazada Logistics

Lazada Group CEO:
Building the Future of Digital Commerce
in Southeast Asia

By LazBeat Staff
Oct. 15, 2020

In the monograph on his book, Good to Great, author Jim Collins pointed out that the “big thing” for a truly great company is neither a single innovation nor one grand plan. Instead, it’s the underlying flywheel architecture, properly conceived, built over time, slowly gaining momentum, and eventually breaking through.

At Alibaba’s Investor Day on September 28, Lazada Group’s chief executive officer Li Chun cited this flywheel concept as a way of reiterating the company’s long-term strategy of building a healthy sustainable business by investing in technology infrastructure and logistics capabilities.

As Alibaba’s flagship platform in Southeast Asia, Lazada wields the competitive advantage of tapping into two decades of experience and cutting-edge technology from the world’s most successful eCommerce player. What matters most, Li said, is creating real value for consumers, brands and sellers across the region as the company builds to last.

Lazada Group CEO Li Chun in Singapore, sharing the stage in Hangzhou virtually with other Alibaba executives, including executive vice chairman Joe Tsai and chief financial officer Maggie Wu, both broadcasting remotely from Hong Kong.

Some key highlights from Investor Day:

Strong sustainable growth momentum in the past year

With a culturally diverse population of more than 650 million and a rapidly digitalising economy, Southeast Asia is fertile ground for eCommerce. During the COVID-19 pandemic, digital adoption surged in the region; brands and sellers raced to onboard Lazada’s platform at an unprecedented pace. In the 12 months ended July, Lazada had more than 80 million annual active consumers, and active monthly users topped 100 million in July. Year on year, its quarterly order volume has doubled for the past three years.

Moreover, key performance metrics illustrate strong growth momentum. With the time that users spend on the Lazada app and purchase frequency increasing year-on-year by 20 per cent, the platform is demonstrating that it is enabling businesses to grow. The number of sellers generating more than USD 5,000 a month in sales has more than doubled. Gross merchandise value growth year-on-year per marketing dollar is 90 per cent, reflecting how smart algorithms are enabling an effective marketing model and achieving scalable efficiencies.

“As a result of our data-driven approach, only a small proportion of our overall gross merchandise volume (GMV) is driven by subsidies,” Li said. “Minimal marginal costs mean our business model is both scalable and sustainable. Strong fundamentals, dedication and a customer-first mindset, all contributed to Lazada being a quality platform, with both quality users and supply.” 

The Tech Advantage

When Li joined Lazada in 2017, his first priority was to transform its product and technology architecture, cognizant that it would be the main engine of the company’s growth. Since then, Lazada has, among other things, revamped its core eCommerce platform, consumer app, seller centre, as well as its AI and recommendations engine. Lazada’s tech architecture is key to improving the experience of users, partners, sellers and brands.

Notable examples include how Lazada’s artificial intelligence technology effectively matches the right products to the right consumers at the right price point, while its proprietary operating data dashboard provides sellers and brands with real-time, actionable insights on buyers’ preferences and business performance, allowing them to react smart and pivot quickly. Lazada Sponsored Solutions, launched earlier this year, further equip merchants with a suite of marketing tools, from on-site ads to offsite affiliate marketing, to better reach potential customers.

The Logistics Differentiator

Logistics is critical to the eCommerce value chain, especially in Southeast Asia with its geographical vastness and diversity. Lazada has the region’s largest, most intelligent integrated logistics and supply chain network for eCommerce. Today, its network across these six countries includes fulfilment centres sited on more than 300,000 sqm of land, over 15 sortation centres, and close to 400 pick-up and delivery hubs. All these are powered by a data-driven, smart routing algorithm, enabling the company to meet the surging demand of Southeast Asia’s flourishing eCommerce industry. More than 85 per cent of total parcels delivered are now sorted by Lazada’s proprietary network.

With e-logistics still in its early days in Southeast Asia, Lazada is just only starting to see how smart logistics and network control can empower businesses and give customers a better shopping experience. Logistics is a game of scale – the wider the network, the more cost efficiencies can be achieved through network synergies, and the better the experience for customers.

The Commitment to Southeast Asia

Li concluded his presentation by declaring the commitment of Lazada’s financial, people and technology resources to the region. Execution and innovation are of the utmost importance.

Lazada is fully backed by Alibaba Group, whose vision is to be a company that lasts for 102 years, with Southeast Asia being a the key pillar of its globalisation strategy.

“We are playing the long game,” he said. “This is not a fight over the next four or eight quarters. It’s a battle spanning the next three, five and even eight years. We are here to stay.”

Lazada Group CEO Li Chun broadcasting remotely from the Singapore office during Investor Day.

Categories
Business & Commerce

Sweet Transformation
of a Traditional Family Business

By LazBeat Staff
Oct. 15, 2020

Growing up in Vietnam’s Central Highlands region famed for its tea and coffee, Lê Đức Minh and Lê Đức Duy watched their parents and other farmers harvest, dry and pack their tea leaves for sale. They remember how tourists would come from far and wide to the highlands city of Bao Loc to taste the tea, and how their mother would proudly tell customers what care and labour went into producing the quality tea they sold. How only the newest leaf buds were plucked, how these were withered and oxidised to retain their enzymes, so that they would retain their flavour and health benefits.

The brothers, now 26 and 25, have grown the family business, and sweetened it. They work with the region’s bee farmers and producers to meet the growing demand for honey and honey-related products. To reflect their mother’s dedication to quality, Đức Duy and Đức Minh consolidated all their products under a single brand name that honours her: “Cô Cự,” which means “Mrs Cự.”

“We named the brand after our mother to retain the traditional aspects of our business and remind ourselves to continue our parents’ dream and passion of selling authentic, quality products at affordable prices for the Vietnamese people. This is a passion shared by many of the local farmers here.” Đức Duy said.

Đức Duy (in first picture above) with industrious bees from Italy at a farm in the Central Highlands where they produce their famous golden yellow honey. These hard working bees are thought to be more productive as well as more resistant to disease.

The brothers have bigger dreams. They want everyone across the country to be able to buy and enjoy their products, whether they are in Bao Loc, or far away. Four years ago, their dreams took them online and into the eCommerce world.  About a year ago they joined LazMall because of its commitment to authenticity and the assurance of quality it offers consumers. Having successfully digitalised their business, they closed all 18 of their physical stores, and now sell their products exclusively online.

Going digital has revived and re-energised their family business, and helped to sustain the livelihoods of the highlands farmers, the brothers said.  Their story has had its ups and downs.

“About 10 years ago, we started to see an influx of products that mimicked ours, but at much lower prices and more inferior quality. The competition hurt our business and our parents had to scale it back. We started to lose some suppliers and customers,” Đức Minh said. “It was tough, seeing our parents’ and the local farmers’ businesses suffer. We decided we needed to look at doing things differently.”

Selling online was a brave new world. The brothers didn’t know how to begin. But they took courses from Lazada University and became involved in the Lazada Sellers’ Club to learn the tools of the trade, as well as tips from other sellers. During the last 11.11 mega shopping festival, the brothers received more than 2,000 orders a day for their honey products.

“Seeing trucks loaded with Cô Cự’s honey products being shipped out is probably one of the happiest moments of our lives,” Đức Duy said. 

During the pandemic, they’ve sold nearly 4,000 litres of honey a month. The brothers believe that as people became more concerned about health and wanting more nutritious products, they were naturally drawn to honey.

Using the same care and dedication to quality that their parents lavished on their tea, the brothers always ensure that their bees are in the pink of health and in the largest numbers before moving the colonies to the “blooming areas” to harvest the honey. The farm staff will also take care to scout for areas where flowers are in full bloom. The brothers use only Italian bees, as these  are thought to be not only highly resistant to disease but are amongst the most productive. This means that the golden yellow honey they produce does not need any artificial treatment and can be stored for more than three years without discolouring.

“The mountainous area of Bao Loc is a great environment for bees. Each package, each product, is a gift of nature to our customers’ health,” Đức Minh said.

Besides ensuring that their facilities comply with regulatory standards for food safety and hygiene, the brothers also work with exporters to ensure that their products meet international standards and are certified as such. This will position them well to one export their products. “Then the world may also learn about and enjoy the tea, coffee and honey from Bao Loc.”

The Central Highlands of Vietnam is a region that has long been known for the delicacy of its tea. 
Categories
Business & Commerce

Behind the Scenes:
Lazada Brand Protection SWAT Team

By Juliane Rose Sun
Oct. 15, 2020

In late September, police raids across several store locations in Thailand netted US$1 million of counterfeit products. Thai authorities seized counterfeit ink cartridges and print supplies under the HP Inc brand. The counterfeiters had been selling them on Lazada.  

HP credited Lazada for exposing the illicit sale of counterfeit goods and said that the successful raid was possible due to the sharing of vital intelligence by Lazada with HP’s anti-counterfeit team and the Thai police.

Online marketplaces are reflections of the realities in the offline world, and removal of product listings suspected to be counterfeit is merely a band-aid to a deeper seeded problem. The root cause needs to be addressed to make real and concrete progress, which means catching the bad sellers and manufacturers of the counterfeit goods that exist in the physical world. While Lazada can help offer leads through the digital trail left behind by these criminals, only law enforcement and government agencies can take action to put them behind bars and permanently interrupt the counterfeit trade.

“The use of unlawful counterfeit supplies can result in printer damage, malfunctions, and printer hardware warranties becoming void. To protect consumers, businesses, customers and partners, the HP Anti-Counterfeiting and Fraud Program proactively works with partners like Lazada to deliver added value to consumers, business customers and partners. This ensures security, reputation protection, seamless operations and cost savings,” said a HP spokesperson.

In another recent raid, Malaysian authorities seized more than 90 counterfeit Panasonic electrical products at the GM Plaza in Kuala Lumpur. They confiscated hair clippers, blenders and irons. Counterfeit electrical goods pose potential safety hazards to consumers as they are unlikely to meet compliance standards. Materials used to make the counterfeit goods are probably of low quality. For this reason, brands like Panasonic are all the more invested in stopping the manufacturing and distribution of counterfeit goods.

As online shopping becomes mainstream, eCommerce platforms, brands and law enforcement authorities are working more closely together to identify, locate and take down counterfeiters. Conducting a raid is complex and often involves multiple parties. Such essential collaboration protects consumers from unwittingly buying and using unregulated and possibly unsafe items. Concerted action effectively deters offenders because they know their illegal activities are under continual scrutiny.

“There are now a lot of people who are new to online shopping, and thus more vulnerable since they do not know how to protect themselves,” said Andy Chua, the senior vice president who leads the regional brands protection team at Lazada. The team, formed in March 2019, now comprises nine people, all with experience working in the fraud prevention and risk management fields, in both the public and private sectors. Chua spent 17 years with the Singapore police force as an officer, including enforcing and investigating intellectual property rights infringement.

Leveraging on Alibaba’s technology, the team manages Lazada’s Intellectual Property Protection (IPP) platform. This is an online portal for rights owners use to upload their proof of IP rights. This then enables them to submit requests against listings that may infringe on their rights, seek their removal and track the progress of their request. Once submitted, the removal request is processed within three or four days on average.

Lazada’s brand protection team also puts measures in place to proactively monitor the platform for counterfeits. Working with the brands, such monitoring mechanisms have been so effective that they can zero in on fake products and remove them automatically.  Although still at the pilot stage and limited to the Singapore market only, these mechanisms have already led to 99 per cent of identified fake listings being taken down even before a single sale was finalised.

In addition, Lazada invests heavily in merchant education to maintain rigorous platform governance.  All new merchants are required to go through a series of educational modules through the web-based Lazada University course.  These modules school the newcomers in awareness of platform terms and conditions, as well as policies regarding intellectual property rights. They also make the newbie merchants aware of consequences for non-compliance, which include escalating penalties, account suspension, and account termination.

LazMall’s authenticity guarantee is a prime example of the platform’s commitment to safeguarding brands’ rights and ensuring peace of mind for shoppers looking for branded merchandise.

Consumer education is another integral part of a continuing anti-counterfeiting battle. Chua said: “We urge Lazada shoppers to shop smart, to keep your eyes peeled for potentially fraudulent activity and to report them. If there are certain marketplace discounts that seem ‘too good to be true,’ they usually are. Other telling characteristics of counterfeit products include popular brand names being purposely misspelled and shops with very poor ratings.”

“As an operations team, we run into daily challenges to balance the needs of our sellers, buyers, rights owners and other stakeholders. The problems we solve are complex and involve a wide set of responsibilities, but it is very rewarding to see the platform safe and our consumers happy,” said Simon Zhou, a senior operations manager in the brands protection team.

Juliane Rose Sun is a manager in Lazada’s Security Risks and Enterprise Intelligence team who works closely with brands in safeguarding their intellectual property rights.