Lazada is aiming to dominate
What’s Happening Here?
Lazada has launched new products such as in-app live streaming and games, and is investing heavily in logistics, technology and payments to accelerate the growth of the third-party merchants that it works with.
What Does This Mean?
Lazada, which started in 2012 before being acquired by Alibaba in 2016, is doubling down on its efforts to dominate the Southeast Asia e-commerce market and supply chain through empowering its sellers in digitising their businesses and reaching more customers. Lazada is following Alibaba’s approach in China of partnering with third-party merchants to corner the market rather than Amazon’s approach in the US of introducing its own private label brands to compete directly with other brands on its platform.
Why Should You and I Care?
It will be hard for any horizontal e-commerce start-up to compete with the likes of giants like Lazada and Tokopedia because they have such a massive lead in market share and deep pockets to drive advertisements and customer acquisition through new products and services.
The opportunity for start-ups and investors lies in vertical e-commerce companies which are able to compete by reaping much higher profit margins derived from selling self-branded products designed in-house and manufactured by third party factories. Such companies are not only able to sell products directly to consumers through their own websites but also leverage third-party platforms like Lazada as a secondary sales channel to clear less popular or unwanted stock to a wider pool of customers.
Vertical e-commerce companies have the ability to build a proprietary brand and a community of people around it, which is a good strategy to establish customer loyalty. In comparison, it is harder for a horizontal e-commerce company that sells numerous third-party branded products to build a loyal following, especially when those products are sold on other online and offline channels as well.
Yet another key strength for vertical e-commerce platforms is the focused approach on data and analytics that allows deeper comprehension of customers’ shopping behaviour, identifying favourable patterns that people are clicking on, features and designs that spike particular inquiries and responses – all these culminate as big data analytics. The subsequent translation of meaningful data, forms the core proposition that aids in areas of production, design and feature sets. This accurately caters to what customers want, based around how they have clicked and navigated.
Sounds like an intriguing phenomenon? Time to embrace it! How we interact with platforms, provides insights to data repositories – the more we give, the more accurate an eventual output will circle back in products or services. And yes, its all for you – what works for you, what gets to you, to cater to the highly efficient you. Welcome to the world of “micro moments“.