Southeast Asian ‘unicorn’ Lazada on why innovation comes from collaborating with other brands
Another year, another 11.11 sales extravaganza has convinced those of us in Asia to hit the keyboard and mouse (or our phones) to get the best deals of the year.
Lazada looks outside for innovation as well as within its business
Lazada, now 83% owned by Chinese e-commerce giant Alibaba, is one of the forerunners of this trend and actually runs a sale for a month. However, on its Single’s Day launch, the company generated $123m USD of gross merchandise value (GMV) which it says is a 171% increase over the previous year. Over 6.5m items were bought, a 191% growth.
Such growth comes in two parts; because Southeast Asia is seeing a societal shift to middle class and cash to spend, while also shifting to an e-commerce mindset. Amazon may be pushing hard into this region now but Lazada has been making its name locally for over five years.
Speaking to The Drum at Millennial 2020 last month, Charles Debonneuil, CMO at Lazada, said the business was trying to build itself as a platform that can ride these trends, but also help empower people to benefit from it too and even drive them forward faster.
“We have iterated and iterated and iterated to become this platform that is here to satisfy an aspiration to get to a modern lifestyle for all the emerging middle classes in Southeast Asia. We see this as a megatrend of middle classes growing really fast in Southeast Asia and they want to have a modern lifestyle, they want to buy things easily, like the stuff they have seen on TV,” he says.
“What we have focused on is creating this platform where consumers can find all the products they are interested in but also a platform for entrepreneurs who aspire to a better life, to become part of this middle class by being successful online. We think that’s a huge trend, it benefits consumers but also a lot of entrepreneurs who want to start a business but they don’t know how to do it, we provide the tools for them to be successful. We moved from being a retailer, to an enabler of a change of lifestyle for consumers and entrepreneurs,” he explains.
Its own lifestyle change as a brand has been significant too, buoyed by major investments by well-known businesses, to the point it is at now, where Alibaba owns a majority stake in the business.
“Alibaba invested twice in us, they now own 83% of our company, and it shows that they have great confidence in the market and what we have done so far. I would say in some ways it didn’t change anything and in others, it was a game changer,” he says.
The similarities, according to Debonneuil, lie in this passion to empower small businesses and become an open ecosystem for innovation and change in e-commerce. In how it’s changed the Lazada business, it’s been about technology and pushing Lazada to create better relationships with other businesses and brands.
“I think they have an amazing relationship with all the key brands and, in the last couple of years, we have started to build really strong partnerships with the likes of Unilever, P&G, Samsung, L’Oreal and Nestle. We recently launched MAC the cosmetic brand with Estee Lauder.”
Debonneuil says that from a technology and platform point of view, the Alibaba relationship is pushing Lazada to think about how it can make online retail more enjoyable, inspired by the experiences that Alibaba creates on Taobao or Tmall.
“I think for a lot of people, when they think of e-commerce, because they think of incumbent players, they think of the experience in which you know what to buy, you go in, you buy, you get out. It does not satisfy the bigger use case of not knowing what to buy, wanting to browse around, as you would in a mall or shopping street, talking to friends. I think they are world-class in that and the engagement they have is amazing. So we are really focused on how we can make the shopping experience different, really engaging and fun.”
Finding new ideas to delight consumers and developing new products comes from creating an environment for innovation, he says, though Lazada turns to the ecosystem as well as its own internal talent for this.
Debonneuil says the Lazada Labs project, in which business talent is mixed with tech talent for a hackathon-style session, is already creating ideas that are now in development. However, one of its most interesting ideas came out of wanting to collaborate with others in the market - the LiveUp Loyalty programme with Netflix, Redmart and Uber.
“Much like Lazada Labs, it is a similar bottom-up approach. The cool thing about it is that I don’t know any other region where high profile companies have partnered in this way; Uber, Netflix and Redmart. It came from an idea from the team who said, ‘hey, why don’t we have a loyalty programme and how can we make it cool?’ We are a platform and we are part of an ecosystem, so how can we partner with other players? I think the internal innovation is important but also with others. We want to work with other brands that have innovative ideas,” says Debonneuil.
Another example of this is a recent launch with Dove to launch a face care product. Lazada launched it alongside a live stream with an influencer, who showed Lazada shoppers how to use the product. Debonneuil says the product sold out within 20 minutes.
The brand-focused side of the business will be a key point of growth for Lazada next year, he says, which presents a new B2B marketing challenge for the business. However, having a more collaborative approach can not only be a unique point of difference for Lazada, but ultimately create a halo effect for the ecosystem, he believes.
“I think, there are other e-commerce approaches that are more closed but we want to be an open platform. We think that if we are going to be successful, we are going to have young entrepreneurs, the brands, the retailers, but also the service providers, like the marketing agencies who are helping out the brands or your designers who are building the brand shops on Lazada. We are developing this ecosystem around us and, if we are successful, then everyone will benefit from it. For consumers, there is a clear value proposition but then, instead of trying to do everything ourselves, we want to again enable this, which comes back to empowering, which is our mantra,” says Debonneuil.
With Amazon pressing hard into Southeast Asia, having a strong consumer foot in the door will help Lazada stand tall. As Amazon also pushes further into its services for advertisers and brands, perhaps positioning itself as open and not a walled garden could give Lazada a point of differentiation as well.