It can be seen that in Southeast Asia, Lazada and Shopee are the two most famous e-commerce websites because of their presence in many countries and a large number of items and orders. But each website uses its own strategy.
Now, one of the ways Lazada uses to attract customers in its Southeast Asia is to create promotions. Funding for these promotions comes from Alibaba.
But the strategy of using money can not help e-commerce projects to develop in the long run. In the near future, Lazada’s rival Shopee, a product of startup Sea, will be listed as a public company. Lazada will certainly have difficulty in attracting investment capital.
Therefore, gradually shifting from using money to call customers to upgrading infrastructure becomes a suitable choice. Lazada’s operating model from 2013 is similar to Amazon’s, allowing sellers to ship in the website’s warehouses. From these warehouses, all products are packaged, delivered to the user every time an order arises. Thus, the more the website develops, the more orders and more sellers, the cost of developing warehouse and transportation will also increase.
According to the current head of Lazada, Max Bittner, they currently have 15 warehouses in Southeast Asia. The company is also expanding its delivery service and trusting this value chain.
Any quantity that is put into the system at any time, costs will be at the cheapest level. This is the goal this e-commerce system is trying to accomplish.
“Not all customers want to buy the same item,” says Bittner. Some customers can wait, but others want it quickly ”. Even if the item a customer wants is as small as an everyday food or as big as a refrigerator, the cost of packaging and shipping should be minimal. This is an important factor in the capacity of an e-commerce company.
How to help the seller save more money
Different from what Lazada is trying to do, Shopee is using a completely different strategy.
According to this e-commerce website, letting sellers take full initiative in completing orders instead of depending on the website’s warehouses is a way to help reduce costs for sellers. They also said that this would be more efficient than having the seller ship the goods to the website’s intermediary warehouse as it suits the situation in Southeast Asia.
Shopee’s analysis shows that stocking in the website’s warehouse is more efficient for customers to buy, but causes problems for sellers. Sellers who want faster deliveries have to get their products to every warehouse. If only products are delivered to warehouses in the big cities, then local delivery will be slower.
Sea president, Shopee’s parent company Nick Nash, said: “If you try to put your inventory into your warehouse, your job is to become a wholesaler and the partner’s problem is how to sell you the largest quantity possible in one go ”. This is the seller’s problem.
Follow Alibaba’s way?
Max Bittner said that the biggest challenge of the e-commerce industry is not to increase the amount of goods traded but to solve the transport problems.
Former Chairman of Lazada Indonesia said that the 3rd shipping partners in the country are not keeping up with the speed of the website development and services in this country are poor at completing orders.
Alibaba, which acquired Lazada, is developing under a similar model. However, Jack Ma also once said: “When your scale is small, develop in a general model, do not hoard goods. But to be effective, combine both the intermediary and the stock model. Given the current scale of Alibaba, the website itself must carry out the task of hoarding this item and should be invested.
Both Lazada and Alibaba are now sharing their big data systems to create customer-tailored services and prevent counterfeiting. Users’ fraudulent acts are also easily detected by the system due to the system’s available order restriction function.
In fact, in Southeast Asia, Lazada and Shopee are not the only two e-commerce services. In each country, these two systems have domestic competitors from that region, for example in Vietnam, Tiki. Amazon has a presence in Singapore. Another competitor, Tokopedia, has sold shares to Alibaba. Changing competitors may lead to the fact that both of these e-commerce websites will also have to change their strategies in the near future.
* Source: BizLive