Social media as a strategy for retail innovation
After making inroads into the nascent e-commerce market in the Philippines, Lazada is taking its online retail strategy to the next level.
The five-year-old branch of Southeast Asia’s leading online marketplace is looking at the potential of social media to drive its business forward.
The 6th annual report of social media and digital trends published by Hootsuite and We Are Social in January revealed that the Philippines has the highest time spent (globally) on social media at 4.17 hours. It also has a 58 percent social media penetration rate, higher than the Southeast Asia average of 47 percent. On Facebook alone, it is 6th in the world in terms of the number of users at 60 million.
Inanc Balci, Co-founder and CEO of Lazada Philippines, is confident that with e-commerce cornering only one percent of retail sales in the country, social media could be a key driver for more wide-scale adoption.
“If someone can create a Facebook account they can also buy online,” he says. “This is our number one objective but significantly we also want to help the economy become more efficient so that everyone can benefit from the potential e-commerce market and also benefit from a growing economy.”
The company that he runs may have cornered over 85 percent of the e-commerce market locally, but it needs to help grow it further in a big way. Compared to the 10 percent e-commerce market share of the more developed countries and even Taiwan’s 18 percent world-leading market penetration, the Philippines is a fledgling underdog.
Balci says he is not dreaming of world dominance in the short term but he is hoping that Lazada Philippines will continue to drive innovations that will increase e-commerce adoption in the next five years.
“If you want to reach out to customers here, either you open a store in all the islands (7,100 islands to be exact)or you do it via an e-commerce platform like Lazada so you can reach out to more customers and increase sales,” he says, emphasizing that the company is not competing with malls and traditional retail but rather complementing their offerings.
“What we do is we offer an additional sales channels to all the businesses in the Philippines so they can reach out to everyone,” he explains.
Social media innovations
According to Balci, Lazada Philippines currently has close to 10,000 sellers in the platform which is also increasing at a very high rate.
The social media strategy is part of the tool sets that it is providing merchants on the platform to increase their products’ discoverability and grow their business without getting a lot of overhead.
It recently started an Instagram Shop that makes it easy for merchants to sell on Instagram. “If you are selling on Instagram, you can link your Instagram account on Lazada and all the items you are selling there automatically appear on Lazada as well,” Balci explains. “It makes it much easier for them to connect their social media accounts to the platform."
The company has also started live streaming media events on Facebook. Its category directors also do live streams to describe the deals they are selling - all to make it easy for customers to make purchase decisions. This is on top of regular advertising on the various social media channels.
“We are doing a lot of Facebook Live executions and we will also be launching Lazada Live feature soon so that key opinion leaders and celebrities can do their platforms on the Lazada website together with the brands that they support,” the Lazada chief discloses.
For its fifth anniversary celebration, Balci’s team is getting ready again for a big three-day sale. But looking back on the past five years, it has achieved many things, including selling about 700,000 smartphones one million power banks, 260,000 diapers, 5,000 unisex sauna suits and at one point has even received 1,400 orders in 1 minute, its highest peak in one to its many past sales event.
The team wants to break the record. With 6.3 million products on offer in 18 categories in its website, it is just a matter of discovering these deals for people who haven’t tried shopping online. Many of these deals with up to 90 percent discount were designed to lure first-time e-commerce users who could be potential lifetime customers if they end up satisfied with the experience.
Lazada offers discounts and deals year-round on its website and holds two major sales events per year. Balci, however, claims that these deals are not for the company to survive but to help grow the e-commerce market.
An entrepreneurial opportunity
Even with its wide assortment of products already on offer and a successful cross-border selling feature, Lazada Philippines is still eyeing to grow its seller base.
“Lazada is the biggest entrepreneurial opportunity here in the Philippines because you don’t need millions of investments. You don’t even need a laptop, you only need an Android phone to start selling on Lazada and we charge our merchants only after a successful delivery,” Balci says. “At the same time, Lazada is a level playing field. Even if you are the smallest merchant or the largest corporation in the Philippines, you get the same rates, there is no difference.”
Recently, it sent five of its best merchants to the Alibaba (its parent company) campus in China so they can get the best learning experience for doing e-commerce.
To support brands and sellers on the platform, Balci says they do one-on-one co-marketing partnerships with over 60 top brands in the Philippines. “We are also trying to come up with innovative things so our brands can engage with millions of Filipinos online,” Balci says.
This is where the social media innovations come in. In Lazada’s view, the brands and sellers are the real shop owners. When customers buy from Lazada they buy these from the merchants and they can do better business with more innovative self-service tools.
“Our vision for the next five years to become a more technology-driven platform for our customers and for our merchants,” Balci concludes. “Lazada is a platform, an e-commerce ecosystem. This is the biggest learning we got from Alibaba. Lazada is focused on its core business - logistics, supply chain, consulting, content. We are inviting everyone to be part of the ecosystem.”