Lazada B2B2C Marketplace Series — Chapter 2
Lazada has not stuck to one functioning model, rather it has evolved to adopt varying business strategies with time to navigate through eCommerce complexities in the region it operates.
Being a pioneer of eCommerce marketplaces in the SEA region, it had an early mover advantage. No competition from the likes of Amazon, or Alibaba gave time to the company to establish itself on similar operative mechanisms as these companies. And in time, add unique initiatives to carve a distinct identity for itself.
The Evolving Business Model of B2B2C Marketplace Lazada
As mentioned in the introduction, the marketplace started by selling its own inventory to establish its brand and gain a loyal customer base, thus evading the chicken-egg conundrum in marketplaces. To elaborate a little more on the paradox ― online marketplaces have to find a way to onboard sellers or customers first, since both are interdependent on the flow of transactions on the marketplace.
Within a year sellers were onboarded to sell to the established customer base ― effectively transitioning from a B2C to a B2B2C marketplace business model like Amazon, Alibaba, and other similar marketplaces. Its start as an inventory-based eCommerce store had meant that it could establish an eCommerce ecosystem, which it further extended to the sellers.
The functioning of a B2B2C business model is discussed in detail below.
What is a B2B2C Business Model?
A B2B2C model works when B2B companies partner B2C companies to sell directly to the customers. Let’s delve further into the mechanisms of the model and the benefits it extends to all stakeholders.
From The Sellers’ Perspective:
Legacy brick-and-mortar businesses, which have operated via B2B channels exclusively ― have based their sales, pricing, and other business strategies around the same. This has worked well in the past, but the evolving digital age has put newer imperatives in place.
Consumers are now more aware of product prices, making it harder for traditional sales channels to justify costs involved in the process ― impacting the prices and eventually, sales. eCommerce has been the biggest driver of this change.
Thus, such businesses understand that they can no more be oblivious to this shift and need to devise a direct-to-customer sales channel.
By partnering with a B2C eCommerce undertaking, they get access directly to the customer base of the business, along with the ecosystem of the undertaking that supports online commerce operations.
This is different from the offline distributor sales channel since there is control over the pricing, wherein the business can offer more value to the customer. Moreover, the business is retailing directly to the customer and skipping the distributor involved in the sales process. Moreover, eCommerce is generating additional sales and revenue for the business, which is in addition to the offline sales channels.
From The Online Marketplace Owner’s Perspective:
With multiple sellers onboard, online marketplaces tend to scale. Their business model primarily works by establishing a customer base and giving them value by connecting them directly to such businesses. This happens by digitizing the middleman, handling supply chains, and managing transactions via their eCommerce marketplace.
A B2B2C online marketplace leverages its services and extends its customer base to the sellers. Thus bridging the B2C partnership component for B2B sellers to make the B2B2C model function.
With the understanding of the B2B2C marketplace business model, let’s see what Lazada has to offer to make the B2B2C machinery work for all the stakeholders involved.
Services Offered by Lazada for the B2B2C Model
Let’s have a look at the services that Lazada offers to its sellers
A Digital Platform: Sellers get to reach their customers on Lazada’s online website and mobile apps. Personalized individual storefronts facilitate the setting up of online storefronts fostering their brand image.
Global operations: Lazada ships globally through its LazGlobal venture. It serves around 200+countries and regions around the world. Sellers on the eCommerce marketplace get access to a global customer base. And sellers globally get access to consumers in the SEA region.
Lazada eLogistics: Lazada works with third-party logistics providers to offer delivery services to the sellers.
Payment solutions: Customers on the eMarketplace get to pay via multiple payment methods like cash on delivery, card payments, and eWallets including Lazada’s own wallet. This payment ecosystem allows sellers to sell on the platform.
Marketing Strategies: Lazada has been implementing key marketing strategies (discussed later in the article) to assist in higher sales on the platform. The sellers benefit from these strategies.
Advertisement Platform: The eMarketplace allows sellers to display advertisements on the platform to enhance the visibility of their brands and offers. An affiliate program further allows sellers to gain traction on their products.
Lazada’s initiatives: A number of initiatives (discussed later in the article) like Lazmall, LazGlobal, availability of downloadable digital products, and more have been introduced ― that have enhanced the versatility of the eCommerce multivendor store.
Lazada’s Business Strategies and Revenue Streams
Lazada has introduced multiple business strategies to navigate complexities in the region, gain traction amongst sellers and buyers, and add opportunities to generate revenue.
Through its multi-pronged approach for revenue generation, it has propelled the business undertaking to encompass multiple niches across the eCommerce space. Discussed below are Lazada’s business strategies, launched intermittently over a period of time.
Revenue generated on Lazada Marketplace.
In a nutshell,
Lazada Group is an example of how eCommerce operations can be scaled up to achieve revenue streams from multiple sources. The industry offers innumerable opportunities for startups, leveraged by technology solutions, industry tie-ups, and more.
Chapter 1: Lazada — A story of eCommerce opportunity seized in South East Asia
Chapter 3 (Coming Soon): Marketing Strategies of Successful B2B2C Marketplace Lazada