Lazada — A story of eCommerce opportunity seized in South East Asia
Lazada B2B2C Marketplace Series — Chapter 2
The spiraling success of eCommerce over the years has made it a lucrative space full of new business opportunities, waiting to be discovered. The evolution of the overall digital infrastructure has brought improved technologies, better connectivity, and wider adoption, among other key drivers fostering accelerated growth of the industry. The success of behemoths like Amazon, and Alibaba, further continues to inspire investors, entrepreneurs, and businesses to gain a share of the successful eCommerce market.
One such success story has been Lazada, a B2B2C marketplace operating in six countries in the South East Asia market ― Vietnam, Thailand, Singapore, Philippines, Malaysia, and Indonesia.
Launched in 2012, by Maximilian Bittner with the backing of Rocket Internet, based on the identified opportunity to fill the market gap of such a platform in the region.
By 2022, in just 10 years of operations, the online marketplace is owned by the Alibaba group, operates in six countries with 130 million active annual user-base, and generated $21 bn in GMV, making it an inspirational success story in itself for startups to analyze and adopt.
In this chapter, let’s analyze the underlying factors that have propelled the marketplace to success.
Lazada ― The inspiring journey of a successful marketplace in South East Asia
In the west, eCommerce gained traction in the 90’s and the industry witnessed accelerated development in the early 2000’s and beyond. By contrast, in South East Asia the development of the sector has started only in the last decade. In fact, to this day, Amazon does not have a presence in the region excluding Singapore and India.
The major determiners for this have been a lack of internet penetration and infrastructure, less consumer awareness and acceptance of online commerce, and economies that don’t rely on digital payments as primary payment modes.
But that scenario started to evolve in the decade after ― opening up possibilities for eCommerce startups to flourish.
The opportunity for favoring circumstances in the region was identified miles away ― in Germany. Maximillian Bittner, an eCommerce pioneer of our times, was working with McKinsey & Company when he chanced upon the idea of launching an eCommerce marketplace.
At that time, Amazon was doing well but it wasn’t the force it is today. Nevertheless, its business model was a successful template that could be adopted in emerging markets, where Amazon and other popular marketplaces of the time didn’t have a significant presence.
Max Bittnell identified the growing opportunity in the SEA region as the ideal location for an eCommerce startup. His business idea gained the trust and backing of Rocket Internet, a Berlin-based company that helps build startups.
Headquartered in Singapore, Lazada soon took the shape of an eCommerce inventory-based store and commenced operations in 2012. Subsequently, by 2013, Lazada transitioned into an online retail marketplace by onboarding sellers to sell on the platform.
The marketplace was able to gain traction amongst the consumers, albeit with initial challenges. Nevertheless, the company successfully navigated through the impediments to post an annual GMV amounting to $1.36 billion across six countries in Southeast Asia, which essentially meant that it was the largest eCommerce player in the region.
Thereafter, in 2016, Lazada was acquired by the Alibaba group in a series of investments. The move extended Alibaba’s ecosystem and eCommerce expertise to Lazada, further propelling its competitiveness and popularity in the region
In the upcoming chapters, let’s analyze how the marketplace operates, earns revenue, and the series of initiatives introduced by it, to achieve desired objectives.
Chapter 2: The evolving business model of Lazada — Lazada’s business strategies and revenue streams
Chapter 3 (Coming Soon): Marketing Strategies of Successful B2B2C Marketplace Lazada