Lazada Group is a Singaporean multinational technology company established to replicate the Amazon business model in Southeast Asia and take advantage of the retail giant’s weak presence in the region. Similar to many eCommerce giants, Lazada has been able to create an assortment of revenue streams. On the Lazada Marketplace, the company takes a sales fee of 1 to 4%, and it also makes money via grocery delivery subscriptions and more.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Lazada’s value proposition includes: – E-commerce Convenience: Providing a convenient online shopping platform with a vast selection of products. – Variety and Choice: Offering a wide range of products from different categories. – Promotions and Discounts: Running regular sales and discounts to attract price-sensitive shoppers. – Seller Network: Partnering with sellers and brands to expand product offerings. Lazada focuses on convenience, variety, discounts, and a robust seller network to attract and retain customers.
Attracts customers looking for diverse product choices and convenience. Encourages repeat purchases with promotions and discounts. Expands product offerings through seller partnerships. Competes in the competitive e-commerce market by offering value. Establishes a strong value proposition for online shoppers.
– Extensive product categories and choices. – Frequent promotions and discounts. – Partnership with various sellers and brands. – Convenient online shopping experience.
Customer Segments
Lazada serves the following customer segments: 1. Online Shoppers: Attracting individuals and households who prefer online shopping for a wide range of products. 2. Sellers and Brands: Providing a platform for sellers, including individual sellers and businesses, to reach a large customer base. 3. Retailers and Wholesalers: Partnering with retailers and wholesalers to expand their online presence. 4. Logistics and Delivery Services: Collaborating with logistics companies for efficient order fulfillment and delivery. Lazada caters to shoppers, sellers, brands, retailers, wholesalers, and logistics partners.
Attracts a diverse range of online shoppers looking for convenience. Provides a platform for sellers and brands to reach a broader audience. Expands the online presence of retailers and wholesalers. Collaborates with logistics partners for efficient delivery. Targets multiple customer segments within the e-commerce ecosystem.
– Individual and household online shoppers. – Sellers and brands looking for online sales channels. – Retailers and wholesalers expanding their online presence. – Logistics and delivery companies for order fulfillment.
Distribution Strategy
Lazada’s distribution strategy includes: – E-commerce Platform: Offering a user-friendly website and mobile app for online shopping. – Seller Network: Partnering with individual sellers, brands, and businesses to list and sell products on the platform. – Logistics and Delivery: Collaborating with logistics companies to ensure efficient order processing and delivery. – Marketing and Promotion: Running marketing campaigns, promotions, and discounts to attract and retain customers. Lazada employs an e-commerce platform, seller network, logistics partnerships, and marketing efforts for distribution.
Provides accessibility through a user-friendly online platform. Expands product offerings through seller partnerships. Ensures efficient order fulfillment and delivery through logistics collaborations. Attracts and retains customers through marketing campaigns and discounts. Implements a comprehensive distribution strategy aligned with its e-commerce business.
– User-friendly website and mobile app for shopping. – Partnership with individual sellers and brands. – Collaborations with logistics companies for delivery. – Marketing campaigns and promotional efforts.
Revenue Streams
Lazada generates revenue through the following channels: 1. Commission Fees: Earning fees from sellers for each successful sale made on the platform. 2. Advertising and Promotions: Charging sellers for premium placement and advertising services. 3. Subscription Fees: Offering subscription packages to sellers with additional features and benefits. 4. Logistics and Fulfillment Services: Earning fees for logistics and order fulfillment services provided to sellers. Lazada diversifies its revenue streams through commission fees, advertising, subscriptions, and logistics services.
Generates revenue from commission fees on successful sales. Earns income from advertising and premium placement for sellers. Offers subscription packages for additional revenue. Provides logistics and fulfillment services for fees. Diversifies its revenue within the e-commerce industry.
– Revenue from commission fees on sales. – Income from advertising and premium placement. – Subscription fees from sellers. – Earnings from logistics and fulfillment services.
Marketing Strategy
Lazada’s marketing strategy involves: – Marketing Campaigns: Running various marketing campaigns and promotions to attract and retain customers. – Seller Support: Providing support and training to sellers to improve their online presence and sales. – Customer Engagement: Engaging with customers through email marketing, notifications, and personalized recommendations. – Partnerships and Collaborations: Partnering with brands and influencers for endorsements and exclusive deals. Lazada focuses on marketing campaigns, seller support, customer engagement, and collaborations to promote its e-commerce platform.
Attracts and retains customers through attractive marketing campaigns. Empowers sellers to succeed through support and training. Engages customers with personalized content and recommendations. Collaborates with brands and influencers for brand endorsements. Implements a multifaceted marketing strategy aligned with its e-commerce business.
– Attractive marketing campaigns and promotions. – Seller support and training programs. – Customer engagement through personalized content. – Partnerships with brands and influencers.
Organization Structure
Lazada’s organizational structure includes: – Management Team: Comprising executives and leaders responsible for overall strategic direction. – Technology Team: Managing the development and maintenance of the e-commerce platform. – Seller Support Team: Providing support, training, and resources to sellers. – Marketing and Customer Engagement Team: Focusing on marketing campaigns, customer engagement, and partnerships. – Logistics and Fulfillment Team: Collaborating with logistics partners for efficient order processing and delivery. Lazada maintains an organized structure to support its e-commerce operations, technology development, seller support, marketing, and logistics.
Led by a management team responsible for strategic direction. Employs a technology team for platform development. Offers seller support and training. Manages marketing and customer engagement efforts. Collaborates with logistics partners for order fulfillment. Maintains an organized structure aligned with its e-commerce business.
– Management team for strategic direction. – Technology team for platform development. – Seller support and training programs. – Marketing and customer engagement efforts. – Logistics collaboration for order fulfillment.
Lazada Group is a Singaporean multinational technology company.
Founded in 2012 by Maximillian Bittner and Pierre Poignant, the company was established to replicate the Amazonbusiness model in Southeast Asia and take advantage of the retail giant’s weak presence in the region.
The first Lazada website came online in 2012, selling consumer goods directly to consumers in Malaysia, the Philippines, Thailand, and Vietnam. The following year, Lazada allowed third-party sellers to offer goods on its platform – the so-called B2B2C model. This part of the business grew rapidly and accounted for 70% of total spending on the platform in 2014.
In 2016, the company became majority-owned by Alibaba Group to support its global expansion strategy. Lazada continued to grow as an online platform, despite a continuing preference by Asian consumers to shop in large physical malls.
Similar to many eCommerce giants, Lazada has been able to create an assortment of revenue streams.
Following is a summary of each.
Lazada Marketplace
In the Lazada Marketplace, the company takes care of the payment and fulfillment process for authorized sellers. It also schools merchants on conversion rates and marketing through Lazada University and Super eBusinesses, respectively.
For access to these services, Lazada takes a sales fee of 1 to 4% based on the product category.
LazMall
LazMall is a higher-end marketplace serving as “a curated selection of leading international and local brands, top-rated online brands and authorized brand distributors.“
In this case, commissions on each transaction are capped at 5%.
Top Up & eStore
The Top Up & eStore gives Lazada users access to a range of services, including:
Mobile credit recharge.
Gaming credits for systems such as Xbox and Steam Wallet.
Food and beverages.
Travel deals.
SEAGM – a virtual currency that can be used to fund the purchase of the above services.
Lazada also earns an undisclosed yet specific commission for partnering with each service provider.
Grocery delivery
In 2018, Lazada acquired delivery start-up RedMart to move into the food delivery business market. The business is now Singapore’s leading online grocery marketplace.
Here, the company charges a fixed fee for each delivery and takes a commission based on the total order amount.
LiveUp membership program
LiveUp is an exclusive membership program allowing consumers to save money on selected services. These include free delivery on RedMart deliveries above a certain threshold, two months of free Netflix, and a 4% rebate on every LazMall order.
Customers can pay a fixed monthly or annual fee. However, the service has been temporarily disabled because of the COVID-19 pandemic.
Fintech
Lazada is also riding the popularity of financing and payment solutions, particularly in the under-served Southeast Asian region.
The company has, for example, partnered with Malaysian P2P lender Funding Societies. This gives merchants access to credit to fund their operations. It is also working with Singapore-based AsiaKredit to offer a Klarna-style monthly repayment option for consumers.
Ultimately, these partnerships increase sales for Lazada.
Key takeaways:
Lazada is a Singaporean multinational technology company with a focus on eCommerce. It was founded to replicate the Amazonbusiness model in the under-served Southeast Asian market.
Lazada collects a transaction fee from merchants in the Lazada Marketplace of 1 to 4%. The sale commission in the high-end LazMall can be as high as 5%.
Lazada charges for various services including a food delivery business and membership program. Indirectly, the company also increases revenue by giving consumers and merchants better access to funds and payment options.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
