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.
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Origin Story
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.
