In 2012, 60% of the world’s online retail sales were accounted for by Asia. Businesses of all sizes – from small homegrown brands to global brands – have turned to online platforms such as marketplaces as their primary way to reach customers, owing to the digital-first approach shaped by the COVID-19 pandemic.
With the rising popularity and rapid growth of e-commerce in Southeast Asia during the past few years, online shoppers have fully embraced marketplaces as primary platforms owing to convenience, ease of use, and accessibility. In turn, marketplace platforms such as Lazada, Shopee, and Zalora continue their rapid growth.
Generating over 137 million visits monthly, Lazada is one of the most popular e-commerce marketplaces in the Asia Pacific. It offers shoppers a large array of products spanning categories including household goods, health, toys, fashion, sports, consumer electronics, and beauty, to name a few.
Lazada also offers widely recognized brands and businesses through LazMall where authenticity checks for products and items are carried out.
A trailblazer in the e-commerce industry since 2012, Lazada cements its reputation as a market leader with its ease of use, variety of payment systems and advanced technology. Lazada sustains a customer-centric vision – by continuously and consistently creating a shopping experience that is both efficient and enjoyable.
By 2016, Asian e-commerce giant Alibaba recognized the potential of Southeast Asia and its rising middle class. And with Lazada dominating as the e-commerce leader in the region – running six separate sites for each Southeast Asian country – Alibaba acquired 51% of Lazada for $1 billion and shortly after invested over $378 million for its growth.
Major and key industry players have also made their products available on Lazada’s platform. From electronics and appliances to fashion and lifestyle brands, Lazada sells products from Samsung, Nivea, Estee Lauder, Olay, Dove, Xiaomi, Huawei, American Tourister, L’Oreal Paris, Camerahaus, Starbucks, Coach, Nike, Lancome, to name a few.
In line with their customer-centric vision, Lazada focused on building an internal logistics network to ensure both speed and assurance in the delivery experience. While their logistics arm was initially divided into two different departments: management of third-party providers (Lazada eLogistics) and management of customer parcel delivery (Lazada Express). By combining both units into Lazlogistics – spanning over 400 logistics facilities such as warehouses and sorting hubs, Lazada began offering sellers a one-stop shop for logistics solutions and customers, a seamless delivery experience.
Initially launched as a smartphone app, Shopee now attracts over 14 million monthly shoppers with users from all across Asia namely the Philippines, Thailand, Indonesia, Taiwan, and other Asian markets. Shopee is under the parent and holding company Sea, a leading global consumer internet company based in Singapore. Also a multinational technology company, Sea also owns online games developer Garena and leading digital payments provider SeaMoney.
While arriving later to the industry, Shopee proves that being a latecomer comes with its fair share of advantages – such as taking on the opportunity to observe the market and identify any trends or areas that existing players left unnoticed and unaddressed. Shopee saw how the future was becoming mobile-first – with Southeast Asia recorded as the region with the highest average mobile internet usage. As a result, Shopee – with its user-oriented design – focused on being a social-first and mobile-centric e-commerce platform in hopes to tap into the younger internet audience who have grown accustomed to relying on mobile devices.
Another strategy that has allowed Shopee to set itself apart in the e-commerce industry is its interactive “Shoppertainment” initiative that aims to increase traffic and boost user engagement. By providing a platform for live streaming and in-app games that offer users giveaways in the form of Shopee coins or products from participating brands, Shopee is able to capture its audience and sustain its attention for longer. Its Singapore base reported that users have spent 40% more time in-app and on live streams by brands and sellers and a record of in-app games being played over 60 million times.
Its popularity has also drawn the attention of multiple global brands such as L’Oreal, Samsung, Adidas, Xiomai, Procter & Gamble and Reckitt, Crocs, Nivea, to name a few, who have enlisted their products on Shopee.
Following its customer-first philosophy, Shopee set up its own logistics company Shopee Xpress in 2018 as a way to offer a faster and cheaper delivery option for both sellers and customers. Through Shopee Xpress which is integrated with third-party logistics providers, sellers are able to arrange and track shipments directly via the app and Seller Center while users are able to track parcels in-app.
Established in 2012, Zalora has become the largest e-commerce website in Southeast Asia – spanning Singapore, Indonesia, Malaysia, Thailand, Vietnam, Hong Kong, Taiwan, and the Philippines – solely dedicated to fashion shopping. The leading online fashion destination with localized e-commerce sites is a venture by European venture builder Rocket Internet.
Recognizing that the region of Southeast Asia has a high concentration of fast fashion brands only in large and mid-size cities, the style-focused online retail platform was founded to provide more access to international fashion brands to anyone, anywhere. Merging both data and fashion, Zalora analyzes customer behavior data to tailor and personalize the shopping experience for each and every user. This sets the retail platform apart from its other fashion-focused competitors. It monitors end-to-end customer journeys from page views to conversion in order to build up a higher sell-through rate.
Beyond fast fashion brands, Zalora has curated its own selection of luxury brands – in line with its commitment to making fashion more accessible – including Balenciaga, Burberry, Celine, Gucci, Prada, and Saint Laurent, among others.
Zalora is also another e-commerce player that recognizes the role that logistics plays in the customer experience. Hence, it partnered with Ayala Corporation to set up its own logistics division called Entrego (rooted in the Spanish word entregar which means “to deliver”) to lead the new retail environment through tech-driven logistics. Entrego customizes end-to-end logistics solutions rooted in technology and data – providing detailed performance analytics and valuable decision-making tools for e-commerce businesses.
Former Managing Director of Zalora Constantin Robertz spearheaded the growth and entry of Zalora in the Philippines. And after seven years, Robertz recognized the opportunities tied to the future of e-commerce and left to pursue the operational side of the industry by setting up the logistics engine Locad.
Apart from these dedicated e-commerce marketplaces, users in the Philippines have also grown familiar with the type of marketplaces built-in their social media apps such as TikTok, Instagram, and Facebook where they get access to a seamless transition between social media browsing and shopping.
Why marketplaces are successful channels for brands
For brands looking to either start their venture into e-commerce or strengthen their digital retail presence, marketplaces serve as ideal channels. Online marketplaces provide brands a platform to sell their products without the long and tedious process of setting up their own online store. Not only does being part of a popular marketplace like Shopee, Lazada or Zalora lets you expand your target consumer audience both locally and internationally, but also builds trust with online buyers.
Where to begin? Marketplaces have made the sign-up process easy and user-friendly – most platforms make it possible to finish setting up a store in mere minutes. Another one of the biggest advantages of using online marketplaces is built-in promotion and marketing tools available for brands to use, which makes it easier to attract more customers, grow their customer base, and reach more online shoppers they otherwise may have not heard of their brand or products otherwise.
And with the ease that comes with setting up marketplaces, brands are given the option to set up multiple shops in all the marketplaces they want – depending on their e-commerce goals.
Challenges of marketplaces and omnichannel e-commerce
But to take full advantage of the benefits of setting up shop on multiple marketplace platforms – boosting sales and increased visibility with online shoppers – brands must consider what it will mean for the logistics operations. While marketplaces offer sellers exclusive in-house logistics, brands that have many online marketplaces may struggle to manage multiple logistic providers while growing to omnichannel e-commerce.
Logistics and fulfillment play key roles in e-commerce – in fact, they can make or break a business’ growth in terms of digital retail presence. According to studies, 8 out of 10 customers won’t do business with a retailer after a single bad shipping experience.
From an e-commerce business or seller’s perspective, this means steep and intense competition. The rise of e-commerce triggered a large volume of players fighting to capture the market. And as a result, players turn to other factors outside of their marketplaces to enhance their target audience’s shopping experience to stay competitive, primarily through efficient logistics and fulfillment.
For an e-commerce business that is trying to scale, logistics, shipping and fulfillment are part of the biggest hurdles and challenges to growth. The taxing and time-consuming nature of these operational tasks – picking, packing, returns, and negotiating shipping contracts – take away time and energy from marketing, product development, and customer service.
Hence, both large-scale and small and medium-sized enterprises have decided to outsource logistics and fulfillment to 3PL providers to help.
What Omnichannel Fulfillment and Logistics Can Do for Marketplace-Based E-commerce Businesses?
3PLs – which are composed of shipping and fulfillment experts – manage end-to-end fulfillment from warehouse operations and inventory management to picking, packing, and shipping out orders straight to customers.
When it comes to outsourcing to 3PLs, every brand or business has its own different set of needs. Usually, 3PLs offer services such as:
- On-demand shipping
- Tailored mass-volume fulfillment
- Integrated fulfillment tech and software
- E-commerce Marketplace integrations
- Local and international shipping
- Real-time order transparency and tracking
Contrary to popular belief that the cost of outsourcing fulfillment and logistics is too expensive, working with a 3PL may actually reduce overhead and free up capital in the long run. There are different 3PLs that are designed for e-commerce businesses of any size as long as they have the intention to scale.
A few important considerations when considering the idea of enlisting the help of a 3PL are order volume (Are you fulfilling more than 10-20 orders daily?), inventory space (Are you losing out on space to store your products?), and forecasted growth (Can your business manage a sudden spike in demand?).
And beyond these points for assessment is the fact that 60% of global shoppers now expect same-day, next-day, and two-day delivery for their e-commerce purchases, as reported by Shopify.
Marketplace and Omnichannel Fulfillment
Through multi-channel logistics, Philippine-based indie beauty brand KJM Cosmetics was able to drive 2x higher conversion rates on Shopee and Lazada – recording a 100% increase in direct-to-consumer sales volume after partnering with logistics engine Locad. By working with fulfillment experts, not only was KJM able to boost customer reach and make its products more accessible throughout the Philippines, but it was also able to boost 70% savings in shipping fees.
Optimizing nationwide fulfillment and distribution also allowed dermatology clinic DMD Skin Science to scale its e-commerce arm and cater to patients who are unable to come in physically. With no dedicated e-commerce team but a strong desire to have their products available online, DMD Skin Science remained focused on running the clinic while outsourcing fulfillment to Locad to keep their Shopee and Lazada stores running seamlessly. Since working with Locad, DMD Skin Science experienced their orders grow by 3x – through increased visibility to customers nationwide and a 24-hour order ship-out timeframe.