11.11 Shopee & Lazada: Behind the Sales
E-commerce in Southeast Asia
The emerging market of Southeast Asia šhas spurred into a pronounced region as we enter the 21st century. With their strategic geographical location, huge talent pools, and accessibility for diplomatic businesses, Alibaba simply will not exclude this from their market development plan.
Nonetheless, instead of introducing the current platforms or building a new platform in Southeast Asia, they decided to acquire a controlling stake in Lazada.
The question is, why Lazada?
Main Competitors
Both Lazada and Shopee are using a hybrid model, a combination of Business-to-Consumer (B2C) and Business-to-Business-to-Consumer (B2B2C). The B2B2C case could be when merchants first procure selected goods and then selling them on these platforms by offering a more reliable service and delivery š¦within a shorter time, but it may come at a higher price tag šø. Another case could be a distributor buys in bulk at a lower cost, and then go on E-commerce sites to sell them in individual quantity at marked-up pricing.
Lazada
Lazada was incubated and invested by Rocket Internet šback in 2012. They are reputed as a start-up clone factory. Maximilian Bittner, who was a former engagement manager of McKinsey & Company, was onboard in the founding journey. Before a substantial stake in Lazada was acquired by Alibaba Group in 2016, they managed to attract other distinguished investors such as JP Morgan, Kinnevik, and Temasek Holdings.
Shopee
Shopee was slightly behind when it made its entrance into the competition. It was launched by Sea šGroup in 2015. The parent company was formerly known as Garena, an online game š®platform and developer. The striking fact is about the CEO of Shopee, Chris Feng, who was the Chief Purchasing Officer of Lazada back in 2013 and made his leap to Sea Group in 2014.
Defending the top spot
3 years of the head start was well utilised by Lazada, and they gained many grounds among Southeast Asia countries, building and serving the market demand as a leader.
It was a great run until the first quarter of 2019, where the blue skies suddenly turned cloudy, and the thunderstorms never seem to go away. Shopee trumped Lazadaās combined traffic based on the data compiled by iPrice. In the first quarter, all of the top E-commerce platforms experience negative traffic growth except Shopee.
The 3rd to 5th place claimed by single market platforms which are:
Lazada managed to maintain its lead in the Philippines, Thailand, Singapore, and Malaysia, but do note that overall, they were experiencing a decline in total visits on desktop and mobile web compared to the previous quarter.
The shortfall in the Indonesian market has plunged its ranking šand handed the Number 1 title to Shopee, who has won over the Vietnam market in the quarter. Shopee was able to maintain its growthš momentum from the previous quarter even though generally Q1 is considered as a non-peak period.
Lazada Leadership Displacement
After Alibaba Group injected 3 consecutive significant investments into Lazada, Maximilian was replaced by one of the founding team members of Alibaba Group, Lucy Peng. Her leadership only lasted for 9 months, and it was handed back to the initial Lazada teamās Pierre Poignant, who also had a past with McKinsey & Company.
When the unceasing pressure resulted from Shopeeās unstoppable growth in June 2020, Lazada was in heated trouble, and they again elected a new CEO, Chun Li, an Alibaba executive, who has a close connection with the current Alibaba Groupās CEO Daniel Zhang.
Mixed Affinity & Inclination
Based on a short survey conducted in Malaysia, a group of the consumer has a split opinion on the user-friendly factors in determining their preference between Shopee and Lazada.
1. User Interface (UI) & User Experience (UX)
A portion of consumers šØāšØāš§āš¦complained that it is difficult to find their wanted products on Shopee, while Lazadaās algorithms make the process easier. On the other hand, some argued that Shopee has a more pleasant user journey from purchasing to checking out.
2. Deliver & Presentation of Advertisement
The intention of advertisement and sale comes hand in hand, understanding what the consumers are interested in and getting them to spend more. Having said that, it should be employed attentively to balance between being catchy and aggravating. There are complaints about Lazadaās advertisement where it has low relevancy with the consumersā interested products, and it is utterly disturbing.
3. Products Variety
Both Shopee and Lazada have their own official brand mall and a general trading platform. A lot of accredited sellers would opt for existence on both platforms, but definitely not all of them. Hence, they play a factor in gathering devoted customers on an exclusive platform. As of now, both platforms have their own list of unique official stores.
With Alibaba Group owning Lazada, the public seeks a more Taobao, Consumer-to-Consumer (C2C) familiar built, where anyone could be a proficient seller. It seems that Shopee is not losing out on this battle since the products and prices offered by their sellers are extremely competitive too. Both of them are providing guidance to their new sellers who intend to become long-term sellers or a business.
Sales Calendar š
Evolving from the 11.11 concept, monthly sales were derived. It is somehow creating confusion on which is exactly the best deal of the year. Based on the arithmetic sequence, a list of past sales of Shopee and Lazada has been compiled as shown below:
Please note that this list does not include other shorter campaigns such as Lazada Birthday, Super Brand Day, Fashion Fair, and other local festival sales such as Christmas, Chinese New Year, and Hari Raya.
- Basically, anything that you can think of, most probably they included it.
Furthermore, to escalate the hype leading to Singlesā Day, there are also a series of āsmallerā sales every day starting from the 26th of October 2020. To sum it up, it is fair to say that there is a sale for a selected category of products daily, and they want you to check on their website or app regularly not to miss them.
Ultimate Discount and Best Offers
On Singlesā Day, nearly all products will have an analogous look with an 11.11 frame, and the stores will have enormous banners with similar wordings.
Up to 50% discount + Free shipping + Free gift
The purpose of colourful and tempting clickbait šis to ensure consumers continue scrolling to discover and eventually ended up with the inessential products which they donāt really need. Therefore, website such as AliPrice has been created to track the prices of products, and we could be a wiser consumer.
Upon searching for several products, there are 3 identified trends of discount pricing applied to the products during the sale.
1. An honest discount
The product was marked down by RM 100 ($25) on Singlesā Day, and it was the lowest price point this product ever goes for a smaller margin. Thus, it could be considered a good deal, but the fluctuation in the earlier price is baffling.
2. Embellished Display
The sole contrast is the addition of the 11.11 frame hanging on the product page and slashed increased pricing. In fact, the price went up steadily to the highest spot on the sale day. Oblivious consumers will then fall into this trap and make the purchase, which is at a premium pricing.
3. Sprint Dash
This discount should the one you pursue after because it could be the best price available, but prior to making a move, it is still prudent to check with price tracker sites. The downside to this kind of discount is the stock available.
Therefore, before a sale begins, consumers tend to get their gears ready to make the fastest sprint. They include a stable and a lightning speed internet connection and multiple devices as a standby to win the race to purchase the limited quantity items at the desired price.
Winner of All Sales š
After all, what we need to understand and remember about E-commerce is in order for them to maximise their profit, they first need to keep their sellers happy and create a dynamic medium so that sellers will flock to their platform and provide more variety of goods and services to the buyers.
By placing the Singlesā Day under the limelight, it acts as a reminder for consumers that they should make a purchase to not be left out from the mass. The 11.11 shopping spree is becoming a topic for friends and family members to share the products they are planning to buy and the āstealsā they have managed to grab.
E-commerce platforms are certainly on track towards their goal of implanting a cognition and habit of great deals will be offered on sales through conditioning. The consumers are being indoctrinated that there is always something they want, and 11.11 is the day to buy them.
Speaking on other sales events, the main rationale is to provide convenience for all sellers. With a sale happening, the selected products will be displayed on the main page of the E-commerce platform, and it likely to be sold faster. Therefore, there is a sale for all types of sellers to participate in to forge a win-win relationship while maximising both partiesā profits.
This information obtained is indeed cleaning our foggy glasses, enabling us to examine clearly from the buyersā perspective. As a result, it seems too complicated and better off buying only what we need when we need.
Food for Thought š”
In the unprecedented time, more businesses are pressured to go online, and for the retailers, E-commerce is a reliable platform, to begin with rather than building a personal website from scratch. The trend of the digital economy will continually increase with the growth in smartphone adaption and internet connection accessibility.
Furthermore, E-commerce platforms are promoting globalisation and presented us with more choices of goods and services. It prompted businesses to rethink and reinvent themselves with a higher product or service quality and catering hospitable customer service.
Contrarily, as a consumer, we need to be extra cautious and make purchasing decision considerably. As we are filled with tons of enticing advertisements, the primary caution is knowing and buying only what we need. Consequently, we can monitor the price and be sure we are getting a good deal in spite of all of the sales mania.
