Lazada: here’s their Southeast Asia scoresheet so far
Lazada has just raised another US$100 million investment round. Let’s take stock of what’s happening around the region in the company’s e-commerce business.
Lazada, an Amazon-like marketplace headquartered in Indonesia, has just raised another US$100 million round of investment.
The investment round is participated by Holtzbrinck Ventures along with its existing investors Kinnevik, Summit Partners and Tengelmann Group. The funding round shows a huge vote of confidence by existing investors participating in the latest round: Kinnevik invested US$40 million in November 2012, Summit Partners added US$26 million in December 2012, and Tengelmann Group came in with around US$20 million back in January 2013.
Launched back in April 2012, Lazada has since expanded its presence and currently operates in Thailand, Vietnam, Malaysia, the Phillipines and Indonesia. Let’s take a closer look at how they are doing in these countries.
Indonesia – Makes up 30% of Lazada’s regional revenue, investing in logistics
Back in April, Managing Director Magnus Ekbom told Indonesia’s leading tech blog Daily Social that Lazada Indonesia sees 250,000 visitors per day to its site. As for the overall growth in sales, Lazada claims it’s achieving 20 percent monthly growth and expects to make US$6 to 7 billion in sales over the next few years. Currently Indonesian sales make up 30 percent of Lazada’s regional revenue.
Lazada is currently building its own logistical operations. The company already controls its supply chain and it wants to ensure it has an end-to-end shopping solution for consumers which means it has to rely on its own delivery channel. “You will see many Lazada motorbikes on city streets in the coming months. We will have our own delivery fleet made up of motorbikes to get our goods to customers,” Bittner told DailySocial.
Malaysia – aiming to capture 5 percent of e-commerce market, working on localization
Malaysia is not too shabby too for Lazada. CEO Igor Pezzilli shared with Business Times that they are aiming to increase market share from the current 2 percent to 5 percent by 2015.
In 2011, the total e-commerce transaction was MYR842 million (US$263 million)) and is expected to surpass MYR1.9 billion (US$594 million) by 2016 (Euromonitor). A Nielsen study estimated an even higher growth rate – MYR5 billion (US$1.56 billion) by 2015. In the inaugural AT Kearney’s 2012 E-Commerce Index, Malaysia ranked seventh, behind only China in Asia.
Assuming we are using the RM5 billion e-commerce projected transaction by 2015, Lazada Malaysia will be generating MYR250 million (about US$78.16million) in sales.
Lazada Malaysia is currently also working on a local Bahasa Malaysia website, which will be up and running by August. The local language will be used to attract the Malays in Malaysia, which makes up more than 50 percent of the entire population.
Thailand – takes up biggest portion of Lazada’s marketing budget, sees 4 million monthly visitors
At e27, we are really bullish about Thailand, and it seems the way too for Lazada. According to Lazada Southeast Asia CEO Maximillan Bittner, Thailand is their fastest growing and one of their biggest online shopping site, after a year in operation in five countries in the region. Due to that, Lazada Thailand takes up the biggest portion of Lazada’s marketing budget, reported to be in the US$30 million range.
David Jou, managing director of Lazada Thailand, estimates the retail market in Thailand at US$50 billion last year, with 1 percent from online shopping (about US$500 million). That figure is set to rise to 3 percent this year (US$1.5billion) and to 6 percent by 2018, helped by burgeoning broadband use and the boom in smartphones and tablets.
The number of online shoppers is forecast to reach 30 million by 2017, said David. To leverage on that, Lazada will introduce a mobile app service for its website to support smartphone and tablet users, earmarked to be happening this month. Some 15 percent of Lazada’s 4 million visitors each month arrive via mobile phone. David also told Bangkok Post that they expect sales in Thailand to top US$48.33 million (about THB 1.5 billion) this year. This suggests that Lazada Thailand owns 3.2 percent of the e-commerce space.
Vietnam – possibly doing US$15 million in sales last year; 10 percent of transaction now comes from mobile
From launch until January 2013, Lazada Vietnam has received over 25 million visits, with 15 million of them being unique visitors. While there are no official sources on its actual sales, Southeast Asia CEO Bittner told Yahoo that less than 10 percent of Lazada transactions in Vietnam were done by credit card. He said that a mobile application launched 10 days ago, and already “accounted for 10 percent of transaction volume”.
The latest report from VECITA, the Vietnam E-Commerce and Information Technology Agency, states that Vietnam’s e-commerce sales hit US$700 million (US$354 million of that registered officially on VECITA) at the end of 2012. Via this same report, VECITA predicts that this number will reach US$1.3 billion by 2015. Assuming Lazada Vietnam captured 2 percent of that, it would be safe to assume that that Lazada Vietnam has done between US$15 to 20 million in sales last year.
Philippines – no official statement on sales and revenue
While there has been bullish reports about Lazada around the region, not much has been mentioned about Philippines, other than them laying off 60 of its employees back in August 2012.
Sales wise, while there are no official statements, Managing Director for Lazada Philippines SteffenWulff Petersen told Manila Bulletin that the reception for Lazada in the Philippines has been “especially great.”
”Many of our visitors are returning customers that have experienced our great service,” Steffen said. “They keep coming back to discover our latest campaigns as well as products and then refer us to their friends and families. We are incredibly proud to have already become such a deeply trusted brand in the Philippines.”
What does this all mean?
Like most Rocket Internet-backed businesses, Bittner does not reveal raw financial figures for Lazada, but he revealed to TheNextWeb that the firm is at “three-digit million euros” in gross merchandise volume (GMV) per year. Looking at the numbers again, here’s the summary based on what we have gathered so far:
- 30 percent of Lazada’s regional revenue is from Indonesia.
- Lazada foresees US$6-7 billion in sales over the next few years.
- Lazada Malaysia aims to capture 5 percent of its e commerce market, potentially to generating US$80 million in annual sales by 2014.
- Lazada Thailand takes up most of Lazada’s marketing budget (reported to be at US$30 million), sales expected to reach US$50 million this year.
- Lazada Vietnam possibly did US$15 to 20 million in sales last year.
While Lazada as a whole has raised more than USD$36 million in multiple rounds of funding, Lazada is really investing in not just e-commerce, but also supply chain, logistics, warehousing, mobile commerce, regional network of e-commerce services, localization, not forgetting hiring as well as marketing. Adding all of this up, Rocket Internet companies like Lazada and Zalora (which recently also raised another US$100 million in funding) are really powerhouses that currently spur the whole e-commerce network and ecosystem in this region.
Never before have we seen so much injection of capitals and e commerce activities in Southeast Asia, putting Southeast Asia on the world map as a viable market of its own. Despite several challenges such as market fragmentation due to differences in currencies, languages and buying behaviour, Southeast Asia with its 600 million population is definitely one of the fastest growing regions in the world right now.
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