CEO Lazada Vietnam, James Dong likens the race between e-commerce floors to a marathon, requiring endurance and tactics in each stage.
E-commerce in general and Lazada in particular have experienced an unprecedented rapid change year. Many indexes have recorded growth, many positive indicators of users’ online shopping habits. Typically for Lazada, the number of sellers in the past year doubled compared to 2019. LazMall – the platform’s genuine booth system also recorded growth in the number of orders and customers to more than three times in the shopping festival and more than twice during weekdays.
Representative of Lazada Vietnam, CEO James Dong shared the success story of this platform and directions in 2021.
– How do you view the point of “burning money” for promotion, reducing prices to compete for market share, creating growth?
Vietnam’s e-commerce market is experiencing many leaps and bounds in recent years and still has a lot of room to expand in the coming years. With such great potential, Vietnam has been attracting the attention of many sellers, brands, service providers and investors. Consequently, more investors will pour money into businesses to attract the attention of consumers. That is also the reason that Vietnam has four large e-commerce platforms, not to mention smaller or specific exchanges for each sector.
For Lazada, we don’t believe in the so-called “burning money”. If necessary, it will be a long-term strategy, but if it only happens in a short period of time, it is easy to see buyers, sellers, brands … turn their backs when the business stops burning. “. This has happened in the markets where I worked in the past, with devastating consequences. That’s why we always ask ourselves in any plan: Would Lazada want to do it in the years to come and the decade to come?
– If you don’t “burn money”, what are the strengths of Lazada to help retain consumers?
I believe it is healthy and sustainable development. First, Lazada and Alibaba Group build a business model and grow without depending on any outside investor. We are unlisted and have not raised capital from venture capitalists, so we are not under pressure on targets for fundraising rounds. We are also not afraid of running out of capital. Next, we inherit the most advanced e-commerce operations skills, experience and technology from other markets and the Alibaba Group. The group has grown for the past 20 years in over 40 markets. Therefore, we are fully confident in our knowledge, technology and business know-how.
In addition, we also have a deep understanding of the Vietnamese market, buyers, sellers, brands, service providers in Vietnam … and choose strategies to bring optimal efficiency. for customers. For example, Vietnamese users like free shipping. We offer more free shipping than other markets. Similarly, Vietnamese users are interested in livestream programs, so we invest in more and more livestream production in order to enhance the experience of “Shopping with entertainment – Shoppertainment”. In 2020, the number of livestreams on Lazada will increase by more than 10 times, the number of daily livestream views on the application will increase by nearly 25 times. In particular, the concert before the shopping festival attracted 15 million views … In general, it is Lazada’s strategy to compete in the long term, not just in a short period of time.
For now, we will continue to implement plans to promote sustainable growth this year and beyond. And that’s healthy growth.
– How do you evaluate the role of traffic after a year when the e-commerce market is said to be booming?
In fact, it doesn’t cost much to generate traffic, but it is a different story to get the conversion from traffic to transaction or buyer. Mobile conversion rates are now 8 times higher than those on computers.
We are developing a healthy way, with no need to please outside investors at all, so we do not focus on website visits. Instead, we focus on conversion rates and ultimately converting to buyers. Buyers are the target, not just buying once, but sticking for the long term. Currently 95% of Lazada’s buyers come from mobile apps. Therefore, the investment level, the concentration rate of the KPI will need different business models, tactics, spending … compared to before.
– If to generalize the competitive situation of the e-commerce market in 2020, which image would you use?
– I think competing in e-commerce is like a marathon. In a marathon, speed control is very important. Especially when you are just starting out, if you run too fast, you will burn out quickly. For example, you usually run at a speed of 6 minutes per km, but if you have run 5 minutes per km in the first place, it will be very difficult to complete the remaining 40 km. If you can control your speed throughout the journey, you can do better gradually, not drowning over the long haul. We need to distribute energy, replenish energy … to be able to maintain the running speed on each marathon.
The problem is that in marathons, most people run faster than they should in the beginning, but as late as they need to be, fatigue, pain, and difficulty getting to the finish line is easy. The same goes for e-commerce. It’s not just a marathon, it’s our strategy and our philosophy of life. Lazada has been “marathon” in this field for more than 8 years and Alibaba Group has been for 20 years. Very few ecommerce competitors in the region have been in this industry for so long.
– So how fast can Lazada maintain while the market moves very quickly?
– I’m not too worried about other businesses. We’ve been in this industry long enough. This business model was created by Alibaba 20 years ago and has conquered many markets. We are also constantly transforming and upgrading in many respects. In Vietnam, Lazada is the pioneer platform to strongly develop livestreams and invest heavily in logistics infrastructure, logistics facilities, and distribution centers …
The company is confident in its business model as well as innovative ideas to grow. Therefore, we are not too afraid of a turning point in the market from other companies. Just like a marathon, we care about our own speed and when things are growing well and continuously, business efficiency improves quarterly … the speed of Lazada still very stable.
Reliance on outside capital is sometimes unstable. There are times when a lot of capital is poured into the market, sometimes a little bit, and then there will be many problems. But Lazada does not face that problem. Our investment capital from year to year will continue to increase as our business performance improves.
– So what is Lazada’s view on competition?
– We like to compete. Competition between parties with different strengths and weaknesses will help us make progress in areas we hadn’t thought of before. Competition drives us to be more efficient, to reach our goals faster, and to survive sustainably.
When it comes to how I compete, I want to return to the image of the marathon. Some people are very good at running short distances, and can run very fast, but without proper speed distribution on the marathon, the athlete will easily exhausted before reaching the finish line.
– What do you think is a sustainable competitive advantage?
– Lazada does not invest less than others, but from a consumer perspective, it is difficult for everyone to see clearly. This is because our investment is largely focused on technological infrastructure development and logistics. We built a warehouse 7-8 years ago and now own the largest logistics infrastructure system in Vietnam and Southeast Asia. Our goal in the next three years is to shorten local delivery times to one day and cross-border to three days.
Lazada chose to build its own logistics system from scratch to solve a painful problem of the e-commerce industry in Vietnam. We also work with other vendors with their own strengths to strengthen the logistics ecosystem.
In a few years, Vietnamese people can enjoy service quality like American or Chinese. You can get a 30-minute delivery service for fresh food, even hot lattes … All of that takes years of investment, not overnight.
Buying website hits is easy and fast, we understand that. But if you want to build a good warehouse system and logistics infrastructure, you cannot do it fast even if you go to buy a logistics company. We always look at the market from a long-term perspective. Time is our friend.
– How will Lazada’s plan be implemented this year?
– I don’t think we have to be daring or should we step back. We continue to increase our investment in Vietnam but this needs to be carefully calculated. Lazada’s investment is complemented by our own assessment of the market and not just on other entities.
Throughout 2021, Lazada will continue to be the business platform for hundreds of thousands of brands and sellers to grow, promote and support Vietnamese businesses transforming digital successfully. In addition, we are constantly promoting our technological potential with more initiatives to bring the best experience to customers. For example, the optimization of artificial intelligence into the app search function, allowing users to find products quickly and conveniently with voice-search and image features. (Image-search). Finally, Lazada is constantly increasing its investment in logistics power, aiming to deliver the same day with the lowest delivery costs to increase the ability to meet customer needs.
In short, we have a firm belief in our own path. In the long term, we believe that Lazada can maintain its number one position, not only in Vietnam but in many other countries as well.