In case you missed it, JD Central’s long-awaited joint venture went live in Thailand a few days ago:
And reviews have already come in,
Though rough, the experience has been positive so far and as expected by JD, delivery reliable and quick. The partnership with Thailand’s largest retail conglomerate Central Group indicates JD.com is attempting to replicate its value proposition in China in Southeast Asia: a high-quality e-commerce experience for authentic goods.
“If you promise people to deliver same day, people will more likely buy. Our people will literally cross rivers and climb mountains to get the package to the end customer.” – Louis Li, former Deputy GM of JD Worldwide
It seems Chinese players Alibaba and JD.com are looking to establish its number one and number two statuses in Southeast Asia e-commerce, respectively. Alibaba is known for its hit-or-miss products at cheap prices and JD.com for the authentic goods and reliable customer experience.
And now that JD.com has planted its flag in Thailand, Alibaba/Lazada isn’t going to sit back casually – hence, (re)introducing LazMall.
What is LazMall?
Very simply, it is a replica of the widely successful Tmall in China – a platform for official brands. In Lazada’s own words:
‘LazMall is an exclusive channel featuring items sold by leading international and local brands.’
“At LazMall, we aim to offer an online shopping experience of the highest-quality to garner the trust of our customers and provide the convenience they long for. LazMall will provide customers with the following promises: 100% authenticity and 15-day easy returns.”
There also appears to a number of benefits by becoming a LazMall seller:
• LazMall badge on all your products throughout the customer journey; see LazMall Indonesia
• Enjoy higher visibility on homepage and higher search ranking
• Exclusive access to dedicated LazMall campaigns
• Dedicated customer service team for LazMall customers
Brand dashing to the marketplace
Brands commonly will teeter with the idea of a brand.com and/or marketplace and the answer we always give is “a marketplace strategy is important in Southeast Asia as part of a bigger digital strategy, but it shouldn’t be the only online effort by a company.”
While LazMall aims to create a safe space for brands to promote themselves online by setting strict authenticity procedures and greater visibility over unofficial sellers, the activity the US and China have taught us the brand relationship with a marketplace is a tricky one and from it emerges a power struggle.
A well-known American brand saw its Tmall sales plummet 10% to 20% for 2017.
“Based on our sales record, we should have been in a prominent position, but we were at the bottom of the page,” said the brand’s e-commerce director, who spoke anonymously to the Bangkok Post for fear of further retaliation. “That’s a clear manipulation of traffic. That’s a clear punishment.”
Executives soon learn that what Alibaba gives, it can also take away.
How did the marketplace gain so much power?
A few factors. First, all that money business tech sites complained about marketplaces burning was to grab market share and market share translates into influence. If you’re not present on marketplace or selling on your own website, you’re losing an important revenue channel.
As reported by the New York Times about Amazon, Lazada also has an advantage over traditional retailers and its own merchants that no one else has: knowledge and access to data from its platform. 70% of Amazon’s word searches are for generic terms such as “running shoes” or “games”, meaning Amazon can choose what to display in the search results. Will it be Nike or Adidas shoes? Well, it probably depends on who is being a better merchant to the marketplace – driving traffic, exclusive promos, etc.
We can expect something similar to take place in Southeast Asia but this doesn’t necessarily mean brands are guaranteed to lose out.
‘KitchenAid recently launched with us and their revenue was two times than targets,’ – Lazada Singapore Category Manager
The rise of digital has forced brands used to have 100% control to learn how to barter for maximum visibility. The birth of a brand to marketplace relationship is also why e-commerce enablers are popping up everywhere in Southeast Asia to mediate the wants and needs of both.
“[Enablers] allow me to focus on my core business capability and rest assured online segment is still moving along” – eIQ Community Member, Ecommerce Enabler survey
Your move brands.
Originally published on eCommerceIQ