Electronic commerce platform Lazada said it is investing more than P2 billion or possibly up to P3 billion in Mindanao, which is the next growth area for online shopping.
Mindanao has one of the lowest penetration rates in e-commerce at a “single digit,” Lazada Philippines Chief Executive Officer Carlos Barrera told reporters on Monday on the sidelines of a company event announcing the platform’s midyear sale.
This, he said, has opened opportunities for e-commerce, as well as for Lazada, which has seen that Mindanao will account for 20 to 25 percent of its business in the future.
Barrera added: “The way we look at it is not so much about the contribution (of Mindanao to our business), but about the opportunity. Historically, Mindanao has been the region with the lowest penetration (rate). E-commerce penetration is in the single digit. We believe that over time, it should be a sizable percent of our business,” he said.
When sought for details on how Lazada would allocate the funds for Mindanao, Barrera said the company’s spending depends on the actual results. “But we’re definitely looking at spending more than P2-3 billion.”
He said in general, Lazada has been employing three key strategies in investing. First is on the buyer side where it invests in promotions, especially free shipping and vouchers. “We’re trying to make it cheaper to buy (products) in Mindanao. Historically, the cost of delivering items to Mindanao was the highest in the country, so we have invested a lot and we have been able to lower the cost of shipping by more than 40 percent overall,” Barrera said.
He said Lazada has also been investing heavily in marketing and installation of the app.
On the seller side, Lazada has established an office and appointed dedicated account managers who have been helping get sellers on board, Barrera added.
He said Lazada has been incubating a lot of sellers by giving them different packages that include vouchers and commission waivers.
Barrera said with this initiative, Lazada onboarded more than 500 sellers over the past few months.
The last strategy, Barrera said, has been to invest in infrastructure and ecosystem by opening more hubs. “We’re growing quite a lot of our own logistics ecosystem there. We’re also helping with financing options. Together with our partners, we’re giving more buy-now, pay-later options for the users in the area and even seller financing,” Barrera said.
“Lazada has been steadily investing in the region over the years. We continue to build our logistics capabilities, drive new buyer engagement, and support local sellers as they establish and grow their businesses online. Looking ahead, we see strong potential in the region and are exploring the possibility of investing over P2 to 3 billion over the next few years. Any such investment will be guided by market performance and aligned with our strategic roadmap,” Barrera said.
