Earlier this week Alibaba announced its behemoth US$1 billion investment into Lazada, Southeast Asia’s largest e-commerce company. Present in six countries, from the Philippines to Vietnam, Lazada is, with no doubt, one of the most known regional ventures, with more than US$136 billion items sold in 2015 alone.
For Alibaba, the deal signals further appetite for international markets (as if 80 per cent of domestic market share in China wasn’t enough, right?). Aside from its retailer AliExpress, operating along the BRICs (Brazil, Russia, India, and, of course, China), the company will be now able to offer a wide array of products in lucrative 550 million-strong Southeast Asia market.
Now everyone knows that in early April, Alibaba became the largest retailer in the World, surpassing even the iconic Wallmart. A filling with the SEC highlighted more than 3 trillion yuan in annual gross merchandise volume, what corresponds to US$476 billion.
By the same token, little attention was given to Alibaba’s enormous mobile footprint. Alibaba makes boatloads of money on mobile. In Q4 2015, more than 65 per cent of all company revenues originated from mobile devices.
Now here is the deal. Lazada, too, is the mobile-first business already. In fact, the company crossed the 50 per cent mobile revenue threshold in mid-2015, around the same time as Alibaba did. Traffic-wise, Lazada became the mobile-first company already in 2014, and today it has accrued more than 30 million downloads of its mobile app. That’s impressive knowing the scale of mobile in China. After all, from among 649 million Internet users in China in 2014, a whopping 557 million are mobile users.
As you can imagine, to manage such mammoth mobile audience is easier said than done. I talked to Lazada’s EVP of Mobile, Aurélien Pallain, who joined the company three years ago and built its mobile department from scratch. Aurélien shared with me a number of best practices for transitioning to mobile and gave a solid view on function of mobile department at Lazada.
Success Factors when Transitioning to Mobile
The larger the organisation, the more challenging is to start a change, while e-commerce businesses, in particular, requires triple the effort. To give you an idea, at the end of 2013, short before its mobile app was launched, Lazada was at 3-digit funding level; no other platform in the region has ever spent anywhere close to it.
Aurélien believes that for operations-heavy business, starting a new ‘mobile organisation’ is the winning approach. The transition requires empowerment from the top management, which trusts the leader responsible for the change. The mobile-focused department has its mobile-only KPIs, produces dedicated content for chat apps and manages mobile ad networks.
Lazada HQ Mobile Team supports Local Mobile Owners.
This refers equally to technical resources, with mobile developers + mobile product manager + UX specialist forming a key part of the team. There will be one dedicated mobile tracking experts and multiple mobile CRM specialists. The API team and core technology is shared between both mobile and desktop environments. Altogether, more than 20 people are responsible for mobile-originating revenues at the company, with additional local roles, including mobile partnerships managers.
How Mobile is Better
The rationale behind transitioning to mobile clearly stems from market factors. Yet, there are a number of benefits that Lazada gained as it grew its mobile audiences. Aurélien summarised them as follows:
- Mobile is resistant to daily usage variations typical for desktop audiences: People can buy at anytime, because they carry their smartphones everywhere.
- Simplified product: Mobile requires lighter layouts and product presentation, with less text and visuals. Consequently, this helps simplify desktop products too.
- Loyalty: As Lazada was first to master mobile e-commerce, its users are now more loyal. People buy through various websites, but they want just one shopping app.
- Recurrence: With ongoing use of push notifications, recurrence and value of the basket went up
- Engagement: Thanks to mobile, Lazada managed to boost engagement and interaction with its products up to 10 times.
- Big Data: More precise, location-based tracking helped Lazada discover additional user insights.
Best Practices for Mobile Growth in Established company
Aurélien sees mobile growth primarily as the derivative of great management and solid tech footprint. Clear division of responsibilities between mobile vs non-mobile teams and making use of mobile tracking fall under this category.
With 7-digit monthly marketing budget, Lazada pays special attention to mobile tracking. It was one of the first startups in the world to create its own multi-click attribution model, which helped create massive savings in retargeting. It carefully tracks fraud, which in Asia accounts to 20-30 per cent of all clicks, subsequently killing all under-performing ad networks.
Mobile web at Lazada is treated as a first touch-point for the mobile user. The company doesn’t aggressively push its mobile app to mWeb visitors, but a gentle mobile banner reminds the users to download the app at first. Only when the users familiarise themselves with the web-based product, Lazada would gladly use its custom audiences to then convert them to mobile app. Today conversions on mobile app of Lazada are up to 3x higher than for mobile Web.
As in any e-commerce company, SEO plays a key role to user acquisition and re-discovery. It took two months for Lazada engineers to implement app indexing, which is directly managed by the product team and strategised by the ASO Specialist.
Aurélien believes that it will take time until app indexing becomes as important as web SEO to e-commerce economy. For now, the company focuses more on deferred deep linking, localised per country and language. The logic is very straightforward — every mobile Web visitor, who has downloaded the app, should always be redirected to Lazada app, so as to smooth buying experience.
There is no doubt that thanks to its mobile focus, Lazada made it to the list of the hottest tech companies in the world. Whereas no two markets are identical (Thailand and Indonesia lead Lazada’s transition to mobile, while Vietnam appeared to be the most challenging), we can say that approaching mobile with the same, utmost dedication, definitely helped bring together two of the great companies such as Lazada and Alibaba.
I am thrilled to observe how this powerful deal evolves. What do you think will come next for Alibaba + Lazada group? Will they launch a new delivery service? Or offer direct purchase of products from China? Share your comments below.
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