While some global e-commerce giants, including Amazon Inc, are planning to build brick-and-mortar convenience stores, Lazada Malaysia will focus on things it does best — selling inventory to customers from its warehouses through its online platform.
Its chief executive officer (CEO) Hans-Peter Ressel said Lazada Malaysia will concentrate on strengthening its online shopping business, rather than building physical stores to complement its online services.
“We can’t comment on their (Amazon’s) strategy because we focus only on our products,” Ressel said in an interview last week. “We have decided to go this way, and if other players are doing other things, I’m happy to learn and observe how this works for them, but it doesn’t change our strategy.”
Citing unnamed sources, The Wall Street Journal last week reported that Amazon stores will sell perishable goods, including milk and meats. The Seattle-based retail giant will also build drive-in locations for consumers in a rush where online grocery orders will be brought to the car, the newspaper said.
Lazada Malaysia, which has achieved more than five million app downloads, is part of the Lazada Group which operates online shopping platforms in Indonesia, the Philippines, Singapore, Thailand and Vietnam. Its product offering covers diverse categories, including electronics, fashion, health & beauty, sports & travel, and groceries.
Vienna-born Ressel, who is of Austrian and Filipino descent, had served as Lazada Malaysia chief commercial officer and chief operations officer since August 2012, before he became its CEO in March 2015.
Lazada Malaysia, he said, would continue to collaborate with brand retailers, hypermarkets and offline flagship stores to sell their products.
“If you want [to operate your own] store, how many stores do you need? What do you want to put on these stores? We don’t believe in doing everything by ourselves. We have partners; we have brands, and it is crucial to have their collaboration, that’s our focus,” he said.
Notably, Lazada Malaysia this year brought in top brands such as L’oreal, Levi’s and Samsung. It also formed partnerships with giant retailers such as Tesco, Watsons and Senheng.
Ressel believes e-commerce is the way forward, considering that two-thirds of Malaysians have Internet access, with most of them spending more than four hours a day online.
“If we didn’t believe in the future growth of e-commerce, we won’t be here. Today, 20 million out of 30 million Malaysians are online. The [Malaysian] e-commerce market will definitely grow towards a size that is similar to Western countries, China and Korea. It’s just a matter of time,” he said.
According to an estimate by statistics portal Statista, total revenue for the Malaysian e-commerce market this year will hit US$894 million (RM3.75 billion) and revenue is expected to see an annual growth rate of 23.7% in the next five years, to reach US$2.58 billion by 2021.
Currently, the market’s largest segment is electronics and media, with a market volume of US$380 million. User penetration is at 61.7% this year and is expected to hit 76.8% in 2021.