Online retailer Lazada Malaysia claims it had at least double-digit growth in sales last year, yet is still losing money.
It was a challenging year for retail, says CEO Hans-Peter Ressel of Ecart Services Malaysia, the company behind Lazada Malaysia.
He says the focus is now on making Lazada’s service more accessible to the “general masses”, particularly those in east Malaysia, starting with improving its logistics and distribution centres in east Malaysia, where the company had 80 per cent sales growth last year.
However, this growth was lower than in other regions, which saw at least 110 per cent year-on-year growth, says Ressel.
He says Lazada would appeal to most Malaysians because of its affordability, accessibility and convenience. With its complex supply chain, Lazada and its 10,000 third-party sellers can now offer products below store prices, and many of the 5.5 million items on sale are not even available in stores in Malaysia.
Lazada had the most application downloads of e-tailers in Malaysia, 2.3 million as at the end of December. Second is 11street.my at half of Lazada’s downloads, while fashion application Zalora had 700,000 downloads.
Malaysia has 10.3 million smartphone users, according to mobile marketing firm Vserv.
Ecart Services wants to double its items in inventory to 10 million stock-keeping units this year. The company will also have a third warehouse 16 times larger than its first warehouse in Subang Jaya, plus there is another warehouse and distribution centre in Sarawak.
Ecart Services’ new loss blew out by 72.94 per cent to RM87.54 million (US$22.28 million) in the financial year ended December 31, but its its top-line growth of 142.22 per cent saw record sales of RM114.81 million from RM47.4 million the previous year. Ressel says the company has yet to break even.
Following Alibaba Group Holdings’ purchase of Lazada Group, founded by Germany’s Rocket Internet in 2012, Ressel said he looks forward to more synergies between the two eCommerce giants.
“With Alibaba’s eCommerce knowhow, systems and processes, we will also be better able to help our sellers grow their businesses.”