Every industry has one special, annual event that gets its blood pumping. For consumer tech, it’s CES in Las Vegas. For gaming, it’s the Tokyo Game Show in Japan. And for e-commerce in Asia, it’s 11/11 – also known as the Singles Day – which falls on, incidentally, the 11th of November.
This is the biggest shopping event ever, similar to Cyber Monday and Black Friday in the US, coined and pioneered by Chinese e-commerce giant Alibaba.
For Alibaba’s Southeast Asian e-commerce subsidiary Lazada, it comes as no surprise that 11/11 is also a huge affair, one that its Singapore CEO Alexis Lanternier told KrASIA is what the engineers at the company prepared a whole year for.
Lazada has been working closely with Alibaba to gain insights on new ways to engage shoppers on big sale events like 11/11, but unlike Alibaba, which shares its Gross Merchandise Volume (GMV) after such events, Lanternier said that there are no plans to do so at the moment, and that Lazada typically does not do that.
In our interview, he also shared what sets Lazada apart from other marketplaces, how shoppers are buying things on 11/11, and how the company sees one of its newest rivals Shopee, a regional firm that is battling for more market share in a number of markets. This interview has been edited for brevity and clarity:
Preparing for 11/11
KrASIA: On that one day itself, you have so much traffic, payments to process. What sort of arrangement on technology would be done? Is it processed in Singapore or somewhere else?
Lanternier: That’s a regional organisation – that’s not localised. Our tech is really, really regional, and that’s the strength of Lazada. We are a regional team working with Alibaba’s tech team, best engineers in the world. Their job for the whole year is actually to just prepare for 11/11 – that’s what they do the whole year. After 11/11, they gotta prepare for the next one.
KrASIA: What do they do to prepare for it?
Lanternier: What they do is if you look at plumbing and logistics, it may be easier. If you have a flow of things coming in, so what if I triple the flow? Where does it break? You have a lot of tubes and water flowing in. You triple the pressure. Where does it leak? That’s an analogy.
That’s what they do on data centres and applications, on all the steps, on payments and a customer coming in purchasing, viewing, all those applications that are tested for a much higher volume and higher spike.
At midnight, you have everybody there at the same time to grab the first deals. That’s what these teams are preparing for — all the countries for the whole year.
The two pillars – tech and logistics
KrASIA: What are the key steps that you take to make sure that this event is successful? In terms of marketing, vendor communications… when do you start all these steps?
Lanternier: Technology starts right after 11/11, they start thinking about the next one. Logistics starts before that. Logistics is planning five years ahead, in terms of building warehouses, buying trucks, developing the capacity — there are tech and logistics, those are the [two pillars] of a company like this. That’s what Lazada has that nobody else has, that enables us to make those big campaigns.
Merchant preparation, brand preparation, we think that [sellers now know more about the campaign]. Every year they are more excited for the next year. They do plan on their side the year before in terms of marketing activities, they now have that in mind. So that’s helped us a lot as well because they’ve come up with a good plan already. And we do the structural preparation right after 9/9, and we release to the merchants and the brands saying that “Hey, come and join us”.
KrASIA: So, for example, if I’m a merchant, the minute midnight starts on 11/11, do I have to be at the computer? Do I have to be there, monitoring things? I have to stay up the whole night?
Lanternier: You have a lot of things to do. It’s a very tiring weekend for everyone. You have to track your sales hourly, conversion rates, and top products. Since April this year, we have provided those tools to sellers. They can check their stock inventory and manage their vouchers. There are a lot of things on the front end, which is just one small part of the business that they need to do, because on that day, the other thing they have to do is to organise the logistics. They’re the ones packing the products, making them available for people to pick them up.
KrASIA: After the sale, what happens if people want to refund their impulse purchases? They made a mistake. They’re regretting it.
Lanternier: Usually, it’s such a good deal that nobody regrets it. They definitely can. On LazMall (brands official store), you can return with no questions asked. If you buy on the marketplace, you have to discuss with the merchant before returning your purchase.
More and more vouchers offered
KrASIA: On average, what sort of discounts were given on 11/11?
Lanternier: I think that’s difficult to say. It’s up to 90% but the average discount is difficult to share. There are more and more vouchers being offered by the seller and the brands. Now we have a third of our sales driven by vouchers offered by the seller, the brands, the partners or the banks. We have more and more vouchers from the banks. So a lot of ways for customers to get their products even cheaper, not just the price, but on top of that, the vouchers.
Three years ago, when we started 11/11, it was very hard to get sellers and brands to give us good deals and now it’s almost too easy. They’re really coming to us and saying that this year is amazing, that it’s way better than last year, give me visibility. We are really in the platform mode where we allocate traffic to the thing that is going to please the customer the most.
KrASIA: So these merchants are very willing to give discounts?
Lanternier: That depends. But we have more and more. And they are more and more proactive because they understand that it works, that it is really impactful now that the share of 11/11 as a part of the business for the year, for them, is becoming more and more important and for us as well. As a result, they are much more proactive to come with the best deals to secure traffic during that period. They can do up to 60x a normal day. For them, it can be two months of business.
KrASIA: But that does mean that during the time leading up to 11/11, they might not have any business at all? People would be waiting for the discounts to come out to buy it.
Lanternier: You have these day to day business that is quite stable. I think, and it’s difficult to say because every customer is different, the ‘pampering’ purchase — the thing that you were waiting. you were hesitating to buy and think, “I’m making myself a really big gift” is the sale that is happening more on 11/11 while the day to day thing which you buy without too much thinking and so on that’s happening every day. The way you can see that is that the basket size is increasing extremely well during 11/11, almost 3x higher because people are really ‘pampering’ themselves.
Shopping trends on 11/11
KrASIA: What is the most frequently bought item during 11/11? What are the trends like?
Lanternier: It depends on the category. We usually have amazing deals on the mother and baby categories, like diapers – sometimes, we have huge sales of diapers.
This year, probably the same, because we see very attractive deals from the brands. On health and beauty, brands are extremely, extremely willing to get visibility during those campaigns because they know that we have a young, woman audience, we have the tech savvy audience, and they are all coming that day and it’s really because they want to be seen. They attract customers, they get them to buy their first product and they know that they’re going to rebuy.
All those brands are in the customer acquisition mindset because they know that it’s a repeat purchase after that – they will give the best deals, hence we see the share of those categories increasing during those big dates.
Taking cues from Alibaba
KrASIA: This time, I guess you’ll be working very closely with the Alibaba group. Will there be any collaborations with 11/11 that Alibaba group is planning in mainland China?
Lanternier: Nothing very visible for the customer, I’d say. We have a lot of sharing on technology and knowledge so we are getting a lot of inspiration. Especially I was referring to all the gamification for the customers, the solutions for the customers to be able to see their sales in real-time, to add new vouchers, to add new banners in real-time during the day – all that is new this year, and all that was thanks to the support of Alibaba.
In terms of linkups between mainland China and Lazada, one big thing we have is Taobao Collection, which is a part of our website, items directly from Taobao, just translated to make it easier. We select, curate the products that have good quality and good ratings – and we translate them to make it easy for customers in the region to buy from Taobao. All that will benefit from 11/11 in mainland China because the price is totally linked, so that will bring a big impact for Lazada from Alibaba.
KrASIA: On competition in Southeast Asia, we have to talk about Sea Group’s Shopee. What are your thoughts on that? Do you consider it to be your biggest competitor? Is it a threat to your business in Singapore?
Lanternier: I think Singapore is a bit different from the other countries. In Singapore, we are the incumbent, there are other players like Qoo10, Amazon, Shopee, and Ezbuy. We have a lot of competition, honestly, it didn’t prevent us to grow massively year over year into double. We are becoming the clear number one.
The marketplaces have always existed. It’s true that there are other players. What differentiates Lazada and enables us to win as soon as the market matures is one: the brands, we have a unique relationship with brands that no one else has, because we have an experience that the brand is looking for. We have hundreds of them, but just to give you an example: Apple is not even working officially with Amazon – they are working officially with Lazada. We have health and beauty brands like MAC and Estee Lauder. That’s a big advantage. The more the market matures, the more people at looking for having all the brands, a great experience, fast delivery and so on. That’s quite unique. Even if some others are trying to copy that, they don’t get the real experience and the brand that Lazada has.
The other big advantage we have is on the cross-border side, we have the unique access to the best marketplace in the world, which is Taobao, Tmall. We also have unique logistics, which is two things: having access to the right products from across the world, but also being able to get them timely. We’re the only one to be able to deliver within a time frame of 6-8 days if you pay for standard shopping or if you have a Liveup membership. Those are the two pillars that differentiate us from the others, and so far, enable us to win and to grow faster than any other competitor.
Editor: Ben Jiang