helloPay: a vertical integration strategy for growing big

Lazada Group is the pioneer of Southeast Asian eCommerce ecosystem. It operates out of its own online shopping website as well as hosting a marketplace with strong presence in six countries .i.e. Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Group serves over 55 million unique visitors per month and its claims it can access more than 550 million consumers across the countries in which it operates. So far, Lazada sold over 2000 brands across categories ranging from consumer electronics to household goods.

Lazada added helloPay, a payment service in November 2014. It replicates the strategy adopted by other pioneering e-commerce players like Alibaba with Alipay and eBay with Paypal, working as a payment solution of Lazada. It is an important service as mobile payments are picking up in Asian countries due to low penetration of debit and credit cards.

helloPay is likely a winning strategy for Lazada:

Mobile-First Shopping: 

  • Mobile accounts for almost two-thirds of all traffic in 2015 in Lazada’s marketplace. South Asian countries use mobile as the primary device to connect to the internet. Mobile payment systems will widen the opportunity to reach new e-commerce customers.

Ecosystem Vertical Integration:

  • helloPay powering money transfer services using mobile number and email addresses will deliver an integrated remittance system. This will tend to engender familiarity and confidence among rural customers to use on-line services.
  • Additionally, it offers payment APIs for merchants enabling them to extend their reach. This will enable broader sales and potentially increase their profitability.

Online to Offline (O2O) Integration:

  • helloPay has a competitive edge over Paypal, in Online to Offline (O2O) presence. Paypal is an international player with a strong foothold in the online space, but it has so far failed to penetrate significantly in the offline markets with low credit/debit card penetration. Using helloPay, customers can ‘buy’ on line but complete the transaction by paying in and collecting the goods from a local associate shop. This approach is helping it rapidly advance in Asian countries with low debit & credit card penetration.
  • With this strategy, Singapore and Philippine are to be primary focus markets for helloPay due to the strength of the Lazada ecosystem and the absence of major O2O competitors. It is also looking to expand in other South East Asian countries that have a Lazada footprint. Countries like China, India are not included in its short-term expansion plan.

Big Sales Festivals:

  •  Lazada continued its three-year-old Singles’ Day shopping festival with massive discount up to 95% on selected product to attract new customers. This festival is a replication of “Singles’ Day” from Alibaba, which has become a phenomenon in China. Lazada started the Singles’ Day promotion on 11th November 2015 and run for one month through 12th December to grab the opportunity of pre-Christmas holidays sales. With helloPay Lazada is luring customers to lock at least part of their activity to the Lazada ecosystem.

Hellopay Promotion

 

HelloPay promotion2

Signup & Referral Bonus:

  • $5 to $10 is in place for new signup and signup using referral to spread lazada footprint amongst new customer.
  • To maximize the benefit from its own ecosystem, Lazada is offering a special discount to opt for helloPay while buying from its Lazada website, creating a habit building exercise for existing customer.

Conclusion

  • Mobile payment is there to bridge the gap between customer and e-commerce seller. It will also be a vital tool to create a vertical ecosystem to provide end to end services.
  • helloPay is optimized for mobile payments that are critical in markets with low penetration of credit & debit card.
  • However, long-run success will mostly depend on obtaining and maintaining relevant partnerships in the e-commerce ecosystem with good online and offline presence.

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Author: Pavel Naiya