Amazon Versus Lazada

  25 years ago it would have been difficult to imagine such a world. While certainly there was the impression that technology would move forward, few probably could have imagined the changes the internet would bring to our life. Among those changes is the significant development of what we call ecommerce.

It all started about 20 years ago when Jeff Bezos founded a website which later turned into an e-commerce partner and is now one of the biggest development platforms. The name of this brand is Amazon. Amazon can be termed as the first king of the world of e-commerce and the current as well. Every king has its rivals or opposition whose only goal is to take the power away from that king and to be crowned king themselves, Amazon certainly has these rivals. Companies like Lazada and many other ecommerce sites (tokopedia, Bilna, etc…) have been in desires to be crowned the king but haven’t been successful thus far. With this thorough comparison between the number one contender for e-commerce crowns Lazada and the Amazon, we can better understand why Amazon is still the King of e-commerce.

Amazon:

While Amazon may not have had the challenge of serious competition at the start, they did have to develop something totally original, something no one thought of before. From a basic online bookstore, Amazon quickly evolved into the world’s largest online e-commerce platform. Amazon has always aspired to be the best and the biggest-it almost seemed like a mandate for company employees. This mission is obvious in the choice of their company name as it’s named after the biggest river in the world – the Amazon River.

Lazada:

On the other hand Lazada didn’t have the challenge of coming up with something original. However, to some extent they had an even bigger problem to face at the beginning of their development- and that was competing with Amazon. And to beat Amazon Lazada will have to learn to be better than the best.

History

Amazon:

Jeff Bezos, the founder of Amazon, left his employment as vice-president of D. E Shaw & Co in 1994 and moved to Seattle, Washington. There he began to work on a business plan which eventually turned out to Amazon. Jeff Bezos first named the company “Cadabra” which later, in 1995, would change into Amazon. It started out as an online bookstore and was an instant success. In just a short span of time, Amazon would become number 1 online book website on the web. The popularity of this new online book website grew at an extraordinary rate and just in about 4 month time went on to become one of the most popular websites on the web. While the company faced heavy controversy, challenges and setbacks, Bezos continue to plow ahead, quickly cornering the online book market.

Lazada:

Lazada was founded about 17 years later than the Amazon. It was founded in 2011 in Singapore by the company Rocket Internet. Its basic purpose was to be the biggest e-commerce store of Southeast Asia and to replace Amazon in the region. Amazon didn’t have strong market share in this part of the world, leaving an opening for the rise of a dominant player in the e-commerce landscape of SouthEast Asia. In 2012, Lazada launched its e-commerce website in Indonesia, Malaysia, Philippines, Thailand and Vietnam. And, in 2014, it expanded into Singapore. Lazada gradually received major funding from well-known investors. In quite a short time Lazada has grown quickly and is proving to be a one of the more major players in the ecommerce sector, specifically as it expands throughout the SouthEast Asian region.

Countries Operating:

Amazon:

Amazon currently operates in more than 16 countries of the world. The countries from which Amazon recieves the largest number of sales are:

U.S, Canada, UK, Germany, France, Italy, Spain, Japan, China, and India.

In general, people in more than 100 countries around the world have bought goods from its marketplace but this doesn’t necessarily mean that Amazon officially operates in those countries. For example, customers can order from Amazon for shipment to Vietnam, they pay expensive shipping rates and don’t have local payment options. As Amazon is expanding, they’re trying to appeal to more distant markets such as offering free shipments to Singapore if $125 worth of items (that qualify) are ordered.

Lazada:

Lazada is still in the phase of evolving and only operates in 6 countries. These countries include:

Indonesia, Malaysia, Philippines, Thailand, Vietnam, Singapore.

While Lazada is quite popular and well-used by those living in these countries, it’s reach is limited and few outside of the region even know about their existence.

Revenue:

Amazon:

Amazon revenue had reached an astounding amount of 107 billion USD in 2015. Amazon earns much of their revenue by receiving a small amount of profit from each sale, though these earnings are not always enough to make up for the losses on shipping costs, failing products like the kindle, and R&D investments the company has been known to make. However, Amazon’s recent growth of their Amazon Web Services and cloud storing offerings have please investors and Wall Street who finally see significant profits coming out of the ecommerce behemoth.

Lazada:

Lazada is still a relatively new company so in no terms would it be appropriate to compare the revenues of Lazada with Amazon. However, judging by the amount of time it’s been operational, Lazada has earned large amount of profit from the sales. Its revenue has increased a lot in in the last couple of years and, according to most recent public documents has reached 1.4 billion USD.

Working Conditions:

Amazon:

Amazon has had its fair share of controversies. For instance, in 2011 the employees of the company also known as “Amazonians” complained about the poor working condition at company warehouses. Amazonians had complained about conditions that were too hot and about managers who would not allow the doors to be open as they were afraid of theft. Other controversies include demanding hours and physical labor, rigorous theft prevention measures and contract workers versus full time employees.

Lazada:

Lazada on another hand is, at the moment, much smaller than Amazon. Therefore, it can easily manage to keep high standards in almost every field. Similarly warehouses of Lazada are yet to be a center of any controversy as it’s considerably much easier to manage them. However, it’s also worth it to note that in the regions that Lazada operates, the expectations for conditions of workers are much lower and protests of workers compesations and conditions are very rare.

Payments, Claims and Refunds:

Amazon:

Amazon had been operating in several parts of the world for several years. However, despite the variety of payment methods from regioun to regioun, Amazon is mostly tied to some form of credit card payment. While this works in much of the Western world, credit card adoptation is low in Asia which presents a challenge for many Asians looking to use the service.

One of the major perks of purchasing items on Amaon is their generous return and exchange policies. While they do a pretty good job of carrying quality items, they are very flexible to allow for return and exchange on almost any items. They are also known for quickly sorting through customer complains and concerns- a fact that breeds tremedous trust among users. And, perhaps, at the end of the day, this is part of what makes Amazon the King of ecommerce. While their prices and products may vary, everyone likes to be able to efficiently and freely return the bag that was the wrong size.

Lazada:

As a company that’s founded in SouthEast Asia, Lazada meets the needs of its customers by offering a cash-upon-delivery option for its customers. This is a major reason for growth in Asia as few of their users have credit card access.

On the other hand, Lazada can not manage to keep up with the kind of quality customer service that Amazon provides. Both because they are a newer, and therefore more limited in terms of financial flexibility and human resources, and servicing needs in Asia, where customer service standards don’t generally meet those common in the US, Lazada still has much to develop in terms of the customer satisfaction. There have been many customers who have complained that the officials from Lazada don’t respond quickly enough to their issues and take quite a long time to solve these issues too. Lazada has been working on these issues and they are gradually improving but they still  have to work out before they can compete with the standards set by Amazon.

Conclusion:

While Amazon may have experienced controversy and concerns on Wall Street, their low prices, Web Based Services and high customer care is sure to keep them in first place for quite a while longer. It still is to be seen, though, whether they can comfortably and successfully expand is less familiar territory like SEAsia or will they leave the door open to more regionally dominant sites like Lazada.

Lazada is climbing the mountain of e-commerce at a rapid pace; their revenue, acquisitions, profits and buyers trust is increasing day by day. At the moment, their future looks quite bright and regional dominance certainly seems possible.  But for now, only they consider themselves to be the Amazon of SouthEast Asia.

 

Although both ecommerce sites offer the same kind of services, to refer to Lazada as a successor to the throne of e-commerce would be quite far-fetched.The journey ahead is tough, but if Lazada carries on expanding and improving their standards and keeps on improvising, then they do have the potential to find themselves in the position to compete with the global online marketing websites.

 

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