Strengthening Logistics, Lazada Indonesia is Ready to Build Around Five New Warehouses for 2018

Lazada Indonesia revealed that it will add about five new warehouses (warehouse) to accommodate logistics issues which are still a problem in Indonesia. Two of them will be in Balikpapan and Makassar.

"To improve the quality of our service, next year we will add about five new warehouses, in Balikpapan and Makassar. For Balikpapan, we have done it pilot project," explained Lazada Indonesia Co-CEO Duri Granziol to DailySocial, Monday (11/12).

Unfortunately, in this regard, Granziol is reluctant to reveal in more detail the investment costs that have been disbursed. For Lazada warehouses in Balikpapan and Makassar, the company cooperates with a third party as the manager.

Granziol reasoned that by cooperating with a third party, his party would find it more helpful because local players were considered to be more familiar with the conditions of the area. Lazada's three previous warehouses located in Jakarta, Surabaya and Medan were built and managed by Lazada themselves. In Jakarta, Lazada manages a warehouse of 40 thousand square meters.

The presence of the warehouse, according to him, will greatly assist Lazada in overcoming logistics issues in Indonesia. At the same time helping sellers at Lazada, including MSMEs because they only need to put their goods in the warehouse, don't need to wrap, and send orders. Thus, the delivery time is shorter and the consumer experience shopping at Lazada is also getting better.

Granziol continued, in addition to logistics issues, Lazada also admitted that they are still trying to overcome the issue of public trust for online shopping. According to him, this issue is one of the reasons Lazada is building a partnership program with official brands to present original products.

To attract more sellers from the MSMEs, Granziol admitted that he would continue to provide education through communities that have been built and spread in 11 cities throughout Indonesia. There, sellers will be taught how to sell online, what to prepare, how to market products, and so on.

Not only that, Lazada is preparing to launch a separate application to make it easier for MSME sellers to sell on Lazada. According to Granziol, only with an application on a smartphone, SME sellers can directly upload product photos without having to go through a desktop.

"The application is still being prepared, it will be released in the near future specifically for MSME sellers."

Currently, there are 50 thousand MSME sellers who have joined the Lazada platform across Indonesia. As a whole, now Lazada has gathered millions of sellers consisting of brands, MSMEs, and sellers from abroad (from Taobao).

Regionally, Lazada's business contribution in Indonesia is in the top three, following Lazada Thailand and the Philippines. However, when viewed from the number of consumers, Lazada Indonesia occupies the first position compared to five other countries.

Next plan with Alibaba

As one of the company portfolios of the e-commerce giant Alibaba, Lazada will continue to carry out various strategic collaborations with other Alibaba subsidiaries in Indonesia.

Although not specifically explained, according to Granziol's description, the focus that is being carried out by Alibaba (via Taobao) with Lazada is to increase marketing access for MSME sellers in order to penetrate the international market.

"With Alibaba's international network, now local MSME sellers can penetrate markets overseas. Of course, we have other collaborations with Alibaba's subsidiaries, for example with UCWeb."

Regarding the integration of payment methods with Alipay (Alibaba's payment system), according to Granziol, he could not comment much. Online payment services owned by Lazada, namely: HelloPay has also been closed and diverted to to merge with Ant Financial earlier this year.

Meanwhile, Lazada is still relying on partnerships with local financial service providers to accommodate the payment system. According to him, by providing many payment options, it indirectly encourages people to be comfortable shopping online and efforts to build elements of "trust".

So far, the two dominant options used by Lazada consumers are bank transfers and cash on delivery (COD).

"Even though we have collaborated with many partners for payments, the impact on the choice of COD options is starting to decrease. However, in percentage terms it is still in the top two positions after bank transfers. We will continue to increase payment options, so that consumers are more comfortable when shopping online," concluded Granziol.