Inside Retail: Can you provide a snapshot of Zalora’s offering in Southeast Asia?
Simone Cortini: Zalora has a presence in several markets in Southeast Asia: Singapore, Malaysia, Brunei, Macau, Taiwan, Hong Kong, the Philippines and Indonesia. Each market has its own assortment and mix. Of course, there are overlapping brands, especially when it comes to international brands, and our objective is to strengthen those partnerships and make them available everywhere. That is very aligned with our vision to create a platform that connects consumers in Southeast Asia to the limitless world of fashion and lifestyle.
In terms of numbers, we carry more than 5000 brands overall. The mix of regional and international brands depends on the market. Markets like Singapore and Malaysia have more international brands and a growing niche of local designers. We want to keep this diversified range of brands across not just fashion but also lifestyle, including the new segments and verticals that we launched during Covid.
IR: How did Covid impact the brands and products you offer on Zalora?
SC: I think Covid was a catalyst for change in many ways. We saw an immediate shift in consumer demand and the sales mix changed quite dramatically after the Covid pandemic hit Southeast Asia. For example, we saw core categories like women’s fashion go down, because people were not inclined to shop for dresses and other apparel in the beginning, but we saw other categories that were more lockdown friendly growing tremendously. Our beauty category saw a huge spike in sales, and other new categories [e.g., luxury and essentials] saw immense growth after Covid.
On the brand acquisition side, we saw tremendous willingness from traditional brands to come online. Of course, the lockdown prevented them from operating offline, so there was a strong incentive for them to do so. Zalora is positioned in the middle of these trends, as a platform that provides brands with all the different products and services to be successful in doing e-commerce in this region, which is a very challenging region.
If you think about all the different cultures and languages, it’s very diverse, but also from a logistics and e-commerce operations perspective, it’s very complicated — the Philippines and Indonesia have all those islands. What we’re trying to do is help brands to reach their customers by leveraging the Zalora platform.
This is based around three main pillars: operations by Zalora, where we provide fulfillment and logistics help, marketing by Zalora, because many of these distributors and brands have very strong offline marketing capabilities, but Zalora has 10 years of online expertise, and data, where our Trender platform helps them understand their customers and their needs and how they can be more successful.
IR: What kind of marketing is most effective in Southeast Asia? Do your services extend to [key opinion leaders] KOLs?
SC: It’s a case by case situation. New brands may want to work on their brand awareness, and social media may be something they can use for that. We have a social media team that works with brands on creating content and engaging audiences, and we have our own crew of Zalora influencers that works with the brands on promoting partnerships, events and campaigns.
We also have an array of services [to drive] conversions — performance marketing, paid marketing, on-site marketing and sponsor ads, which is something that is very performance driven and growing very fast. It’s basically an in-house solution where brands can boost their products and show them in the catalogue in a higher position. This really helps brands that don’t have organic searches.
IR: What are you seeing in terms of demand for global brands like H&M, which launched on Zalora in several markets just a few months ago?
SC: When it comes to global brands, one of the biggest trends we’re seeing is that brands are really investing in the partnership — they understand the need to have a great customer experience and delivery experience. Brands that try to set up their own warehouse and operations may find that they’re not able to provide an excellent customer experience, and then they move to using Zalora’s logistics services and see a massive increase in sales because fast delivery is very important for customers.
If brands use Zalora [fulfilment] services, they’re also featured in Zalora Now, which is our loyalty program, where you get a one-year subscription for next-day delivery without a threshold. Brands that are part of this program see a high conversion rate because of the delivery experience. Brands that use our marketing services aggressively also have a much higher market share in the platform.
We also have many global brands using our Trender platform, and they’re seeing a lot of success based on data. They can adjust their strategy, their buying plan and even their design. These are more strategic insights, but they can also be tactical. For example, brands may see a growing acquisition of Gen Z using Trender, and then they can use Zalora’s marketing services to change their marketing strategy to do more partnerships with KOLs to target that audience.
This is just an example, but to sum it up, we’re seeing brands understand what the platform strategy offers and leverage the three pillars of operational excellence, marketing and data.
IR: What are the main factors that you think will help Zalora grow in the years ahead?
SC: We’ve been talking a lot about how brands can be successful on Zalora, but there is a lot of innovation happening on the B2C side. We see personalisation becoming an important factor for success, and we’ve already invested a lot in it from a tech standpoint.
For example, we can define existing consumers based on their past purchases and the brands they like and follow, so we can shape their experience on our app in terms of [showing them] the SKUs and styles and brands they are more likely to buy. The more we’re able to personalise the experience to a specific consumer or consumer cluster, the more our engagement metrics improve, not just sales but also time spent on the platform.
If you look at the innovations we’ve launched, there’s Shop the Look, Zalora Live Streaming, where we provide live content on the platform, and cashback, where for every purchase, consumers get some credit back in their wallet that they can use to purchase again. That’s been a huge success.
There’s also buy now, pay later, and the partnership we did with Atome, which is gaining a lot of traction with consumers, especially for higher price points. Our luxury offering is actually picking up really fast — that’s another post-Covid trend that we saw, surprisingly — and a lot of consumers are shopping for these more expensive brands and products with buy now, pay later.
So these are some of the innovations on the consumer side that are driving growth right now.