Zalora opening 4 new hubs outside NCR by end-2015
MANILA, Philippines – In line with e-commerce demand gravitating toward the provinces, online fashion retailer Zalora is opening 4 new delivery hubs in Cagayan Oro, Iloilo, Bacolod, and Pampanga by end-2015.
“Zalora's customer base has shifted to the provinces. Most buyers were in Metro Manila when the platform was launched in 2012. Now 60% of demand comes from outside,” said Zalora Philippines co-founder and CEO Paulo Campos.
The firm’s research showed that most rapid growth is in second-tier and third-tier cities, mainly due to the lack of malls and retail outlets.
“People there shop online not just out of convenience but because for the first time they have access to fashionable products. If I’m out in the province, how do I get Nike shoes? The expansion is offering them the chance to get it at their doorstep,” said Constantin Robertz, Zalora managing director .
This also “grows the retail pie” with a 57% net consumption boost seen in areas outside Metro Cebu and Metro Manila, Robertz added.
Going beyond Metro Manila
The firm started expanding its geographical footprint in 2014 with the opening of delivery hubs in Cebu, Davao, and Zamboanga. It also established two hubs on the edges of Metro Manila – Quezon City in the north and Carmona in the south, to serve communities on the peripheries of the capital.
A big part of the expansion is to offer customers outside Metro Manila the same delivery service as that offered to the National Capital Region.
Last year’s expansion allowed for half of deliveries outside Manila to be delivered overnight, bringing the delivery standard almost at par with its service in Manila, Robertz confirmed.
Cash-on-Delivery (COD) is a big reason why e-commerce is gaining popularity in the provinces, with the payment option accounting for 70% of the firms' transactions.
The payment method allows deliveries to be made by people with no access to credit cards, while building trust among customers who do but are afraid to use them online, he explained.
“The success rate is very high, more than 90% of all COD transactions go through,” Robertz said.
The accessibility of affordable smartphones is another factor in demand gravitating toward the provinces.
“What you’ll find is that a lot of consumers don’t really have home computing, everyone just goes straight to mobile because there are now sub-$50 (P2,333) dollar phones readily available,” said Zalora marketing director Martin Cu.
He noted that almost 40% of consumers now access Zalora through mobile platforms. He also expects that there will be an even split between mobile and desktop users in the next few years.
The Zalora mobile app was downloaded by 4.8 million last year alone, which represented more than 100% growth from 2013, Cu pointed out.
The firm’s head in the country hopes that this will push Zalora to its objective of doubling sales every year.
“The potential for online shopping in the Philippines is huge, considering that at present there are 35 million Filipinos with Internet access,” Campos said.
This number, he added, is expected to double to 70 million by 2018, driven mostly by mobile Internet access. – Rappler.com
US$1 = P 44.66
Image from Zalora Philippines website