What's driving Zalora's growth

By Jon Carlos Rodriguez, ABS-CBNnews.com

Posted at Mar 17 2015 06:25 PM | Updated as of Mar 18 2015 10:16 PM

Majority of products traded are local brands

MANILA – Online fashion and lifestyle store Zalora is set to transfer to a new warehouse in Carmona in May as it expects further growth in the country's e-commerce space.

Zalora managing director Constantin Robertz said the 10,000-square-meter (sqm) facility has a storage capacity of about 2 million items, more than double its current capacity of 700,000 items in its Paranaque warehouse.

“We’ll be moving from our old facility to a new warehouse that has 10,000 sqm floor space, which is about double the size of our current warehouse, and is really designed to accommodate our growth for the next couple of years where we expect orders as well as inventory to be growing,” Robertz said in a press briefing on Tuesday.

Zalora started its Philippine operations in 2012, at first shipping items from its Jupiter office in Makati before transferring operations to the Paranaque warehouse within six months.

The items in the Zalora facility are “picked, packed and shipped” at an average processing time of 2 hours and 20 minutes for same-day express orders.

Robertz said Zalora is also planning to expand its in-house delivery fleet, Zalora Express, which currently has hubs in Metro Manila, Cebu, Davao, and Zamboanga.

He said the new delivery hubs that are expected to open this year will be located in Cagayan de Oro, Iloilo, Bacolod, and San Fernando, Pampanga.

The additional delivery facilities aim to cut down delivery lead times to three days for all major metro areas, and set the next-day delivery standard for Metro Manila. For same-day express orders, orders processed before noon are expected to be delivered within the day.

Zalora offers free shipping nationwide for purchases above P1,000; cash-on delivery services; and a 30-day return policy.

The shopping site features more than 500 local and foreign brands, including Nike, Levi’s Mango, Puma, New Balance, Nixon, Vans, and The North Face.

LOCAL BRANDS

Zalora co-founder Paulo Campos said around 60 percent of items sold in the site are from local brands, mostly from top sellers such as Freeway, Crissa, Penshoppe, Mendrez, Sunnies and Hang Ten.

“We’re a full-price retailer, our proposition to brands is that we won’t undercut your pricing. The same price you would find in the mall, is exactly the same price we carry in the website,” he said.

Zalora also recently introduced its Zalora Marketplace portal, which houses 350 homegrown independent brands, fashion designers and entrepreneurs who manage their own webshops or fashion boutiques.

'EXPLOSIVE GROWTH'

Campos said Zalora is targeting to double its sales revenues this year as it expects internet accessibility to continue to grow in the country.

“Over the next three years, our ambition is to double our sales each year…We’re already quite big in terms of scale but growth remains explosive,” he said.

Currently, around 40 million Filipinos have access to the internet, but Campos said the firm expects this figure to grow to 70 million by 2018.

He said this is one of the trends that is fueling e-commerce in the country, aside from the rising disposable income, and rising trust in online transactions.

The growth, Campos said, will be driven mainly by mobile internet access.

Campos said the strength of Zalora is giving access to those who normally wouldn’t have access to the fashion brands. He noted that around 60 percent of orders in 2014 were from outside Metro Manila, with the rate of growth seen faster in the provincial areas.

“We’re positive in the sense that the overall retail market is growing and the share of fashion bought online is also growing,” he said.

The Zalora Philippines website gets an average of 150,000 visitors per day. Aside from the Philippines, Zalora operates in Hong Kong, Vietnam, Malaysia, Thailand, Singapore, Indonesia, Australia and New Zealand.

The firm is planning to introduce a physical pop-up store in Manila this year, similar to the Zalora pop-up store opened at the ION Orchard in Singapore.

The Singapore store operated from October 2014 until January 2015.