ZALORA Online Application Analysis

ZALORA Online Application Analysis

1. Needs or problems in society which lead to the emergence of the apps.

A company needs innovation and development to gain more profit or sustain in a
business. Zalora tries to make an innovation on the fashion business process.
Although Zalora was not the first one to implement an application for innovation in
fashion business process, but Zalora is one of fashion e-commerce which success
implementing the application. The problem in society which lead to the emergence of
the application is uneffectiveness of traditional business process in fashion. The
traditional business process needs more time for people to choose the right clothes for
them with limited styles. Even Zalora already has desktop for PC version, but
customers think it was a little bit immobalize. It was because every time the customer
needs to buy, they have to use a PC or laptop. So, to make it easier, Zalora created
application which almost the same as desktop for PC version. Using application,
customers can access the application anytime, anywhere with unlimited styles.

Figure 1. growth of internet users

Source : industry research

Besides, the growth of people accessing online is increasing through several years
which is shown in figure 1. It is a great potential to use mobile application as the way
to reach customers.

ZALORA Online Application Analysis

2. An analysis of how the application can solve the problem.

Data show that Zalora website is more often accessed by mobile phone because of
the easiness and mobility. User can access Zalora official site without turn on the PC.
Because of the Zaloras development, Zalora website becomes more and more heavy
to be accessed by mobile phone. Since Zalora develops application for smartphone
that contains simplier appearance, now Zalora can be accessed everywhere easily and
rapidly. Zalora also now reachs the previous unreachable regions all over Indonesia.
Thus, customer can buy Zaloras product everywhere. Customers also get the
specification of items showed by pitcures and information on mobile application even
they do not see the product directly.
The other advantage of Zalora mobile app is push notification that gives customer
the up-to-date item and information easily. The push notifications appear to users
smartphone so that customers are not necessary to open the website looking for recent
update at all times. The push notifications also cause benefit to Zalora indirectly since
the promotion delivered to customer can be impulse buying even they do not have a
plan to shop before.
Zalora can increase the income because impulse buying delivered by push
notification. Thats why Zalora has to know how to develop a way in order to get
more customer using Zalora mobile app on their smartphone. There are some ways
Zalora use to attract customer so they would like to use the mobile app. First, Zalora
bring pop up information on the website. Zalora always offer discount if people
download Zalora mobile app and register for membership. Besides, Zalora does
partnership with very popular messenger in Indonesia such as Line and BBM, and
social media to spread the information about Zalora mobile app in order to get more
users.
Zalora mobile apps appearance is very simple and easy to use because of the nice
and understandble layout. Home of Zalora mobile apps shows product categories with
simple pitcure on squares so that users can find the wanted items. Zalora mobile apps
navigation is also simple. Customers easily understand over all the contents.
Customers also be aware about the promotion going on because they appear clearly
on home.
Zalora mobile app just presents the product specification, price, promotion, and
order system, thats why the appearance is so much simplier. If we compare to the
mobile appss appearance focusing only on e-commerce, Zaloras website contains
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ZALORA Online Application Analysis

more complex information and tends to be e-business which is not for only customer
but also key partners getting relation with Zalora.
Zalora mobile app provides easy and fast order steps for high mobility people so
they can access Zalora and buy items at anytime.

Providing easy, simple, and

understandable order steps can be a good offer for elders who got limitation using
technology. Thats why navigation of the mobile apps designed to be simple and
understandble.
Having Zalora mobile app on portable gadget makes Zalora and customers keep in
touch easily. Zalora can deliver many kinds of message such as special day greeting
as customer care so that Zalora can increase customer realtionship. A good
relationship keeps customer on loyalty and causes income increasement.

3. Detailed explanation on how the application enhance traditional business

process.
We assumed that shopping - especially clothes or apparels - traditionally customers
come to the physical store such as department store, pick some products, and then pay
the bill at the cashier. Sometimes the customer needs to try on the clothes in fitting
room before they do the payment. Moreover, some stores offer product-return among
7 days after the payment and the customer can change the product whether the size,
color, or other apparels as long as they are available. However just a few of them maybe none - have the return-and-cash-back for customers. If the customers want to
change the products but they are not available, the store can not pay the cash-back, so
customers have to change other option or not return the product at all due to the return
policy. That's our assumption of traditional shopping process.
Zalora has sophisticated shopping process that doesn't need physical stores, no
cashier, no fitting room. Its main process of modern shopping is quite the same as the
others. Customers can buy anything just by typing on the search box, they can shop
everywhere 24 hours non-stop, they can pay the bill without standing in queue, and
they just sit well at home waiting for the packages arrived. However, online shopping
has some disadvantage for customers who buy apparels they can not fit it on. Thus
the general scare of shopping apparels online is that the customers not really sure
about the size, maybe the color, and the cutting. On top of that, they hesitate if the
online store has return policy or not.

ZALORA Online Application Analysis

Based on an article at goglobby.com, Zalora has over 500 brands in Singapore,

Indonesia, Malaysia, Thailand, Vietnam, Hong Kong, Brunei, and the Philippines. It
offers 30-days free return policy and ensuring that delivery of orders are done within
48 hours. Not only return and change the product, Zalora can also pay the cash-back if
necessary. A customer-centric approach is applied to differentiate Zalora from its
industry rivals as it has local warehouses in those 8 Southeast Asian countries to
speed up their deliveries so customers can get their purchases sooner. Therefore,
Zalora is able to offer customers to pay in cash on delivery (COD).
When we heard online shopping that automatically we used to think it needed
PC. It sounds modern, but it is inflexible bringing your 14 inches PC and you have to
deal with on/off button that requires a little bit long time to finally go through the
online shopping.

Thus Zalora has developed its mobile friendly website and

application on iOS and Android to make customers easier do the online shopping
anytime. Based on an article at thenextweb.com, Zalora predicted many consumers in
Southeast Asia would leave the desktop PC experience and going straight to mobile
that tablets are the particular focus because the larger screens are better suited to
shopping and Internet browsing than a smartphone. Therefore Zalora is looking
forward gain more sales via tablet than PC. Although shopping via PC is modern,
Zalora thinks one step ahead much hip than what currently happen, because what is
becoming trending now soon will be old and replaced by newer innovation.
As mentioned before, online fashion retailers obviously dont have physical store
and fitting room, that Zalora also has the same problem. When others e-commerce
make it as the weakness and threats which can be beaten by the offline stores, Zalora
makes it as a good opportunity instead. Zalora goes offline with pop-up store in
several countries, including Indonesia that was located in Kota Kasablanka Shopping
Mall Jakarta. Based on an article at rappler.com, the concept of this breakthrough is to
help customers see, touch, and try on clothes at the store as what we usually do in
physical department store. However they cannot take them home immediately. They
buy products at the store, and Zalora delivers them to their homes as we have
experienced shopping via online. They were asked to scan a QR code and download
the Zalora application to their smartphones. If they dont have or forget bringing one,
customers can also use the available tablets found inside the store or laptops at the
check-out counters to sign-up or log-in to Zalora app and then place their orders. It

ZALORA Online Application Analysis

shows that Zalora could blend two different concept of shopping traditional and
modern to be a unique shopping experience.

4. Detailed explanation on how the application works.

The application works by giving a view about the products and fashion categories.
While, orders can be made directly on the website in 3 easy steps , (1) Select the
product, (2) Select a payment method, and (3) Fill the data content delivery
a. Open the application, you can download it free at AppStore or Playstore. The first

view of Zaloras mobile application is the product by categories and special

offers.
Figure 2. the 1st view of Zaloras mobile application

ZALORA Online Application Analysis

b. Find the product that you want to buy by selecting the category. For example
choosing shoes category. Select a product and select the size and then click "Add
to Shopping bag".

Figure 3. the view of shoes product on Zaloras mobile application

c. On shopping bag, click checkout

Figure 4. the checkout view of Zaloras mobile application

ZALORA Online Application Analysis

d. Log in or register and continue

Figure 5. the login/sign up view of Zaloras mobile application

e. Choose the address to shippping then click continue

f. Choose the payment method (COD, Bank Transfer, Credit Card) then click
Review Order, Review your order, if you want to change your shipping address
or the payment method you can click Change.

Figure 6. the payment and address view of Zaloras mobile application

g. If you are sure for the data that you fill, you can click "Purchase"

ZALORA Online Application Analysis

h. After click Purchase, you will receive a confirmation email (booking code etc.)
and SMS as well as the expected delivery time.
5. Feasibility study of the business Part 1. The analysis includes market analysis,
competitor analysis, and industry analysis
a. Market Analysis
At the heart of Zaloras mission is to address a fashion market of 600 million
people in Southeast Asia and Australia, worth over EUR 60 billion (US$63.5
billion), as they reveal in a 2014 report. To have position as the biggest ASEAN
online fashion retailer, Zalora is headquartered in Singapore and also operates in
Hong Kong, Malaysia, Thailand, Indonesia, the Philippines, and Vietnam, as well
as in Australia and New Zealand under the name The Iconic.

Figure 7. Zaloras data on targetting potential customers

Source : Kinnevik Rocket CMD 2014

Zaloras target is 70% women and 30 % men, within 18-40 years old
customer, and focus on people at 20-35 years old. They aim middle class segment
who love fashion and really comfort to do online shopping. Thats why Zalora has

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ZALORA Online Application Analysis

more womens product than mans. Zalora also determines what price is reachable
for middle class.
The number of Zaloras transactions increased more than 90%, from 2 million
in 2013 to 3.9 million in 2014. The total number of customers doubled, growing
from 1.3 million to 2.7 million for the same periods. These data show that market
changing could happen anytime. Customer number growth is really possible to
happen in 2015.
Zalora in 2013 had tried strategy using community to collect and group data
based on occupation, location, ect. Using those information, Zalora understand
what brand or products attracting consumer. Zalora adjusts their contents to local
market preferences. Zalora has partnership to local designers adapting what local
people are looking for. Nowadays, there are more than 3000 merks with products
intersting customers so that Zalora get positive development. Hijabbers for
example, Zaloras hijab product became complate because of this huge
community.
Zalora also concerns about customer potential at mobile use. Zalora launched
mobile app to faciliate customer easier online shopping and developed technology
and loyalty program for customer. The mobile app is designed to make customer
experiencing navigation easily. People nowadays spend their time to see their
smartphone monitor everytime everywhere. Zalora sees this big potential to grab
by launching Zalora mobile app. The mobile app strategy will be the key strategy
to win the business. Zalora teams ensure Indonesian customer to have Zalora
mobile app on their smartphone by doing promotions on social media that got big
social impact to Zaloras prime segment.
One data point he was willing to share is that a typical user spends 50 minutes
a month on Zaloras app, which has been downloaded 5 million times so far.
Strategically, Zalora is preparing for a mobile-only market, as Costa put it. He
sees many Southeast Asians making the move to going online via smartphones
rather than laptops.

b. Competitor and industry analysis

Because of the operating in the online fashion market space, Zalora has to face
many competitors both direct and indirect competitors. Some of direct competitors
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ZALORA Online Application Analysis

of Zalora are Emigo and Mango in Vietnam, Odioli and Berrybenka in Indonesia,
Metrofashionevo and H&M in Philippines, Milktee and Dressabelle in Singapore,
Asos in Hongkong, Topshop in Thailand, and Yoox in Brunei. Those competitors
sell the same product fashion and Zalora has to share piece of cake for them in the
same market segment. Zaloras indirect competitors sell the products that can
substitute for fashion such as food, electronic devices, entertainment services, and
more. Based on Porters 5 forces tool to analyze the competition in the industry,
this substitution could be a thread for Zalora. Lets say Tokopedia and Bukalapak
in Indonesia which have selection of goods not only fashion, also they have
automotive equipments, food and beverages, technology and electronic devices.
Another threads based on Porters 5 forces tool, Zalora Indonesia is now
facing Matahari Mall, as a new entrant of tashion e-commerce that has a strong
local network and backed up by US$500 million in funding. Like Zalora, Matahari
Mall also sees a future in merging online and offline shopping. Through their
Matahari department stores, they already have the infrastructure in place. Matahari
Mall offers the goods spanning fashion, beauty, electronics, home, groceries,
books, entertainment, and more, also they claimed that they are the first online-tooffline ecommerce site in Southeast Asia. This means that people can buy stuff
online, then waltz into a Matahari department store to pick up the goods later.
Zalora Indonesia was created in 2012 while its elder competitor, Bhinneka,
has been established since 1999. Bhinneka is known as the pioneer e-commerce
that continues to expand and grow into the largest e-commerce website in
Indonesia. They sell electronic devices, sports and hobbies, automotives, fashion,
and more. From their tagline Indonesias no.1 Online Store, indeed implies their
vision to be the only best online store in Indonesia that provides goods and the
ease of shopping. Based on an article at wstats.ws, it is estimated worth of
US$1,971,020.00 and have a daily income of around US$1,460.00. Based on an
article at kompasiana.com, Zalora has at least 200-500 transactions per day with
estimation Rp 300.000 on average, so we can conclude that Zalora could earn at
least Rp 60.000.000 (US$4.615,38462) that is much earning than Bhinneka.

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ZALORA Online Application Analysis

Figure 8. Sales by category and Brands on Zalora

Source : Kinnevik Rocket CMD 2014

Zalora has suppliers from 500 brands including worldwide brand (Mango,
Nike, Levis) and marketplace brand (local brand). Their income is sourced by the
commission from each brand. Zalora distributes the products to the buyers that
have willingness to purchase and power of money especially who need fashion
retail just one click. They targeted middle to high class shoppers for the
worldwide brand, and middle to low class shoppers for marketplace brand. For
500 brands of suppliers, high levels of competition among them acts to reduce
prices to producers. This statement will lead to an increase in profits for Zalora.
For buyers, when producers have low dependence and distributors have less
bargaining power, this might hinder buyers to fulfill their needs. This statement
will lead to an opportunity for Zalora offers the goods and deliver them sooner
and could increase the profit also.
The full value chain of Zalora while in this industry is divided into five categories,
there are assortment, marketing on site, payment, logistics and delivery,
6. Feasibility study of the business Part 2. The analysis includes growth potential
analysis, risk mitigation analysis, and financial analysis
a. Potential growth analysis
Indonesia is a country that has population very more than 200 million people.
Currently, Indonesia has a penetration of internet users is very large, the data
show that 20% of Indonesia's population use the internet for various purposes. Not
only that penetration growth of Internet users in Indonesia is also very surprising.
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ZALORA Online Application Analysis

But according to some surveys the total number of ecommerce transactions in

Indonesia is 5% of the total internet users. The lack of online transactions in
Indonesia are caused by a lack of public knowledge about online business itself.
Conventional society not 100% trust to shop online. In addition, the lack of
Internet infrastructure also led to the slow development of e-commerce in
Indonesia.

Figure 9. Zalora data of selling

Source : Zalora info graphic

In the midst of stagnant growth of e-commerce in Indonesia there are great

opportunities to be gained. One of the opportunities that arise with the increasing
number of people middle class. In addition, progress in the field of education also
have a positive impact to online business because people are becoming more
smart and want something more practical. No wonder if the analysts predict that
Indonesia will become one of the largest e-commerce users in the world in the
next decade. Indonesian Internet penetration reaching 74 million and is expected
to increase to 102 million in 2016. As you can imagine if just 10% of educated
people in Indonesia do online shopping then the enormity of the transaction
volume. Thats why zalora has a good potential growth in Indonesia. While south
east Asia market growth potential can be predict in some facts which already
shared by Zalora when it has one million orders.
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ZALORA Online Application Analysis

From the data, it can conclude that south east Asia market is still growing and
have high potential of buyers by 17.9 million visitors in the region monthly and
uploading 23.375 every week. The buyers can be expand if Zalora can expand the
region, too. While mantaining the reguler customers which Zalora already had.
b. Risks and mitigation analysis
This is a list of risks and mitigation that may occur in zalora:

No

Risk

Mitigation

Tapping server

make the best security system for websites

Inputs errors on website

Improvement of source code on the website

Traffic overload

Dissemination of information that is privacy

increase server capacity and analyse the needs

of bandwidth
ensure that updated security systems are the
best

One user with multiple accounts

restrictions with input the identity card

Virus

Providing the best antivirus

The loss database

Making at least two mirror database

Failure of automation procedures

checking and matching all activities

Tapping on transfer money

keep the critical data

10

Information on goods displayed not match

filtering data items manually

11

12

Data entry errors

Order errors
Catalog price and the amount of stock that is

13

14

15
16

not update
Customer dissatisfaction

Loss opportunity because competitor

Damage goods on shipping

Creating automation system repetition in data

entry
provide automation system approval in each
order and process returns
Regularly update with punctuality
Provide a detailed explanation of the product to
the customer
Creating

website

with

an

attractive

appearance and easy to use

trace where is the mistakes and compensate
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ZALORA Online Application Analysis

17
18

Late on shipping
Customer arbitrarily when do COD

provide compensation and make tools so that

all parties can find out where the goods
make the regulation policy

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ZALORA Online Application Analysis

c. Financial analysis
Zalora had a negative income almost USD 91 M in 2012. Zalora launched
confidential income statement 2012-2017 for investors, Zalora Southeast Asia
made USD 62.5 M in 2012 revenues. It is shown in figure 10.

Figure 10. Zalora confidential income statement 2012-2017 for investors

Source : https://www.techinasia.com/zalora-lost

In fact by Forbes, Zaloras 2014 revenue was USD 140.4 M and net losses USD
68.1 M. Zalora Zaloras GMV grew 80% in the past year: from 84 million in
2013 to 151.6 million in 2014. The operating lossas a proportion of GMV shrunk
from 90% of GMV in 2013 to 58% in 2014.The number of Zaloras transactions
increased more than 90%, from 2 million in 2013 to 3.9 million in 2014. The total
number of customers doubled, growing from 1.3 million to 2.7 million for the
same periods. Even now Zalora has negative income and did not gain any profit,
but with this growth potential by its financial analysis, Zalora is moving toward
profitabilty year by year.

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ZALORA Online Application Analysis

http://www.forbes.com/sites/susancunningham/2015/05/12/rockets-lazada-and-zalora-lost235-3-million-in-2014-but-are-moving-toward-profitability/
http://www.slideshare.net/p2045i/rocket-internet-may-2015-report
https://www.techinasia.com/zalora-lost

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