Zalora Indonesia On Track for Record Group Revenue

We spoke to Zalora Indonesia co-founder and CEO Hadi Wenas earlier this week about the company’s growth, performance, and plans. Having completed the first year of operations, Zalora Indonesia has just recorded its best revenue since it was launched in February 2012. The company, which is officially known as PT Fashion Eservices Indonesia, is also receiving orders in greater numbers from outside of the capital city and will be introducing new services in the coming months.

Wenas told us that he can’t be happier with how things are going for the company. “We just had our record revenue and orders in July 2013. Zalora ID is now the biggest Zalora in terms of orders and we are on-track to be the largest in revenue as well by end of 2013″. Zalora operates in seven countries across Southeast Asia as well as in Hong Kong.

While Wenas was not prepared to talk in absolute numbers, he’s very pleased that Zalora Indonesia has managed to become the largest of the group in the region. The record numbers achieved by Zalora Indonesia means that e-commerce in Indonesia is growing at a healthy rate. He agrees with Lazada CEO Max Bittner who said earlier this year that having established in the country so early in terms of e-commerce awareness and activities helps with getting the company’s name out in the market and getting individuals to be familiar with the company.

Back in March, The Wall Street Journal noted that Indonesian credit card transactions have reached $21 billion in 2012, triple the amount it was in 2007, with 15 million credit card holders. This growing increase of credit card usage clearly is helping online businesses that primarily prefer to accept payments through credit cards over most other means.

Wenas also said that Jakarta is no longer the dominant base for Zalora’s customers. With 70-80% of sales coming from residents of other Indonesian cities, it means e-commerce is no longer the domain of the nation’s capital. “There has been an accelerated growth for [customers] outside of Jakarta in the last six months”.

Perhaps anticipating a question on the reason behind the growth, he said, “70% of orders are coming from non-paid channels. When we started, 90% would come from paid channels”. What this means is that Zalora’s sales have swung away from what used to be predominantly through paid marketing campaigns through various channels. “When we started… nobody knew Zalora, nobody cared to open our website, there weren’t many subscribers to our newsletters, so we ran campaigns on various channels such as Facebook, Google, etc”, Wenas told us. “70% non-paid means for every 1000 orders we get, 700 came from free channels, so it’s healthier for us because we don’t have to spend to get that traffic”.

People across the country are adopting e-commerce as it saves them time and effort in having to go shopping. “We want to be the number one fashion destination in the country, not just the number one online fashion destination”, Wenas told DailySocial in an earlier conversation. ”Buying from Zalora also means saving shoppers from having to go though traffic”. Indeed, Jakarta’s traffic seems to be getting worse by the month but with up to 80% of sales originating from outside of the city, maybe traffic is not the number one reason people make purchases online. A recent study by Ericsson Consumer Lab found that Indonesians in general spend an hour a day in traffic, which is far lower than the Jakarta average of up to four hours a day.

Zalora Indonesia uses Net Promoter Score as its customer loyalty/satisfaction metric and Wenas told us that Zalora Indonesia’s score of 70 is the highest among the Zalora group. According to Wenas, the company has managed to make same day shipment for its customers in Jakarta 95% of the time. Because its warehouse is still located in Jakarta, however, the company has yet to be able to implement the same service for the majority of its customers.

The company is also still on track to reach its goal of processing 40% of its transactions from its mobile app before year’s end. Currently it records 30% of sales from mobile although back in July Wenas said that while the majority of sales are still done through the desktop website, there is a significant use of the shopping cart feature on the mobile apps.

Wenas also hinted at a major announcement to be made in early October.

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