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Southeast Asia’s biggest ecommerce marketplace Lazada made headlines recently with a blockbuster launch of a membership program in Singapore called LiveUp, which offers free deliveries and rebates from Lazada, Lazada-owned online grocer Redmart, Netflix, and Uber.
It’s widely seen as Lazada’s answer to Amazon Prime, in anticipation of Amazon’s delayed entry into the region. But is it as good as advertised? Will it be a compelling moat for LiveUp partners against their competitors? Let’s break it down.
First impressions: not bad
What the welcome email looks like.
I was pleasantly surprised by the perks. I use Netflix, Redmart, and Uber regularly. Lazada on occasion. I rarely order on UberEats, but I see myself using it weekly from now on. These are all widely used services in Singapore, which means LiveUp has the potential to attract a wide consumer base.
The benefits seem compelling, and the signup process is smooth. You can activate LiveUp by either ordering through RedMart or Lazada. You’ll then receive an email with two buttons: one to redeem credits on Netflix, the other for Uber.
I was done in seconds, and I’ve already redeemed about half the value of the usual S$49.90 (US$36) annual membership fee.
I can see this appealing to the so-called “online lifestyle natives,” which is what Lazada calls people who primarily go online for all sorts of services.
Not just a simple perks program
On the surface, LiveUp may not look too different from existing rewards or cashback programs like Perx, Shopback, or Grab’s GrabRewards.
There is a difference though. To understand how LiveUp might work, look at what made Amazon Prime successful in the first place. The key psychology is this: when consumers pay in advance for a service, they’re essentially committing to the view that Amazon is a service worth paying for.
And because people are inclined to show consistency in their actions, they’re likely to use Amazon’s services and stay loyal to them, and they often spend more than they otherwise would if they did not subscribe to Prime.
There’s also the notion of redeeming sunk costs: once people put money into something, they’re are more likely to want to get their money’s worth, again, often to the extent of spending more than they expect.
Further, Prime is not just offering discounts, but also lowering buying friction by offering free and fast deliveries with every order.
LiveUp has the potential to similarly increase the customer lifetime values of its partners.
As a result, Prime became wildly successful and profitable. By 2015, a Prime member spent US$538 annually on Amazon compared to US$320 for non-Prime consumers. Amazon made a profit even after taking into account the cost of free deliveries.
Similarly, LiveUp has the potential to increase the customer lifetime values of its partners, although Lazada Singapore CEO Alexis Lanternier tells Tech in Asia that “the goal of LiveUp is less about revenue, and all about getting as many online lifestyle natives to sign up.”
Of course, vanilla earn-as-you-spend programs can be successful. But the mechanic’s different. They rely on the principle of reciprocity: I give you $10 credit. You’ll feel obliged to spend it.
Lazada Singapore could win big
While no one disputes Lazada’s heft in Southeast Asia, Lazada itself readily admits that it has some way to go in Singapore. As such, Lazada could gain market share against players like Qoo10 through a halo effect from the traction that Uber, RedMart, and Netflix have among Singapore residents.
That’s assuming a couple of things. One, that LiveUp will see massive signups. And two, that it’s able to effectively convert Uber, RedMart, and Netflix users into Lazada customers.
A competitive edge
The sum is often greater than its parts. Bundling is an age-old tactic for competitors to gain an edge. Cable channels group together to give subscribers a bevy of options. Go-Jek in Indonesia is tying various services together through its payments platform.
Similarly, all the partners in LiveUp have the potential to gain from this. It gives Uber an answer to GrabRewards. UberEats might convert some customers over from Foodpanda or Deliveroo. And Netflix gains another distribution channel.
A wait-and-see attitude
While copying happens all the time, the industry hasn’t quite jumped onto this bandwagon yet. iFlix, which competes with Netflix but doesn’t see Singapore as a market, tells Tech in Asia that it will monitor LiveUp’s expansion into the region and is open to collaborate.
Grab, on the other hand, emphasized that it already has its own loyalty program that includes F&B, hospitality, lifestyle, and retail brands.
“We think the LiveUp program is a good initiative from Lazada, but it does not make sense for Grab to be a part of it when we have GrabRewards. Loyalty programs do work together and we are open to further cooperation in time,” says a spokesperson.
Qoo10, meanwhile, reckons that it’s still too early to introduce a paid membership program in Singapore.
“Today, Singapore is still at the early stage of e-commerce transformation; only 3 percent of the country’s retail business is generated from ecommerce. This is still behind other mature markets such as Japan and South Korea, where the number stands at 10%, at least,” a Qoo10 spokesperson says.
The company runs its own membership and loyalty programs, incorporating external partners.
Early days
We’ll know soon if LiveUp will work in Singapore and whether it has legs in the rest of Southeast Asia. While Lazada Singapore boss Alexis Lanternier did not reveal projections or targets for LiveUp, he tells Tech in Asia: “Each of the other five markets are very different, and when we do decide to expand, we will do it smartly to cater to the specific needs of the local consumers. Until then, our focus is on making LiveUp a success in Singapore.”
This post Is the Lazada-Uber-Netflix alliance a game changer? appeared first on Tech in Asia.
from Tech in Asia https://www.techinasia.com/lazadaubernetflix-alliance-game-changer
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