Porter’s Five Forces Analysis of Lazada 

Lazada is the largest Southeast Asian E-commerce platform and Singaporean multinational company. Maximilian Bittner founded the company in 2012. Today, we’ll discuss Porter’s five forces analysis of Lazada; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Substitutes and Competitors of Lazada

• iPrice Group
• Zalora
• eBay
• Tokopedia
• Amazon
• Bukalapak
• Carousell
• Shopee
• Blibli
• Digikala

Porter’s five forces analysis of Lazada would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Lazada Porter’s five forces analysis of Southeast Asian E-commerce platforms as follows;

Porter’s Five Forces Analysis of Lazada

Let’s discuss Porter’s five forces analysis of Lazada as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Lazada

The bargaining of suppliers is Moderate and lower in the Southeast Asian E-commerce platform as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in Lazada Porter’s 5 forces analysis of Southeast Asian E-commerce platforms are as follows;

I-Large Network of Sellers

According to an estimate, Lazada has over 155,000 sellers and suppliers; 560 million customers, and 3000 brands on its e-commerce and online marketplace. The large network of sellers and suppliers on the platform decreases the company’s reliance on a few suppliers. As a result, it decreases the bargaining power of suppliers. Some of the main suppliers of Lazada are as follows;

• Yuyao Sanyin Bathroom Technology
• Shenzhen Shining Technology
• Bolva Shenzhen Technology
• Appacs Electronics Shenzhen
• Riying Industry Shenzhen
• Hopepower Shenzhen Technology

II-Suppliers Regulations

Lazada has established a very large network of over 560 million active customers on its platform. Many sellers and suppliers prefer to partner up and launch their stores on Lazada’s marketplace platform. It would increase their customer market; they have to comply with the company’s regulations to keep running their store on Lazada’s platform.  

Bargaining Power of Buyers in Lazada

The bargaining of Buyers is Higher in the Southeast Asian E-commerce platform business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in Lazada Porter’s 5 forces analysis of Southeast Asian E-commerce platforms are as follows;

I-Alternative E-commerce

There are multiple e-commerce platforms operating their e-commerce and online stores in the Southeast Asian market region. Customers have multiple options for choosing and shopping from multiple online stores and e-commerce platforms. Easy availability of online stores and no switching cost increase the bargaining power of ordinary customers.

II-Largest Platform in Southeast Asia

Lazada has a unique competitive edge of being the largest e-commerce platform in the Southeast Asian market. Tech giant Alibaba is the parent company of Lazada; strong tech and financial backup further strengthens the company’s market positioning. It allows the e-commerce platform to keep up with the competitive market.

Threat of New Entrants in Lazada

The threat of new entrants is low in Southeast Asian E-commerce platforms as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the Southeast Asian E-commerce platform 5 forces analysis of Lazada are as follows;

I-Heavy Investment

Building an e-commerce platform would require heavy investment in supply chain networks, warehousing, inventory management, transportation, and distribution channel management work. Any type of mistake in building the supply chain network would cause delays heavy warehouse costs, stock spoilage, and outdated costs. It may seem easier, but it requires heavy investment to successfully the supply chain and logistic network.

II-Marketing & Branding

Lazada has established a strong brand positioning by effectively running advertisement and promotional campaigns over the years. It allowed the company to establish a very large network of loyal users. However, it helps the company to decrease the threat of new entrants.

Threat of Substitutes to Lazada

The threat of substitute products and brands is higher in the Southeast Asian E-commerce platform as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in Lazada Porter’s 5 forces analysis of Southeast Asian E-commerce platforms are as follows;

I-Multiple Alternatives

Along with multiple e-commerce platforms in the regions, there are also various brick-and-mortar stores in the market. They offer the same type of unique shopping experience and service to their customers; with the advantage of actually physically checking the product and then buying it. They could easily switch from one source of shopping to another without incurring any cost. It amplifies the threat of substitution rate.

Competitive Rivalry in Lazada

The competitive rivalry among Southeast Asian E-commerce platforms is very high as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in Southeast Asian E-commerce platform 5 forces analysis of Lazada are as follows;

I-Tough Competition

Lazada is facing tough competition from the competitors like Amazon, Shopee, Carousell, and Bukalapak. They have earned a significant market share in Southeast Asian with a lot of daily active users. Their market presence made it difficult for the company to maintain its market share.

II-Research and Development

In order to keep up with the competition; Lazada is constantly improving its platforms to offer a better customer experience. The company is doing it through research and development, the company should focus on ML, AI, drone delivery technology, and other latest and advanced technological tools and facilities to gain a competitive edge in the market.

Conclusion: Lazada Porter’s Five Forces Analysis |5 Forces Analysis of Lazada

After an in-depth study of Porter’s five forces analysis of Lazada; we have realized that Lazada is the world’s leading Southeast Asian e-commerce platform. If you are learning about the Lazada 5 forces analysis of the Singaporean e-commerce platform; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.