ONLINE fashion destination Zalora is targeting to double its sales in the Philippines this year amid strong growth in the number of internet users and rising disposable incomes.
“We expect to double our sales this year. Over the next three years our ambition is to double our sales each year. 2016 will be 100-percent growth,” Paulo Campos, Zalora co-founder and chief executive officer, told reporters on Tuesday.
“From 2013 to 2014, Zalora grew by 150 percent, and from 2012 to 2013, it was 400 percent coming from smaller base. We are quite big in terms of scale but our growth is still explosive. We plan to double every year for the next three years based on revenue,” he said.
According to Campos, the growth is fueled by three mega trends in e-commerce in the Philippines—strong uptake of internet users, rising disposable income, and rising trust in online transactions.
“The Philippines is quickly catching up to the access levels of mature economies,” he said, noting the expanding use of mobile internet, a growing middle-class, and with Filipinos’ confidence in online transactions improving, with cash-on-delivery option as an enabler.
“Fashion e-commerce in the Philippines will experience high annual growth,” he predicts, particularly since internet users across Southeast Asia “continue to grow at a much greater pace than any other market worldwide.”
Campos noted that internet and mobile penetration is growing tremendously. There are currently 35 million Filipinos with access to the internet, and this is expected to grow to 70 million by 2018, driven by mobile internet access.
Campos said e-commerce is penetrating even 3rd-tier cities and rural areas.
Meanwhile, he said six out of 10 items or 60 percent of those sold by Zalora are from local Filipino brands.
For his part, Zalora managing director Constantin Robertz said online fashion shopping complements the traditional offline shopping.
“Peak hours for online fashion e-commerce are very different from those of offline retailers. Customers shop online mainly during working hours and on weekdays with very little overlap with traditional offline shopping,” Robertz said.
Cash-on-delivery is the dominant payment method with 70 percent of transactions being paid through this method, while 20 percent of payments are via credit card. Alternative payment methods account for the remainder although there is strong potential in e-payments for the “uncarded.”
Zalora is expanding its express delivery to Tier 2 cities to two to three days’ delivery lead times, said Martin Cu, Zalora marketing director.
“Zalora Express plans to expand to other key metro areas across the country like Cagayan de Oro, Iloilo, Bacolod, and Pampanga, cutting down delivery lead time to three days for all major metro areas,” Cu said.
Delivery hubs of Zalora Express’ in-house delivery fleets are currently in Metro Manila, Cebu, Davao, and Zamboanga.
Zalora is moving to a new 10,000 square-meter warehouse space in Carmona, Cavite in June this year.