Tugas Analisis Sistem Informasi Bisnis Zalora

ZALORA Online Application Analysis

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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.


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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 Zalora’s 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 Zalora’s 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 user’s

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. That’s 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 app’s 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 app’s

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, that’s why the appearance is so much simplier. If we compare to the

mobile apps’s appearance focusing only on e-commerce, Zalora’s website contains


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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. That’s 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.


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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 don’t 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 don’t 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


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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 Zalora’s mobile application is the product by categories and special

offers.

Figure 2. the 1st view of Zalora’s mobile application


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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 Zalora’s mobile application

c. On shopping bag, click “checkout”

Figure 4. the checkout view of Zalora’s mobile application


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d. Log in or register and continue

Figure 5. the login/sign up view of Zalora’s 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 Zalora’s mobile application

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


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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 Zalora’s 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. Zalora’s data on targetting potential customers

Source : Kinnevik Rocket CMD 2014

Zalora’s 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. That’s why Zalora has

http://kinnevik.se/en/Investor/Kinnevik-Rocket-capital-markeys-day-2014/


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more women’s product than man’s. Zalora also determines what price is reachable

for middle class.

The number of Zalora’s 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, Zalora’s 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 Zalora’s prime segment.

One data point he was willing to share is that a typical user spends 50 minutes

a month on Zalora’s 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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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. Zalora’s indirect competitors sell the products that can

substitute for fashion such as food, electronic devices, entertainment services, and

more. Based on Porter’s 5 forces tool to analyze the competition in the industry,

this substitution could be a thread for Zalora. Let’s 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 Porter’s 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-to-

offline 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 “Indonesia’s 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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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, Levi’s) 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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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. That’s 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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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

1 Tapping server make the best security system for websites

2 Inputs errors on website Improvement of source code on the website

3 Traffic overload

increase server capacity and analyse the needs

of bandwidth

4 Dissemination of information that is privacy

ensure that updated security systems are the

best

5 One user with multiple accounts restrictions with input the identity card

6 Virus Providing the best antivirus

7 The loss database Making at least two mirror database

8 Failure of automation procedures checking and matching all activities

9 Tapping on transfer money keep the critical data

10 Information on goods displayed not match filtering data items manually

11 Data entry errors

Creating automation system repetition in data

entry

12 Order errors

provide automation system approval in each

order and process returns

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Catalog price and the amount of stock that is

not update Regularly update with punctuality

14 Customer dissatisfaction

Provide a detailed explanation of the product to

the customer

15 Loss opportunity because competitor

Creating a website with an attractive

appearance and easy to use

16 Damage goods on shipping trace where is the mistakes and compensate


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17 Late on shipping

provide compensation and make tools so that

all parties can find out where the goods

18 Customer arbitrarily when do COD make the regulation policy


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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, Zalora’s 2014 revenue was USD 140.4 M and net losses USD

68.1 M. Zalora Zalora’s 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 Zalora’s 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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http://www.forbes.com/sites/susancunningham/2015/05/12/rockets-lazada-and-zalora-lost-

235-3-million-in-2014-but-are-moving-toward-profitability/

http://www.slideshare.net/p2045i/rocket-internet-may-2015-report

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

http://www.forbes.com/sites/susancunningham/2015/05/12/rockets-lazada-and-zalora-lost-235-3-million-in-2014-but-are-moving-toward-profitability/

http://www.forbes.com/sites/susancunningham/2015/05/12/rockets-lazada-and-zalora-lost-235-3-million-in-2014-but-are-moving-toward-profitability/

http://www.slideshare.net/p2045i/rocket-internet-may-2015-report

Tugas Analisis Sistem Informasi Bisnis Zalora

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