So, Lazada has finally announced its Tech Hub in Shenzhen, a long due move that probably took a lot of preparations:

In the past they have flirted with having hubs in countries such as Russia and Vietnam, and since Alibaba now owns a majority of Lazada, the game plan has changed. This is not surprising, and is the right move.

 

Adopting Chinese ecommerce innovation much faster

Why?

Well, look at Shopee – they already have the tech hub in Shenzhen. And if you have used both platforms, especially in Indonesia, you would know the difference.

Momentum Works did some consumer surveys in November and December 2017, and the results were that consumers liked Shopee’s app experience much better than that of Lazada.

MW conducted surveys across Indonesia in 2017 – Shopee scored high in terms of app experience

The reason is actually simple – in terms of ecommerce evolution, China is probably the fastest. Taobao & Tmall dominate seller & brand spaces, JD controls the full chain, and there are many other models such as Xiaohongshu & Pinduoduo that are consumer facing. And these companies evolve fast – it makes much more sense to be close to their competitors.

Also, Alibaba could not more easily recruit and transfer experienced tech and design folks to Lazada, knowing that not many of them would like to leave the country where everything can be paid with mobile phone.

 

Though this is no guarantee of success

However, as avid readers of TLD would know well, we advocate good decisions but always caution that good decisions do not necessarily lead to good results.

In Lazada’s case, how to bridge the cultural gap between Shenzhen and Southeast Asian teams would be a key challenge.

At Momentum Works we have built multiple ventures with Chinese JV partners, and we know this is not easy to manage, particularly at scale. It is worth noting that the same is less challenging for Shopee – whose senior ranks are filled with folks from China who have been in Southeast Asia for a long long time.

Also, Chinese product manager and engineers tend to focus more on speed (some of them can really work 16 hours a day, 7 days a week) – but they are not necessarily interested in latest methodologies or long term thinking. Lots of efforts later on are often spent on fixing problems that could have been avoided in earlier developments – something they call “paying the tech debt” in China.

Some companies hire cheerleaders to help programmers de-stress, and work longer hours. Well, if Momentum Works can resolve such challenges – we think Lazada, and Alibaba at large can as well.

 

What’s next

There have been many rumours surrounding Lazada/Alibaba recently as they begin to move key personnel to Singapore and China. Many in the community are beginning to wonder when Alibaba is going to make sweeping changes since it has been 2 years after the acquisition took place.

We might be sharing more on this in the coming weeks. Stay tuned.

 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.