Zalora Marketing Plan

MARKETING MANAGEMENT Zalora: Style and Convenience at Your Fingertips

Zalora: Style and Convenience at Your Fingertips Submitted to: Professor Emilio Macasaet III, MBA

Submitted by: Patricia Ysabel Abletez Neniko Banal Jacquiline Brabante Denise Flordeliza Catherine Mendoza Monette Medina Baby Grace M. Umali

August 5, 2017

01 STATE OF BUSINESSVEHICLE 14 GOAL AND STRATEGIES 04 SITUATIONAL ANALYSES 23 RISK AND CONTINGENCIES OF THE BUSINESS

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Executive Summary The Filipino online retail sector has experienced doubledigit growth since 2011, with even more increases forecasted within the next few years. The outlook for online retail in the country is set to be at PhP 26 billion in 2020.

At present, the market leader in online retail of fashion and accessories in the country is Zalora Philippines. Established in January 2012 by Global Fashion Group, the company offers a range of over 1,000 local and international brands of apparel, footwear, accessories and, most recently, beauty products, through its website and mobile app. It offers convenient fashion to its young, modern, and educated target market by banking on innovative technology, efficient delivery, and a range of secure payment options.

Increasing customer conversion is the main strategy of this marketing plan. Based on results of the study conducted, awareness of Zalora as a brand was high, but only around half had tried Zalora by purchasing items, due to concerns relating to a perceived limitation of offerings and the desire to touch and feel items before purchase. With this in mind, Zalora’s marketing strategy will prioritize increasing conversion and alleviating customer fears through the employment of brand ambassadors, partnerships with BPO companies for pop-up stores, sponsorships, and a rewards system. In this way, Zalora will be able to maintain its leadership in the online retail market for years to come.

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AUTONOMOUS VEHICLE I. STATE OF BUSINESS A. Company Background Zalora Philippines is the leading online fashion destination in the country today. It offers local and international brands of apparel, footwear, accessories and beauty products. It was established in January 2012 by Global fashion Group (an enterprise of Rocket Internet GmbH based in Germany that invests in innovative startup companies through funding and mentoring) with the help of their co-founder, Paulo Campos III. Today it is considered as the number one online shop across Southeast Asia. Zalora Group has presence in Singapore, Indonesia, Malaysia, Brunei, Hong Kong and Taiwan.

Currently, they house 1000 local brands, 500 international brands and over 100,000 items to offer to its target market. Those brands vary from those available in SM Malls, Ayala Malls and the likes, to local independent brands found in Facebook and Instagram.

Zalora transferred its has central warehouse from Paranaque to a 10 thousand square meter area in Carmona, Cavite to effectively house all of its inventories. They have an in-house fleet of 400

motorcycle riders executing daily deliveries in the busiest areas of National Capital Region. This in-house fleet can do cash-on-delivery services that make up almost 70% of customer transactions. They also have third party logistics providers delivering piecemeal products in other parts of the metro.

Zalora Philippines provide the young Filipinos the most trendy, fashionable and relevant products through innovative technology and efficient delivery. They redefined online shopping as their website becomes more personalized with every use. And for mostly mobile Filipinos, shopping has never been this fun and convenient.

In early 2017, Ayala Corporation took 49% ownership stake in Zalora. They believe that this alliance can boost the potential of the company. More than the increase in funds needed for growth, Ayala Group can expand their user base through partnership and co-marketing.

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B. Vision and Positioning Statement

The vision of Zalora is:

“to be the #1 affordable fast fashion that can transcend the online space by converting the traditional PH offline fashion scene by 2020” The vision of Zalora is focused on the goal of being the leading provider in the industry by the 2020. Zalora is currently number one in the online PH fashion apparel industry. However, the current industry size (2015 PH online industry is worth 10B PhP) is very small compared to its other Asian counterparts. Zalora expects to push the growth of the industry while maintaining its top spot. With its technological expertise, it aims to attract its market to convert through its multiple value propositions.

Brand Positioning Statement

“To the upwardly-mobile, fashionable omni-shoppers, Zalora is an online fashion retailer that offers the best “touch-and-try” experience through an extensive 30-day return policy, a logistics infrastructure, a modern phone application, and a Fit Visualizer-enabled website.”

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Frame of Reference

“online fashion retailer” The frame of reference is online fashion retail. The market consists of digital shopping for fashion apparel for both men and women. Apparel includes any and all things fashion. Indirect competitors are general online shopping which can entice potential customers. Direct competitors are the store-owned online stores (Bench online, Berschka online), and other fashion apparel sites (gobuy.com.ph, KILY.ph, Seek the Uniq & Zoo.com.ph). A growing segment of direct competitors is small-time Instagram or Facebook fashion stores which, despite having very small market share individually, actually reaches a huge chunk of the online store scene.

Primary Target Market

Reasons to Believe

“To the upwardly-mobile, fashionable omni-shoppers”

“an extensive 30-day return policy, a logistics infrastructure, a modern phone application, and a Fit Visualizer-enabled website.”

The target market of Zalora consists of upwardlymobile fashionable omnishoppers. Omni-shoppers generally mean that these are professionals with enough disposable income to shop anywhere, and anytime. They are confident, trendy, enjoys fashion and always on the go. They are people who shop online due to scheduling constraints or due to inaccessibility of usual channels. They belong to the A, B and C socioeconomic classes. This means that the income level of the target market is at a minimum of 15,000 PhP per month. Another key element of the target market is their fashion awareness. The target market of Zalora are people that care on how they look. They are people who take the extra time to choose and nitpick on their clothes, shoes and accessories. They are people who value fit, style and quality.

Zalora offers multiple value propositions to help push consumers to choose online rather than offline. One of these is the extensive 30-day return policy. This is the only no-questions-asked policy in the online market. It includes free shipping or free pickup from the customer’s address with a return of the payment to an online Zalora wallet. This returns policy is empowered by the logistics infrastructure being built by Zalora.

Zalora has an extensive delivery network that includes 12 delivery hubs, 400 in-house riders and third-party providers. With their own fleet, delivery for their products are faster and can span from 1 to 3 days. Last is the technology-enabled customer interface of Zalora in both mobile and computer platforms. Both the mobile app and the website are designed to be userfriendly and apparel-shopping-oriented. The interfaces have a Fit Visualizer feature that provides multiple angles as well as a view on the feel of the cloth.

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II. SITUATIONAL ANALYSES OF THE BUSINESS A. Industry: E-commerce in the Southeast Asia and The Philippines Source: https://ecommerceiq.asia/philippines-ecommerce-potential/

The Philippine population is projected to increase by 13% by 2025, which implies a bigger market for business to sell their products including e-commerce.

The Philippines might be currently the second most populated country in Southeast Asia with around 100 million residents; however, it is not only the third poorest country in the region but also the second smallest e-commerce market at Php25 Billion. Last 2016, only 30 Million Filipinos were recorded shopping online that led to an average spend of Php1,650.00 per person. According to Statista, people shopping online in the Philippines are expected to increase by 40% and the average spend per person will reach only Php2,400.00 come 2021. Below is a table that compares the current status of e-commerce of Southeast Asian countries.

Statista projects the Philippines e-commerce will reach only Php117 Billion in 2021 making the country the smallest of markets in Southeast Asia, while Google and Temasek expect the market to be Php485 Billion by 2025.

Source: https://ecommerceiq.asia/philippines-ecommerce-potential/

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Below is an illustration of MasterCard’s survey that was conducted in 14 Asia Pacific countries with a minimum of 500 respondents per country which shows what were usually purchased online.

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Apparel, accessories, luggage and leather goods is the largest segment of the online retail sector reaching 36.7% of the sector’s total value.

Philippines online retail sector category segmentation: % share, by value, 2015

B. Market Outlook: Philippines The Filipino online retail sector has been growing double-digit annually as seen in the table below:

The Filipino online retail sector is forecasted to continuously rise reaching a 166.4% increase from 2015 to 2020 as detailed in the tables below:

Philippines online retail sector value: 2011 – 15 Philippines online retail sector value forecast: $ Million, 2015 – 20

Philippines online retail sector value: $ Million, 2011 15

Philippines online retail sector value forecast: $ Million, 2015 - 20

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C. Online Consumer Behavior: Philippines According to the 2014 study commissioned by Visa International, nearly 9 out of 10 Filipino consumer do their shopping online. Those who prefer to do their shopping online spend around 6.2 hours daily. And 72% of the respondents have been shopping online for the past year.

The study reveals that the top reasons for shopping are convenience (58%), price (47%), and deals (46%). The top three categories for online transactions are bill payments (39%), fashion-related items (39%), and movie tickets (34%).

Despite the fact that Filipinos still use cash for everyday transactions, Visa’s study shows that 65% of the respondents prefer to use payment cards when shopping online, while 35% still prefer cash on deliver (COD), and another 34% select bank transfers.

An earlier study on consumer behavior highlights the preference of Filipino online shoppers towards local online retailers (80%) for faster deliveries (62%) and less risk of lost orders (55%). 43% of respondents are concerned with delivery times while 45% consider payment security when shopping for their items in overseas websites.

Based on the 2017 Euromonitor study, several trends are affecting the consumer behavior of Filipinos, first of which is that consumers have developed the omnichannel approach to shopping, which involved both store-based and online retailers. Second is that customers continue to prefer cash on delivery as the mode of payment in internet retailing, even with the availability of online payment options. This preference is still driven by issues of payment security and by access to financial cards. Third is that customers are gaining increasing level of comfort and awareness as they gain more access to smartphones and the internet, but are likely to continue visiting physical stores. Lastly, with the traffic in the Metro, consumers are embracing on-demand online shopping that provides them with the convenience and accessibility that they need.

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D. Competition In the Philippines, Lazada is dominating ecommerce with almost 40 million monthly visits; whereas, Zalora has only 2.2 million visits on the month of February 2017 as seen in the table below.

Direct competitors that compete in the same category as Zalora are much smaller than Lazada, in terms of awareness and company size. Companies such as Ava Online Group and GoBuy.com, all register only 1-50 employees and are privately funded. This is in comparison to Zalora, which is now 49% owned by Ayala Corporation, one of the largest conglomerates in the country Other popular online retail sites such as OLX.com, Shopee.com and GoBuy.com operate with a different business model than that of Zalora’s. While they sell the same category of items as Zalora, they place great emphasis on sellers as an integral part of the process. Instead of the company curating the brands and items for selling on the website, the sites mentioned above offer peer-to-peer selling of new and used fashion items. Moreover, the price point of items sold on these websites are lower than those in Zalora’s collection, which the company carefully curates and controls.

Online shops in the Philippines are far behind Lazada PH as illustrated in the table below.

Source: https://ecommerceiq.asia/top-ecommerce-sites philippines

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F. Industry Analysis To conduct a study about the online shopping scene, a Porter’s Five Forces Analysis was done on fashion ecommerce. Fashion e-commerce includes online shops that sell clothing apparel, shoes and accessories. It covers both B2C and C2C business models. The image of the preliminary analysis is below: Source: https://ecommerceiq.asia/top-ecommerce-sites philippines/

Zalora is the market leader when it comes to the online retail of apparel and accessories. Lazada, while far larger in terms of size and market share, is a sister company of Zalora. While it does offer clothing and accessories, the company’s top-selling category is electronics and fast-moving consumer goods (FMCG), making it only an indirect competitor of Zalora. The FMCG category of Lazada has grown 181% in the last year alone, making the site an attractive option to companies such as Unilever and SM Department Store as a viable distribution channel

E. Zalora Philippines Zalora’s business is driven by female consumers, with 70% to 80% of its business coming from this demographic of consumers, who they see as tech savvy and willing to spend. In the past two years, Zalora Philippines has grown top line revenue by more than 300 percent from the 2014 level. And last 2016, Zalora has reported an 890 percent surge in the number of customers from 2012. 55 percent of the customers last year were first-time Zalora purchasers and 70 percent purchased from their mobile compared to less than 50 percent in 2015.Zalora page was visited over 90 million last year versus 50 million in 2015. 60% of orders are coming outside Metro Manila such as Visayas and Mindanao, and the rest come from Manila.

The company recognizes that a significant percentage of its target market are still not comfortable with the concept of online shopping, which is why they are continue educating their target market and encourage them to try it. Aside from this, they are working on improving the delivery and payment capabilities of the company by covering more areas and offering more secure options for the customers.

The threat to new entrants in this industry is very high.

Technology is now advanced and widespread resulting into online businesses popping up left and right. This is especially assisted by the growing influence of social media as not just a networking tool but also as an online store.

The bargaining power of suppliers are also high. Given the size of the fashion apparel industry, big brands pull a lot of weight given their brand followers and brand image. These suppliers are more than capable of pulling out their products from online stores and putting up their own online distribution networks. Given the fashion industry’s particularities on branding, suppliers are given more power and flexibility as they dictate most of the terms.

The threat of substitute products is low. The substitute for online stores are traditional retail stores. These are low given that certain demands of the market such as 24/7 availability and convenience are hard to provide.

The bargaining power of buyers is high due to the low diversity of the products in the industry. While most products are highly in demand, the products are easily available in other distribution channels. This gives

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buyers a lot options making it easier for them to say no to purchases.

The competitive rivalry in the industry is high. With the accessibility of the buyers in the industry, the players have been very active in competing for them. The industry players are very active in social media and other forms of online advertising.

G. SWOT Strength • Backed by Rocket Internet Zalora operates under the wings of Rocket Internet, a business incubator which aids start-up and innovative companies towards growth and success through mentoring and funding. The Rocket Internet specializes in supporting online-based companies by using proven e-commerce business models.

These business intelligence and the technological framework are effectively used

by Zalora.

• As a business disruptor, it is a highly likeable investment Rocket Internet entered the Philippine online market not only with Zalora but with a host of other internet-based companies, such as Lamudi, Carmudi, Clickbus and Pricepad, in tow. The Philippine Long Distance Telephone Company (PLDT) built a partnership with them in 2015.

Gaining more investor confidence, in 2017, another major company, the Ayala Corporation, took 43.3% ownership of the company as they see potential business growth with this business disruptor.

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• All online platforms are updated and congruent with each other Zalora’s digital assets are its websites, social media networks (Facebook, Instagram, Pinterest, YouTube) and mobile application.

Brand imagery is consistent among all assets; contents are updated and congruent with each other; and is easy to navigate.

With a click-and-mortar model, Zalora provides a seamless experience on all its online channels.

• Fit Visualizer The Fit Visualizer is a tool in the Zalora website that provides multiple angles of the apparel as worn by a model. It enables the prospective buyer to see how the fit of the apparel would be. Among all online fashion retailers, Zalora is the only one that provides such a tool.

• 30-day returns and exchange policy Online shopping can be considered as the product of quintessential need to access products, anytime, anywhere. With the fastchanging fashion trends, some people tend to change their minds just as fast or decided that the item does not fit their size nor taste.

Similar to Zappos who delivered variety, touch and convenience through free shipping and return, Zalora has a Zalora’s 30-day returns and exchange policy, customers can easily return an item or even exchange an item if ever they like, for free. This addresses the need for customer to touch and feel an item they purchase. A leeway of thirty days can give them ample time to reassess their purchase.

• Variety Zalora maintains its competitive advantage by providing a rich portfolio of the latest fashion trends that matches the preference of its target market. A buyer can choose from carefully curated pieces of 1,000 local and 500 international brands. The brands vary from mainstream retailers to emerging ones found on Facebook and Instagram, to private labels which represent the company’s response to fashion trends in Southeast Asia.

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Weakness • Low conversion rate One glaring weakness of Zalora, and the most pervasive is its low sales conversion rate despite high awareness level and efficient infrastructure (physically and digitally) systems. Internet penetration has steadily increased over the years. Zalora has 200,000 web visits per day. However, converting this web visits to sales has been a challenged which may be caused by (1) the apprehension of Filipinos to transact online (2) the need to “touch and feel” the product. In the survey conducted by the researchers, only 52% of the respondents who are representative of the Zalora PTM have actually bought from Zalora. The company must increase this to increase revenue.

medium enterprises (MSMEs) and others to broadband Infrastructure; and increase internet usage for all. Such project would be able to give Zalora Philippines’ a chance to reach even the far flung areas and give potential consumers a chance to experience what Zalora Philippines business can offer.

• National retail payment system project by Central bank of the Philippines When Central Bank of the Philippines launched the National Retail Payment project they aim to encourage filipino consumers to transact using electronic payments in the coming years.

In 2015, share of electronic payment was only 1% of all type of payment transactions, 99% were paid in cash and checks. The goal is to increase electronic payment share by at least 20% by 2020. This initiative will contribute to consumers’ confidence in using electronic payments--one of the many mode of payments offered by Zalora Philippines.

Opportunities • Projected continued growth of e-commerce Opportunities for e-commerce is seen to grow almost twice, from Php241 billion in 2015 to Php459 billion in 2025. This includes online purchases of clothing, gadgets, household goods, food, among others. Zalora can ride the wave of this growth and continue its dominance in the online fashion retail category.

• Completion of the National Broadband Plan and fiber investments will enhance rural broadband coverage Part of Aquino administration’s campaign is to establish the National Broadband Plan. The agency’s mission is to “establish a broadband as a basic right for all consumers, businesses and government entities.” Their focal points would be to accelerate investments; mobilized and engage public and private sectors; connect more places by setting up strategies that will connect government sites, schools, health institutions, micro, small and

Threat • Electronic fraud Fraud is prevalent online and one of the many forms it comes with is unauthorized credit card /bank details usage. Stories of fraudulent transactions prevent prospective buyers from trying in online retails stores. While most of the transaction in Zalora is cash-based, the credit-card toting market must be encouraged to transact using electronic payment systems with online retailers, like Zalora.

• Slow to no internet connection The Philippine internet connectivity is lagging behind countries. On an average, Philippines’ internet speed is 3.6 MBps. The average for an Association of South East Asian Nation (ASEAN) country is 12.4 MBps, while the global average is 17.5 MBps.

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Despite this, there are still 26.01 M ecommerce users in the country in 2015. Such slow connection and the huge volume of traffic may result to poor online connection and navigation experience for a fashion retail buyer.

• Bureaucratic delays in issuance of telecom permits Slow internet connection in the Philippines is being remedied. However, local government units require telecommunications company to secure at least 25 permits (that usually takes eight months to complete) prior to construction of one cell site. This contribute to the delay in expanding mobile data across the whole country, and the entrance of new players. To date, Philippines only have 16,300 towers as compared to the 70,000 towers of Vietnam. Thus, it affects the connectivity of online retail buyers.

H. Market Survey In order to understand the pulse of the market and their buying behavior the group conducted a survey using random, convenience sampling method. Survey questionnaires were sent online (Facebook messenger, Viber and Telegram) to 33 samples. The survey was constructed in such a way that respondents described their profile, their general online shopping behavior and their knowledge about Zalora.

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In terms of educational level, most of the surveyed samples were bachelor’s degree holders (75.8%). Of the remaining, 15.2% of the sample were Master’s Degree and 9.1% were High School or associate degree holders.

A larger number of the respondents were employed (72.7%), while 18.2% categorized themselves as professionals (ex. Doctor, Lawyer, Architect, etc.). 6.1% of the sample were business owners and 3% were unemployed. With regard to the respondents’ monthly income, most earn PhP 50,001 to 100,000 (36.4%) per year, a third earn PhP 30,001 to 50,000 (33.3%), and the remaining members of the sample earn PhP 30,000 and below (21.2%), PhP 100,001 to 150,000 (6.1%) and PhP 150,001 and above (3%).

Online Shopping Behavior

Respondents Profile

When the respondents were asked if they shop online, 75.8% answered in the affirmative, while 24.2% responded otherwise. In terms of frequency, most of them only shopped once every quarter (36%), once a month (24%), 2 to 3 times a month (24%), once a year (12%), more than once a week (8%) and once a week (4%). In addition, they were asked to rank product/ services they usually purchase online and 75% stated clothing and accessories, travel tickets (52%) and food and drinks (48%).

Of the 33 samples, 22 (66.7%) were female and 11 (33.3%) were male. Majority were in the 21 to 25 age range (42.4%) while 30.3% are 26 to 30 year olds, 21.2% were 31 to 35, 3% were 36 to 40. Lastly, 3% were more than 50 years old.

In terms of platform, 52% said they reached shopping websites through social media, 32% through search engines, 12% are through friends/families’ recommendations, and 4%’s through traditional advertising (TV, radio, magazines, etc.).

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According to them, the most important factors were secure payment option, price and convenience. Less important considerations were reliable delivery service, good customer service, discounts and choice of products and varieties.

Interestingly, when samples were asked where they had their last online purchase/s for the past year, 18 of the respondents ticked Lazada (72%) and 11 said Zalora (44%). Other common options were OLX (24%), Amazon (24%) and Shoppee (12%). More than half of the respondents said they were quite comfortable shopping online (58.3%), others were extremely comfortable (33.3%) and moderately comfortable (8.3%). With regard to the advantages that prompted them to purchase online rather than the traditional mall or store, the top 3 answers were cheaper price, free delivery option and free return option.

Credit card payment (60%) was their top most choice in terms of payment options, followed by cash on delivery (20%), debit card (12%), and bank deposit (8%).

In relation to returns policy, samples were asked if they had returned an item, and 64% said they have never returned an item, 32% have returned items 1 to 5 times and 4% said 6 to 10 times. When asked about their experience in returning an item, 47.4% said it was extremely pleasant, 31.6% quite pleasant, 10.5% moderately pleasant, 5.3% slightly unpleasant and 5.3% not at all pleasant.

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Knowledge about Zalora All 33 samples were aware of Zalora as an online shopping website and most of them found out about it through the Internet (82.6%), word of mouth (recommendation of family and friends) (47.8%) and through mobile application (4.3%). 52% said they have purchased in Zalora in the past and 48% have not. Most of them bought clothing (57.9%), shoes (26.3%).

Accessories, beauty products/ cosmetics/ grooming and sportswear all got the same percentage at 15.8%.

In terms of the amount they usually purchase, 42.9% responded PhP 1000 to 2000, 28.6% have never spent online, 14.3% spent PhP 3001 to 4000, 9.5% Php 2001 to 3000, and 4.8% PhP 4001 to 5000. To know when they usually purchased from Zalora, 66.7% responded anytime, 16.7% purchased for special occasions (as gifts), and 5.6% purchased during pay day. When asked about the reason why they have never tried Zalora before, 26.3% said Zalora has a limited product range, 21.1% preferred seeing the item to check its quality and fit.

Finally, when asked about what items do they wish to see in Zalora, some of the answers were electronics, more brands, furniture, survival kits and luxury bags.

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In terms of platforms, more respondents are reached through social media than any other medium. According to Digital Marketing Philippines, 43% of online users would not mind getting their usage patterns tracked as long as they would receive relevant ads in return--a good opportunity for online advertising. Moreover, 69% of Filipinos rely on information from Social Media channels that influences their purchase decision. This offers Zalora a key medium through which they can convey their message in a way that is easily accessible to their PTM.

I. Insights The survey supports various factors in Zalora’s current marketing strategy. Their consumers are mainly young, educated, employees mostly earning PhP 50,001 to 100,000. It is a good indicator of the PTM’s robust disposable income. Reasons for such can be the country’s continuous economic growth, the rising number of middle class, and high employment rate as published by Philippine Statistics Authority (93.4% as of January 2017). Interestingly, the top five (5) industries with high paying jobs (for less than 5 years work experience) are IT-related; law/legal services; training and development; banking/ financial services; and Actuarial science/ statistics. In this demographic, the cyberspace plays a significant role in how they move in both their workplaces and in recreation.

When it comes to awareness, all of the respondents responded in the affirmative. However, conversion is low, with only 52% of them actually having bought from Zalora. This is due to a perceived limitation to the range of items that Zalora carries, and wanting to touch, feel and fit goods (especially clothing) before purchase. Zalora’s efforts at carrying mainstream, traditionally brick-and-mortar brands such as Mango, Topshop, River Island, aims to address perceived limited offerings, while seasonal, pop-up stores in CBD retail areas address their PTM’s need to try before buying.

The company’s ability to deliver within 1-3 days in Metro Manila has given them the advantage of convenience. As the survey stated, it plays a major role in a consumer’s decision to participate in the online marketplace. In addition, the business’ logistics system also enables the company to reach different areas of the Philippines. This gives Zalora considerable access to suppliers and consumers in different territories in the Philippines. Compared to neighboring Asian countries such as Malaysia and Indonesia, the Philippines has a more contemporary and metropolitan approach in fashion. This demand makes the company more competitive in the market by providing fashionable pieces in a convenient manner.

The survey has implied that convenience, together with affordable price and variety are priorities when it comes to online shopping. Through strong infrastructure and an active market presence, the business has succeeded in delivering key needs to their existing customers.

However, there is a gap between awareness and purchase that must be addressed if Zalora wishes to maintain its leadership of the online retail market.

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J. Key Business Issues Philippine online businesses are faced with several challenges and one of this is that around 70% of the Philippine population are unbanked and less than 3% of Filipinos use credit cards for their transactions.

Philippines is still a largely cash-based society which is why Zalora decided to include a Cash on Delivery as a payment option for the customer's’ online transactions.

The second issue is that Filipinos are connected to and browsing the Internet; however, it has the second slowest internet connection in the Asia Pacific region. A faster connection might not guarantee higher online sales, but this surely has an impact on one’s online shopping experience.

Third is that the immature logistics infrastructure in the Philippines is making it harder to serve consumers nationwide. Zalora did not want to rely fully on service providers which is why they built their own Zalora Express, an in-house delivery freight operating nationwide.

Fourth, and one of the top 2 issues being faced by Zalora Philippines, is that Filipinos need to be educated in online shopping especially because many are still concerned about the security of online transactions through credit cards. With the recent scandals of credit card fraud, online hacking and debit card skimming, Filipinos are not that comfortable using their bank accounts online. Customers still have their fear that (1) the purchased clothes might not be delivered to them; (2) the purchased clothes might not fit them the way they want to; and (3) the online payment might not be secure.

Lastly, and one of the top two issues being faced by Zalora Philippines, is the low conversion rate. Based on the survey that our group conducted, all of our respondents are aware of Zalora but only 52% actually bought from the online shop. All the marketing efforts of Zalora Philippines has been successful in making their target market aware of the on-demand shopping service that they offer. Now, they have to focus on converting these people who are aware of the service to customers who actually buys from Zalora online. Successful conversion would definitely lead to better revenues for the years to come.

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B. Strategies 1. Increase Customer Conversion Increasing customer conversion of Zalora is our main strategy for this marketing plan. Based on the market study we conducted, a significant number of the company’s PTM are already aware of Zalora as an online shopping store but only few have already tried it. Results of our market study also indicates that the low

conversion rate is due to a perceived limitation on the goods and services Zalora offers as well as lack of knowledge in the “touch and feel” business feature of the company.

III. GOALS & STRATEGIES A. Goal and Objective

Given this, Zalora must be able to convert more customers. Conversion rate should

increase up to 200% within a span of 1 year that will eventually result to optimal profitability and business growth. Increase in conversion rate will help the company expand their market and gain more consumers.

The group decided to focus on one specific target that responds to the key issues of the study which is to attain optimal profitability and business growth. Boost

2. Improve stakeholders relations (customer and community)

revenue by 30% over the course of 12 months by increasing customer conversion and improving stakeholders’ relations.

According to our market study, a good number of primary target market members are aware of Zalora but are not actively engaging in buying goods. This shows that the market is not conscious of the message of the business and that the company is not conveying their positioning as well as it could. With this in mind, Zalora will prioritize developing stakeholder relationships in order to achieve a better relationship with its consumers. A good relationship between business and its consumers is important in attaining a positive customer life value relationship. With improved consumer engagement and relationship, the company should be able to provide a superior array of products better fitted to their PTM as well as exceeding service to its consumers

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C. Tactics Primary Tactics for Increase in Customer Conversion Strategy 1. Brand Ambassador (Blogger Collaborations) Instead of choosing celebrities as campaign ambassadors, Zalora will collaborate with top and micro-influencer blogger like Tricia Gosingtian, Kryz Uy, Camille Co, Joyce Pring, Lissa Kahayon, and Tim Yap. These bloggers/influencer embody the corporate identity in appearance, demeanor, values and ethics of Zalora. Blogs are becoming the place where young professionals get their inspiration from. In this case Zalora will benefit with expanding their audience and bloggers will benefit with increase fashion interested audience. The bloggers will be asked to wear Zalora products and share the pictures on their social media platforms.

Bloggers will also appear in the editorial for the online magazine of Zalora.

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2. Partnership with Top BPO companies to open pop-up store The concept of a digital interactive pop-up store has proven successful in Singapore branch of Zalora. That’s why Zalora’s main objective for the stores was to acquire more customers and educate them about online shopping. Partnering with top BPO’s companies like Accenture, Convergys Philippines Services Corporation and JP Morgan and Chase & Co. in the Philippines is very strategic. With employee range from 20,000 - 80,000, Zalora can use this as a leverage to increase the brand awareness and educate consumer about online shopping.

Sometimes, people are averse to online shopping because they have been misinformed about the process. For new customers who consider it to be unsafe, the stores serve as an educational experience to interact with staff and try the products on before buying them online. The step-by-step information provided on the buying process (whether payment or delivery methods) are meant to facilitate customers to become better acquainted with online shopping through understanding, choosing, and exercising the options that they are most comfortable with.

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Secondary Tactics for Increase Customer Conversion 1. Boost digital PR and Social Media Digital media’s comprehensive reach to Zalora’s PTM will help the business be continuously relevant to their consumers.

Presently, the company already has active social media channels on online platforms such as Instagram and Twitter. According to Digital Global Overview, the average Filipino spends an average of 4.17 hours on social media. The study also shows that 58% of Filipinos use social media on a daily basis. This tactic would also mitigate fear within consumers. It has been proven that social media has been useful in increasing trust in brands.

The business is aiming to increase their followers and interaction in their website and in social media platforms such as Instagram, Twitter and Facebook. Zalora would also contract celebrities to do a delivery service to increase social media attention. An increase in social media presence and interaction will help attract potential customers to try Zalora.

In addition, This will help their PTM constantly in the know with the company’s offerings and events.

Key performance metrics:

Initiative

Target

Timeline

Instagram Followers

Increase of 200%

Within 1 year from implementation

Facebook Likes

Increase of 50%

Within 1 year from implementation

Post your Zalora outfit with #OOTD hashtag

Post your Zalora outfit with #OOTD hashtag

Within 3 months from implementation

Video showing a celebrity doing a Zalora delivery (Instagram Story)

2x a year

Within 2 months from implementation

Website visits

Increase of 50%

Within 6 months from implementation

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2. Sponsorship Zalora’s PTM has interests focused on topics such as fashion and popular culture. With this in mind, it is in the company’s advantage to be involved in events concerning the interests of their target consumer. Zalora has been a main sponsor for Asia’s Next Top Model from season 3 to 5. This tactic is in line with the company’s strategy to be in the vicinity of their target market. In addition, sponsorship of events heavily watched by the public eye will give the business the opportunity to gain the trust of their PTM. Model competitions such as Asia’s Next Top Model helps the business clearly communicate their message to their customer. Aside from Asia’s Next Top Model, the company could tap into sponsoring events such as beauty pageants such as Binibining Pilipinas, romantic comedy movie launches and other events. Zalora will also have sponsorship contracts with celebrities and hold blogger exclusive media events.

Key performance metrics: Initiative

Target

Timeline

Event Sponsorship

Once a year

Within 6 months from implementation

Blogger exclusive media events (Micro influencers with 50-100k social media followers)

Twice a year

Within 3 months from implementation

Celebrity contracts

Once a year

Within 4 months from implementation

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3. Sponsorship Consumers will always patronize products that offer higher product value. With this in mind, Zalora will benefit from partnerships from other business organizations. Partnerships will boost the value of their current product offerings and will also entice their consumers to look in the merchandise of the company.

This will help the business increase their customer conversion rate. This tactic will also enable the business gain the trust of their PTM since they are partnering with reputable companies. These partnerships will enable the company to be associated with bigger and trusted companies which will be beneficial to the business.

One of the payment methods of Zalora is the usage of the credit card. A partnership with a credit card already geared towards the PTM of Zalora will ensure the business that they are opening their partnership to the right consumer. This will also expand the company’s customer conversion rate. An example of this partnership is a tie-up between Zalora and BPI’s Blue Mastercard or BDO’s Classic Visa Card. This affiliation can offer 0% interest layaway programs for a minimum amount of purchase. Both of these credit cards are entry level and is in the lower range in terms of income requirements. These characteristics are directly in line with Zalora’s PTM thus this promotion can entice the company’s target market to be a Zalora customer. Partnerships can also include tie ups with fashion brands.

Key performance metrics:

Initiative Partnership with reputable companies

Target Minimum of 5 brands

Timeline One year

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4. Points and Reward Systems Currently, Zalora has a one-time reward discount which only applies to new customers.

What the company lacks is a solid and permanent reward system for its consumers.

The business should employ a point reward system for purchases made. Case in point, there would be 1 reward point awarded for every 20 Php spent on the retail house. These points would act as discount for future purchases. The customer has the flexibility to choose when to apply their reward points.

This system will attract current and future shoppers because it increases the value of their purchase. This will also further help the company to increase their customer conversion rate since potential customers are more likely to try Zalora’s products if they see these as higher value. Friend referral codes and birthday gift cards will also be used as part of the points and rewards system tactic.

A point reward system will also help the company build a relationship with their PTM and convey the message that the company has the benefit of its consumers in mind. This tactic would help the company convince their PTM in In addition, rewards has the ability to build customer loyalty and encourage the longevity of a customer’s life value.

Key Performance Metrics:

Initiative

Target

Timeline

Referral Code

100 code used per month per month

1 year after implementation

Birthday Gift Card

Once a year

Every year

Reward Points

100,000 redeemed points

2 months

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Secondary Tactics for Improve stakeholders relations (customer and community) 1. Online Customer Survey A customer satisfaction survey is a direct reflection of a consumer’s priorities and how the company has responded to them. This is important in any business since customer satisfaction is a dominant index of customer loyalty.

Customer loyalty stimulates profitability and it is less costly for the company to initiate efforts in increasing consumption of current customers as compared to spending to gain new customers.

Zalora will kick off this initiative by conducting customer surveys on an annual basis. Knowing the preferences of their consumers will enable the business to focus their resources to attend to the lead needs of their buyers.

Attending to their PTM’s primary needs will encourage current buyers to continue to patronize the business.

Key Performance Metrics: Initiative Online customer survey

Target 1,000 customers

Timeline Within 3 months from implementation; Once a year

2. Conduct Usage Attitude Image (UAI) Study A UAI study is essential for a company to get an objective pulse of the market. This study focus on the frequency of use and purchase, how the PTM feel about the product and what the product is perceived by the PTM. Done regularly, it allows the company to monitor how their product plays out the in the minds and hearts of their market throughout the years. Zalora can better strategize and make adjustments on the tactics if they can capitalize on the insights that they get from these studies. They can also monitor how their competitors--direct and indirect--are affecting their business, and manage it in such a way that their business’s status is protected and improved.

Initiative Conduct UAI survey (Once every two years)

Target Twice a year

Timeline Within 3 months from implementation

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3. Corporate Social Responsibility Program The application of corporate social responsibility (CSR) programs has proven to be beneficial in customer and employee engagement. Zalora can hold programs such as Fashion Scholarships and donation of old and new clothes. These CSR programs create and convey a “good” and socially responsible message to the business’ target market.

Ultimately, this will help the company achieve a better relationships with its customers. This in return will provide a longer customer life value for the business. For Zalora, employing this program will help the company relate its customers better. CSR programs administer better and closer relationships between business and consumer.

Key Performance Metrics: Initiative

Target

Timeline

Donation of old and new clothes

Once a year

Within 3 months from implementation

Zalora Fashion Scholarship

5 aspiring young designers

Within 3 months from implementation

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IV. RISK AND CONTINGENCIES Zalora’s business hinges on two factors: its delivery network and its technological framework.

The company has upgraded its warehouse, strategic delivery hubs, and reliable in-house and third-party fleet. One of the major risks a business like Zalora is facing failure to deliver the goods within the committed and advertised 3-5 days delivery. Due to the nature of online retail, Zalora buyers have already delayed their touch and feel experience of the product.

A breakdown in the delivery network and failure to meet the committed time of delivery would adversely affect the customer satisfaction for both the product and the service of Zalora.

To avoid this, Zalora must create another partnership with a stable courier service. Currently, their thirdparty suppliers are 2Go, LBC and AirSpeed. Other couriers with efficient system and stable name like TNT and FedEx may also be considered.

Zalora must be able to build alliances with good courier services so that in the future, when another similar eretailer pops up, Zalora can leverage on the partnerships forged.

With the Philippine government re-affirming its commitment on the development of the National Broadband Plan during the June 2016 State of the Nation Address of the president, the e-commerce industry will be experiencing a new wave of online retailers, including ones that focus on apparel and footwear, just as Zalora does. Threat of new entrant is and will be continuously very high in this market category. This is another major risk for the business. The increase in the market players may adversely affect the market share being enjoyed by Zalora.

Zalora must accelerate its customer conversion by creating and implementing plans geared towards more brand awareness and enticing sales promos. They must be able to re-assert the perceived value and quality of their products.

They must also invest on customer retention programs to further strengthen their ties to their patrons and maximize customer the lifetime value. To this end, they must periodically survey, study customer loss rate, try the mystery shopper technique and monitor competitive performance.

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