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HO CHI MINH CITY UNIVERSITY OF ECONOMICS & FINANCEFINAL REPORTSUPPLY CHAIN MANAGEMENTTopicLAZADA’S SUPPLY CHAIN ANALYTICSLecture: Dang Quan TriTeam Cactus: Tran Phan Thanh Ha – 195120608 Nguyen Phuong Nguyen – 195120601 Vu Cao Tam – 195120639 Nguyen Duy Quang – 195120609 Tran Thuc Uyen – 1951205...

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HO CHI MINH CITY UNIVERSITY OF ECONOMICS & FINANCE

FINAL REPORT SUPPLY CHAIN MANAGEMENT Topic LAZADA’S SUPPLY CHAIN ANALYTICS Lecture: Dang Quan Tri

Team Cactus: Tran Phan Thanh Ha – 195120608 Nguyen Phuong Nguyen – 195120601 Vu Cao Tam – 195120639 Nguyen Duy Quang – 195120609 Tran Thuc Uyen – 195120510 Ho Chi Minh City, November 2021

ACKNOWLEDGEMENTS First of all, our team would like to express our gratitude to Mr. Dang Quan Tri to enabling us to complete this report on “Supply Chain Management in E-Commerce”. Furthermore, we genuinely appreciate his enthusiasm, sanguine energy, and great sense of humor which boost our incentive to retain and accomplish our work. We’d also want to express our deepest gratitude for all of our friends' contributions to this course. We would not be able to complete this thesis to its full potential without them. We thank all of the support we received during the process. Sincerely,

Team Cactus

SCOREBOARD Member’s names

Mission

Completion

Vu Cao Tam

Write about chapter 1 and 2.1

level 100%

Nguyen Phuong Nguyen

(chapter 2) Write about 2.2, 2.3 (chapter

100%

Tran Phan Thanh Ha

2) Write about 2.4, 2.5 (chapter

100%

Tran Thuc Uyen

2) and Content summary Write about chapter 3

100%

Nguyen Duy Quang

Write about chapter 4

100%

Point

Comment of lecture: ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. .................................................................................................................................

TABLE OF CONTENTS CHAPTER 1: LAZADA COMPANY..........................................................6

1.1.

General information..................................................................................................................6

1.2. History of formation.......................................................................................................................6 1.3. Structure diagram:.........................................................................................................................7 1.4. Highlights........................................................................................................................................8 1.5. Lazada’s financial situation...........................................................................................................9 1.6. Lazada's competitive strategy......................................................................................................10

CHAPTER 2: LAZADA’S SUPPLY CHAIN............................................11 2.1. Structure of Lazada’s supply chain.............................................................................................11 2.1.1. Supplier...................................................................................................................................11 2.1.2. Manufacturer...........................................................................................................................12 2.1.3. Retailer/Distributor.................................................................................................................12 2.1.4. Lazada’s website......................................................................................................................12 2.1.5. Customer..................................................................................................................................12 2.2. Supply chain strategy of Lazada..................................................................................................12 2.2.1. Invested in warehouse infrastructure and logistics services.....................................................12 2.2.2 Using artificial intelligence......................................................................................................13 2.2.3 Implementing the plan of electric bicycles to carry goods........................................................14 2.2.4 Replicate the Drop-off point model or Collection point............................................................14 2.3. Supply chain model of Lazada.....................................................................................................16 2.3.1 Supply chain components appear in Lazada.............................................................................17 a. Transportation.........................................................................................................................17 b. Warehouse................................................................................................................................19 c. Retailers / Distributors............................................................................................................20 d. Inventory..................................................................................................................................20 e. Packaging..................................................................................................................................21 f. Distribution center...................................................................................................................23 g. Customer..................................................................................................................................23 2.3.2 Delivery method in Lazada's supply chain................................................................................24 a. Manufacturer Storage with Direct Shipping.........................................................................24 b. Distribution Storage with Carrier Delivery...........................................................................25 2.4. Supply Chain Flows......................................................................................................................26 2.5. Supply chain operation of Lazada:..............................................................................................27

2.4.1. How to register to sell on Lazada............................................................................................28 2.4.2. Lazada's order processing process...........................................................................................32 a.

Stage 1: Receiving new orders:..............................................................................................32

b.

Stage 2: Packaging orders:....................................................................................................33

c.

Stage 3: Delivery to the shipping unit....................................................................................34

d.

Stage 4: Delivery to customer................................................................................................36

e.

Stage 5: Receive payment......................................................................................................38

f.

Stage 6: Return process.........................................................................................................39

CHAPTER 1: LAZADA COMPANY 1.1. General information Lazada Group is a multinational e-commerce group currently operating in countries such as Indonesia, Philippines, Singapore, Thailand and Malaysia; is run by German founder and director Maximilian Bittner. Then Alibaba Group of Chinese billionaire Jack Ma bought and completed the deal in early 2015. With the largest payment and logistics network in the region, Lazada has become an indispensable part of daily life. Consumer's Day in Southeast Asia. Since 2016, Lazada has been a strategic e-commerce platform in the region with the support of technology infrastructure from Alibaba Group. By 2030, Lazada's goal is to serve 300 million customers across Southeast Asia. Lazada Vietnam was established in March 2012 as part of this group. Inheriting high technologies and huge capital from the parent company in Germany plus business experience, Lazada has set the goal of becoming the No. 1 retail website in Vietnam by the method of "hit fast, win fast".

1.2. History of formation

Figure 1: Lazada’s History of the formation

In 2012, Lazada.vn officially entered the Vietnamese market as a member of Lazada Group - the number one online shopping center in Southeast Asia. In 2013, Lazada

Vietnam opened its first warehouse in Vinh Loc Industrial Park, Ho Chi Minh City. Soon after, a dispatch center was opened in the Southeast in 2014 to serve the increasing number of customers in this area. In 2015, a milestone marked Lazada's significant transformation when building Marketplace - a true e-commerce exchange. In October 2015, Lazada launched a forwarding unit - Lazada Express to standardize capital forwarding services. As of March 2016, Lazada Vietnam has 35 dispatch centers and 1 Lazada Express (LEX) shipping team provided by the company to support direct shipping (FBL) for sellers. In 2018, Lazada focused on improving the user experience based on the applications of data technology (Big Data) and artificial technology (A.I).

1.3. Structure diagram:

Figure 2: Lazada's structure diagram (theofficialboard.com, 2020)

Figure 3: Lazada's structure diagram (theofficialboard.com, 2020)

1.4. Highlights Lazada is one of the largest e-commerce exchanges in Vietnam. All shopping needs are met on Lazada. It is distinguished by its product diversification from electronics, furniture, fashion, home, etc. along with the strength of typical goods originating in the fields of engineering, electronics, and accessories. assembled with a rich source of goods from China. Lazada is different from other commerce platforms in terms of service quality and customer care because there is no switchboard but only online chat with customers. Regarding the price of goods, Lazada has a big fluctuation when conducting sales campaigns, which are shock deals of 0 VND at the end of the year, 11/11, 12/12 ... which is quite different from other e-commerce platforms. Dynamic and powerful marketing activities when debuting with Vietnamese stars MV "Can you see Co Vy" to promote the community's optimism and active disease prevention

1.5. Lazada’s financial situation Pioneering to bring effective marketing solutions to sellers and brands: Lazada Vietnam is the first e-commerce platform to provide an affiliate marketing solution that helps sellers and brands drive sales with reasonable investment, bringing high profit margins. Affiliate marketing helps maximize brand awareness and drive store traffic through a network of content creators, influencers (KOLs), and high-traffic sites high…Affiliate marketing has proven effective for the business activities of sellers and brands (data from October 1 to December 31, 2020):  Revenue on the day of launching the campaign increased by nearly 6 times compared to normal days  Nearly 600,000 orders were created thanks to the affiliate marketing solution during the two shopping festivals at the end of November 11 and December 12.  The highest revenue generated from a KOL in the brand's super brand festival is more than 4 billion VND. Based on data from Lazada Vietnam in the 12 months from January 1 to December 31, 2020 compared to the same period in 2019]: Lazada has supported small and medium businesses to convert to digital and do business effectively on e-commerce:  The number of sellers participating in business on Lazada increased nearly 2 times.  During the first wave of the Covid-19 epidemic, Lazada implemented a stimulus package for 110,000 small and medium enterprises.  Lazada Academy also continues to expand its support for sellers when it announced a partnership with Google in November 2020 to organize free training courses for online sellers, helping them equip their skills and promote business growth on digital platforms.

 Continue to expand strategy: Shoppertainment – shopping combined with entertainment:  In 2020, Lazada has stepped up investment with the number of livestream episodes increasing more than 10 times.  The number of daily livestream views on Lazada application increased by nearly 25 times. In particular, the music festival before shopping festivals attracted 15 million views.  The number of successful orders through LazLive channel increased 45 times. With this positive result, livestream is becoming the favorite tool of many brands and sellers.  The number of regular customers interacting with LazGame every day increased by more than 2.5 times.  The number of customers collecting LazCoin coins has increased by more than 2 times, in which the number of coins each customer collects is also 3 times higher. Lazada Vietnam recorded many memorable milestones in 2020 with its efforts to accompany consumers, sellers, partner brands and the community to overcome challenges caused by the Covid-19 epidemic. Lazada also focuses on developing new categories such as fresh food and diversifying items on the floor to better serve the needs of consumers. Not only did Lazada bring consumers more incentives over the past year, but Lazada also expanded its free shipping strategy, while supporting more and more brands and sellers to do business effectively on the commerce platform. electronic. Notable achievements can be mentioned as Enfa Super Brand Festival on April 23 with more than 4,500 products sold in just 1 hour Flash Sale. Innisfree Super Brand Festival on April 6 also set a new record with the highest number of buyers in Super Brand Festivals of the cosmetics industry. Notably, on this day alone, Innisfree's revenue increased more than 100 times compared to normal days.

1.6. Lazada's competitive strategy Lazada is seen as an intermediary between customers and retailers. They are applying policies to attract customers and retailers as well. They follow the premium image route, guiding sellers to highlight their own brands, emphasizing the professional standards of their images, and being similar to AliExpress in brand strategy style. Lazada is a company that works very hard on marketing and their marketing tactics are very impressive and leave in the minds of users for a long time. Lazada has used a variety of marketing methods to achieve its aim of encouraging customers to buy its products. So, in the next section, we'll go over the company's marketing methods. Lazada focuses on obtaining a big number of new customers and increasing revenue from those who access the internet through various media such as desktop computers and mobile phones. To accomplish the foregoing, the Lazada group used the 'Google AdWords' flexible bid technique. These bid strategies provide options for enterprises to automate their cost-per-click offerings in order to achieve goals such as ROI augmentation, change amplification, cost per procurement, and permeability. Lazada used a technique known as target outclassing share, which allowed the online retailer to outperform its competitors on key catchphrases. The goal outclassing share bid technique allows businesses to raise or lower their offers up to a preset maximum cost per click in order to assist their adverts "outclass" those of others. This method was used by the team to place Lazada's catchphrases in new categories.

CHAPTER 2: LAZADA’S SUPPLY CHAIN 2.1. Structure of Lazada’s supply chain 2.1.1. Supplier Suppliers of Lazada include Component and Raw-material suppliers. These suppliers are often located in rural area, convenient for raw materials and components. These suppliers will make the supply according to the specified order and quantity. They play the role of supplying raw materials to the manufacturing plants of the supply chain.

Suppliers play important roles in the supply chain, If the supplier has a problem or delay, it will bring the whole system to stop. 2.1.2. Manufacturer Manufacturer will receive raw materials from suppliers and proceed to produce . Product quantity is decided based on orders coming from retailers and their distributors. Finished products will be delivered to distributors/retailers to fulfill orders. 2.1.3. Retailer/Distributor Retailer or distributor is who gives orders to the manufacturers themselves based on the orders they aggregate. Distributors/retailers are the main beneficiaries of a supply chain. Their mission is to upload their products, attract customers, marketing and consulting, ... to increase their retail sales. 2.1.4. Lazada’s website It’s a third-party as an intermediary between customers and retailers/distributors. This e-commerce platform helps retailers/distributors to post their products with many options in terms of price, color and quality; It also makes it easy for sellers to provide information about products and communicate with customers through displaying messages on their website or application. Customers can easily access and use this platform through phones, computers,... The interface is easy to use and close to everyone. 2.1.5. Customer The customer is the final object in the hard supply chain, they are the one who will consume the goods. In addition, consumers can also buy products at distributors in large quantities, but this rate is very low. Customers will visit Lazada's website and perform their shopping behavior. Customers will send their orders to Lazada and wait to receive goods from retailers/distributors through 3rd party delivery such as GHTK, GHN,...

2.2. Supply chain strategy of Lazada 2.2.1. Invested in warehouse infrastructure and logistics services Ms. Trang Bui - Senior Director of Vietnam Market at JLL - said that Vietnam is currently one of the fastest growing e-commerce markets in Southeast Asia. In recent years, the supply chain has become increasingly focused on serving the consumer, and speed of delivery has always been one of the key factors in purchasing decisions. “Compared to traditional logistics operations, e-commerce is more labor intensive and requires three times more warehouse space”- Ms. Trang analyzed. Taking advantage of this opportunity, Lazada has boldly invested in warehouse infrastructure and logistics services. Lazada has invested in 3 large warehouses with a total area of 22,000m2 in Ho Chi Minh City, Da Nang and Hanoi with a network of 34 distribution centers nationwide. In which, LEL Express - a forwarding company under Lazada Group has invested in the second automatic goods sorting system in Hanoi with a capacity of up to 10,000 products/hour. Two Sortation Centers are also located in Ho Chi Minh City and Hanoi with a total area of 7,000m2, respectively. and 10,000m2. According to Lazada, all goods collected and classified by these two centers are concentrated and classified to delivery centers in districts and districts through automatic selection technology. Lazada's automated sorting system is operated almost entirely by robots, the job of the employees is mainly to monitor and line up in trays, containers The first is the automatic split line, using 2...