This isn’t another boilerplate Pro vs. Con bullet-point comparison — there’s plenty of those on the Internet already and they keep changing as e-commerce companies add new features all the time, so I’m not going to bore you with another one.
Instead, I’m going to give you a frontline account from a small merchant, telling you firsthand how doing e-commerce in Singapore using either of these platforms (or your own store) looks like.
How hard is it? Can you make money? What do you have to watch out for?
For context, I opened a small store importing medical goods from Europe in early 2020, around the time the Covid-19 pandemic broke out, when the local market was suffering shortages of hand sanitisers and other products.
Like all store owners, I had to choose my mix of channels to maximise my reach and sell as many products as I could.
You can try going completely independent and run your own website, under your own domain, host it separately and drive traffic directly to it.
Alternatively, you can list your products using one of the major e-commerce platforms — in my case, I went for Lazada and Shopee (with an addition of Carousell) to complement my own store.
Should You Go At It Alone?
Before we compare the platforms, let’s consider going independent first.
Should you do it? Is there any space for individual stores in a modern e-commerce world where millions of people flock to large Amazon-like platforms looking for the best deals?
As much as I’d like to give you a simple yes or no answer, the reality is, it depends.
The answer was easy for me as besides writing, my main line of work has for years been graphic design and I know a fair deal about configuring and setting up WordPress websites as well.
This means I could create a complete identity for the store, set it up and run a WooCommerce store on a dedicated host without anybody’s help.
My investment was only time, not money. Hiring someone to do it for you properly would cost at least a few thousand dollars, which is a challenge for any small business.
But the real issue isn’t even building the store, but driving visitors to it. Having the best shop in the world isn’t going to help you if nobody visits it, and advertising typically costs a lot of money.
For me, it wasn’t a major issue as I could leverage my relative popularity in the local blogosphere and promote my website to Singaporean readers, which also costs me nothing.
Driving traffic through ads however, can end up being even more expensive than designing the site. Quite frankly, my attempts at using Google or Facebook to increase my reach were expensive and ultimately, unsuccessful.
If you are considering building your own store, you need to first be sure that you have the means to attract people to it.
The solution to this issue is precisely the source of allure of all e-commerce platforms pioneered by Amazon — seemingly “free” traffic of millions of people browsing for products and finding yours in the midst of hundreds of competitors.
Given how many individuals visit these enormous online stores every month, there’s a decent chance many of them are going to come across your offer and make a purchase.
With little to no upfront costs, signing up for Lazada or Shopee (or even Carousell) looks like a no-brainer, but is it enough to run a business?
It Feels a Bit Like Early 2000s
The first thing that struck me when I first signed up on the two reigning giants of e-commerce — Shopee and Lazada — is how remarkably unsophisticated and buggy they often are.
This is a particularly strong indictment against the child of Rocket Internet, which has been around for almost 10 years now and yet caused me many problems — from being unable to enter my bank account number, broken FAQs, to random error messages in order management and advertising dashboards.
The above is definitely not the message you want to see when you have a few thousand products waiting in a warehouse that you can’t send a courier to because for Lazada, the postal code simply does not exist.
Fortunately, support was responsive and the address was added after a week. As a workaround, I used the address of a nearby building to direct delivery drivers to my fulfilment centre next door.
Shopee is a bit better on that front — it feels better put together, although it still has its quirks.
You have to be careful, for instance, what username you register with as it becomes the name appearing next to your store’s profile icon and you can’t change it later. Therefore, it’s best to keep the name of your company in the username, or you may confuse buyers.
My store actually didn’t bear its own name, but my username. How is this possible in 2020? Especially in companies that millions of people consider to be at the cutting edge of innovation, and yet are still dealing with pretty basic bugs.
Both companies also offer a similar array of marketing tools — on-site advertising, deals/vouchers, participation in regular promotional campaigns et cetera.
It’s also worthy to note that Lazada only launched keyword-targeted ads in May 2020 — and you couldn’t pay for it from your pocket. Instead, you had to use whatever credit from sales you have accumulated in your account.
Shopee, while functioning better, has sadly failed to generate enough interest and sales, so I quit spending money there quite quickly.
Technologically, both companies are still reeling from the pace at which they grow, which clearly prevents them from polishing their services and makes them either clunky or inefficient to use.
So if you’re a customer, do bear in mind that your unanswered chat or unfulfilled order may equally be a consequence of a lazy or dishonest merchant as it can be a bug in the system or a missing notification that the staff at the store simply didn’t see (or even receive) because of an unforeseen error. It happens.
Show Me The Money
Let’s move on from the technical stuff onto what everybody wants to know – can you make money there?
Crucially for this comparison, I have not promoted my stores on these platforms anywhere else (ie. all the customers I received came from them, be it organically or through some of the advertising I used there).
It means that whatever sales I did generate came from within the platforms and so, it allows me to compare the numbers with my independent store which was operating in parallel.
Remarkably, for all its bugs and errors, Lazada outperformed Shopee by miles (or rather, thousands of dollars).
Of course, your experience may be quite different.
Nevertheless, after uploading my products and getting everything approved, I started getting organic orders from Lazada on the next day — and I didn’t promote my store at all at the time.
For Shopee, I had to wait for a week for my first order. However, I only discovered it two or three weeks later because I was never notified about it. I have no idea what went wrong, but I received neither app or email notifications about incoming orders from Shopee. Not that it mattered to me at the time, as I was busy on Lazada and, chiefly, my own store.
Lazada (perhaps due to slightly lower competition?) kept delivering consistently over several months, with visible boosts enjoyed during their various promotional campaigns.
I could say that my store there was functioning on autopilot during that period, with minimal input of preparing Ninja Van labels for my fulfilment centre. Since my product lineup was small, I used only discounts, keyword ads (when they became available) and participated in Lazada’s campaigns to generate sales, until the pandemic died down and the demand for my products with it.
However, despite collecting a few hundred orders there, I now have to address the elephant in the room.
Was it enough to sustain a business?
Despite the fact that Lazada provided me with revenues, my answer to this question is negative.
Relying on organic traffic or limited advertising within the platforms is nowhere near enough. I made about 5 per cent of my total revenues and perhaps, around 10 per cent of my profits for the year on Lazada, Shopee and Carousell combined.
If you’re hoping to rely on their discovery mechanisms or people luckily searching for a product that you offer, then it may turn out to be an expensive bet.
There’s no getting around the necessity of promoting your store to outside audiences. Perhaps, organic traffic works better if you have highly unique products or if you carry a lot more SKUs (I had less than 10) to increase your search coverage. But in my case, the few hundred orders I collected were just a welcome addition, not the main source of income.
Despite importing products which were in fairly good demand at the time (although admittedly, already dropping a bit by March 2020), I wouldn’t be able to sell my stock even if Shopee delivered as good a performance as Lazada did.
In other words – even if you decide to save yourself the expense of building your own website and rely on these platforms, you still have to very actively promote your products to buyers on your own dime (and time).
Should You Do It?
Every e-commerce business should take advantage of all tools at its disposal to generate more sales.
Offering your stock on Shopee, Lazada, Carousell and other platforms is a no-brainer as it really doesn’t cost you much. That said, none of these is a “fire and forget” solution. You still have to put in the effort — not only into attracting buyers, but in running the operations honestly and efficiently each day.
These platforms give you a stage, but they don’t help you all that much beyond the basics.
You might be forgiven for thinking they utilise some highly sophisticated solutions to help you drive sales, but you’d most likely be wrong.
First and foremost, you have to do your job: make sure that the photos are good, descriptions are complete, the right keywords are used, headlines or product names are enticing enough and so on — this follows the same rules that was applied 10 or 20 years ago. No magic bullet has been invented yet.
The only thing that these companies do for you is allowing you to connect with millions of users, which they themselves appear to be overwhelmed by — so much so that they seem to have a backlog of issues to fix and features to add, while trying to handle the enormous and growing traffic.
They are certainly a godsend for many businesses that have no online presence at all, and would otherwise not know how to get on the Internet.
In doing so however, they have created an overwhelmingly crowded market of thousands of merchants hoping for the same things. By lowering the barriers of entry, they have created new opportunities for many, but also ramped up the competition for all.
As a merchant, you would be well advised to make the most of what they offer but avoid over-reliance or you may end up at their mercy.
Featured Image Credit: Campaign Asia
Editor’s Note: Lazada is celebrating its 9th birthday sale with a virtual concert, games, flash deals and a lot of vouchers to be won. Find out more here.
