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How Lazada Can Bounce Back and Compete with Shopee and Temu: Strategies for Resilience in Philippine E-Commerce

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by RJ Auman
How Lazada Can Bounce Back and Compete with Shopee and Temu: Strategies for Resilience in Philippine E-Commerce

How Lazada Can Bounce Back and Compete with Shopee and Temu: Strategies for Resilience in the Philippine E-Commerce Market

The Philippine e-commerce scene has become a fiercely competitive battleground dominated by Shopee and Lazada. But in recent years, a new player—Temu—has emerged as a formidable threat, disrupting the market with its aggressive pricing backed by massive Chinese manufacturers.

As everyone knows, one of the major reasons Lazada lost ground to Shopee was its logistics shortcomings. Meanwhile, Shopee’s rise was fueled by its mobile-first approach, seller-friendly policies, and integrated logistics. But even Shopee now faces challenges that could affect its leadership. This article explores how Lazada can improve, how both Shopee and Lazada can build resilience against Temu’s growing presence, and why government intervention might be needed to level the playing field.

Lazada’s Biggest Hurdle: Fixing the Logistics Nightmare

One of Lazada’s most glaring weaknesses is its logistics system, particularly the first-mile process. Sellers are often required to drop off packages at designated centers, especially if they don’t reach a minimum order volume per day. This has caused many small and medium sellers to struggle with shipping their products efficiently.

Additionally, Lazada’s reliance on LEX (Lazada Express) for parcel pickup and delivery has been a double-edged sword. While LEX has a broad network, many sellers report problems such as lost packages, delayed shipments, and inconsistent service, especially with larger or expensive items. Sellers often resort to other couriers like J&T or Flash for bulky shipments, leading to delays of 1-2 days—an unacceptable lag in today’s fast-paced market.

How Lazada Can Improve Logistics to Regain Seller Trust:

  • Adopt Individual Pickup Service: Lazada needs to implement a system similar to Shopee’s where couriers pick up packages directly from sellers regardless of daily order volume. This lowers seller burden and improves efficiency.

  • Review and Improve LEX Operations: Strengthening the first-mile delivery network by enhancing training, accountability, and tracking can reduce lost parcels and delays.

  • Flexible Options for Large Items: Provide sellers with seamless integration with multiple couriers for bulky items without penalty or delay.

  • Seller Support & Incentives: Incentivize sellers with discounts or priority pickups to encourage loyalty and increase order volumes.

Fixing these logistics issues isn’t just a convenience—it's critical for Lazada’s survival and growth in a market where sellers have many alternatives.

Shopee’s Resilience: Revisit Fees and Seller Relations

Shopee’s mobile-first approach and integrated pickup logistics helped it overtake Lazada in 2018-2019. However, Shopee now faces its own hurdles:

  • Seller Fee Increase: Shopee’s commission rates have crept up to around 6%, which is noticeably higher than Lazada and TikTok Shop. This sudden increase hurts smaller sellers’ margins and may push some to explore alternatives.

  • ITA Compliance Issues: Mandatory compliance with Importer of Record and Tax Authority regulations has led to product bans and seller frustrations.

Shopee Needs to:

  • Reconsider Fee Structures: Lower or introduce tiered commission rates for small and medium sellers to maintain platform loyalty.

  • Enhance Seller Support: Provide clearer guidance and streamlined processes for ITA compliance to avoid product removals and seller bans.

  • Continue Innovating User Engagement: Maintain gamification, flash sales, and localized campaigns that keep buyers hooked.

Temu’s Disruption and the Need for Balanced Competition

Temu entered the Philippine market in 2023 with huge discounts (up to 50%) on products sourced directly from massive manufacturers and distributors in China. Temu’s model poses a big challenge:

  • Unfair Competition: Local sellers, whether on Lazada, Shopee, or even Temu itself, find it nearly impossible to compete with Temu’s prices because of its vast scale and low costs.

  • “Legit” Philippine Sellers as a Front: Temu plans to onboard Philippine sellers to comply with local regulations, but this appears largely superficial since Chinese manufacturers dominate inventory and pricing.

  • Economic Impact: This aggressive pricing threatens local businesses and mall retailers, creating a domino effect on the Philippine economy.

The Role of Government: Neutralizing Temu’s Market Impact

The government’s involvement may be the key to neutralizing Temu’s unfair advantage. A possible solution involves:

  • Tax Harmonization: Implement tax policies similar to Indonesia, Vietnam, and the USA that require stricter collection of import duties and VAT on cross-border e-commerce.

  • Enforcement of Fair Trade Practices: Ensure Temu and similar platforms comply with local consumer protection and fair trade laws.

  • Support for Local Sellers: Introduce incentives and subsidies to strengthen local e-commerce businesses.

Without such measures, the Philippine e-commerce landscape risks being overwhelmed by a few dominant foreign players, damaging local entrepreneurship and economic diversity.

Final Thoughts: A Competitive Future Requires Adaptation and Collaboration

  • Lazada must urgently fix its logistics and seller experience to win back market share.

  • Shopee should revisit its fee policies and ease regulatory compliance to sustain seller loyalty.

  • Both must innovate continuously to retain consumer interest amid Temu’s aggressive pricing.

  • Government intervention is crucial to balance competition and protect local economic interests.

The future of Philippine e-commerce depends on the ability of these platforms and regulators to work together to create a fair, efficient, and vibrant marketplace for all.

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