A conversation with Zalora’s Chief Technology Officer
- Tech Wire Asia had the opportunity to interview Sumit Jain, the new chief technology officer of Zalora, who shared how Zalora adopts a data-first approach to understand the region’s complexities, personalize the customer experience, and meet orders with speed.
Lockdowns may be way behind us, but online shopping appetite among many remains voracious – a fact Zalora or any e-commerce site can agree on. For fashion and lifestyle online retailers like Zalora, the pandemic has accelerated the need for improved agility to adapt to the new retail landscape quickly.
As is the case with most retailers, the leading Asian e-commerce brand is also under pressure to innovate constantly, especially in the current economic climate where inflation is soaring, and there is an impending global recession. The last few years have proven that companies that best understand their customers’ needs and can quickly meet them will be rewarded with their loyalty.
Tech Wire Asia caught up with Sumit Jain, the newly appointed Chief Technology Officer at Zalora, who shared how the online retailer has prioritized improving the customer experience using a data-first approach. He shared how Zalora attempted to understand the region’s complexities, personalize the customer experience, and quickly meet orders.
For Jain, the new role has been a roller coaster ride filled with challenges and opportunities. Yet, he has the pleasure of working with a brilliant and motivated team, who have been increasingly, focusing on maximizing the company’s impact and innovation.
How does Zalora use artificial intelligence and machine learning to automate highly complex decisions?
Zalora is a data-first fashion company, and this belief lies at the heart of all our primary business and operational decisions. With this in mind, we launched our proprietary data-solutions service TRENDER in April 2021 at the height of the pandemic, to provide our brand partners with a greater understanding of their performance in a time of great uncertainty.
Through TRENDER, our partners can distill trends around aspects like geo-segmentation and consumer behavior, providing them with actionable insights that different stakeholders can act upon. Similarly, within Zalora, we also tap on technologies like real-time predictive segmentation to deliver personalized journeys to shoppers across our app, mobile web, desktop, and other platforms.
These powerful tools are all powered by deep AI and machine-learning capabilities, which allow us to sieve through and use an ever-growing amount of data, that we obtain off the back of close to 60 million monthly visits by 2.6 million active customers across our markets. Subsequently, we have also regularly evaluated opportunities to incorporate new AI and automation capabilities, as it remains a core theme for innovation at Zalora.
In 2019, Zalora partnered with software-as-a-service provider Freshworks to solve customer experience issues. How has the collaboration helped Zalora, especially during the pandemic when interest in e-commerce spiked?
Since joining Zalora’s collaboration with Freshworks in 2019, our support teams have significantly benefited from switching to their customer service platform. Once we found it challenging to gather data siloed across different systems and apps, we could approach customer service from a unified view.
This enabled us to speed up our average agent response time and enhance personalization for customers across our platform while remaining available to customers around the clock. Freshworks’ intuitive and user-friendly interface also meant that our support teams could easily pick up the new system, even working from home. This proved critical in early 2020, where, following the onset of the pandemic, most of the region was forced to stay home.
In addition, the platform’s suite of features meant that various tasks could be automated, freeing up much-needed resources to deal with the sustained growth in customer volume throughout the pandemic. The omnichannel nature of the system also ensured that our helpdesk remained seamlessly extended to customers, even as they continued to switch across channels and devices.
The results speak for themselves – since adopting the Freshworks system, we have noted a significant reduction in abandoned carts among customers and a rise in customer satisfaction scores by almost 5% every quarter. Customer loyalty and retention have benefited immensely, with 75% of new visitors becoming repeat shoppers after their first purchase on Zalora.
How is Zalora’s fulfillment center coping with customer demand?
To ensure that Zalora continues to deliver a best-in-class experience for our customers and brand partners, we have made significant investments in our platform services and infrastructure that have boosted our warehousing and fulfillment functions, allowing us to keep up with the burgeoning e-commerce market in Southeast Asia.
Over the years, we have built robust, futuristic, and distributed platforms with no single point of failure, affording us observability, reporting, and the ability to scale on demand.
By streamlining our processes to address the unique geographical challenges of the region – such as through the securing of Authorized Economic Operator status in Malaysia, thereby granting us access to express lanes at local customs and allowing for seamless cross-border deliveries – we have been able to scale up our delivery capabilities to handle the surges in demand during peak seasons like double-digit celebrations, 11.11 and 12.12.
Furthermore, our regional fulfillment center in Selangor, Malaysia, recently underwent a significant expansion of close to 50% and can now hold close to seven million items at any one time. This has allowed Zalora to strengthen our centralized stock and return management systems and boosted our delivery capabilities, allowing us to bring a broader range of global brands to more customers in Southeast Asia.
Beyond our in-house operations and logistics, we also have partnerships with global brands worldwide as part of their strategy in Southeast Asia. As many as 45% of the items in our warehouse belong to third-party brands, who tap on our best-in-class delivery and stock management solutions to boost their e-commerce capabilities and increase their brand’s presence in the region.
For many of them, Zalora represents a springboard into an untapped and diverse series of markets. When coupled with our longstanding experience and data-driven insights powered by years of consumer data, such collaboration provides them with greater peace of mind as they expand their operations to meet the fast-growing demand of Southeast Asian consumers.
Has there been any critical technological shifts in digital payment and consumer experience following the gradual travel resumption and retail recovery?
With more than 70 million consumers have made their first online purchases during the pandemic, digital payment options saw a sharp spike in adoption over the last few years as they looked to democratize financial freedom to millions of previously unbanked or underbanked consumers in the region.
We have seen this ourselves on the Zalora platform, with a 6.6% growth in digital payment transactions and a corresponding decline in cash transactions over the last two years. Consequently, the rising adoption of such technologies has also influenced consumer spending habits, especially as retail recovers from its trough during the pandemic.
With Buy Now, Pay Later (BNPL) payment models gaining in popularity, Zalora has seen an increase in customer basket sizes in terms of net merchandise value, with a strong 73.6% growth in 2021 and a subsequent 25.9% growth in 2022, as consumers were enabled in their purchases of big-ticket items.
Similarly, the pandemic has left an indelible change in customers’ expectations of their online shopping experiences. These demands have become even more pronounced with the resumption of travel and retail recovery. Boosted by an increased familiarity with online platforms owing to their time spent at home during the pandemic, customers have become increasingly discerning when deciding which brands to spend their money on. Poor experiences quickly result in seeking better alternatives.
In response, brands have turned towards technology that provides a seamless experience for customers and introduces novelty and immersion. From the rise of live streaming and social commerce to the development of augmented and virtual reality tools that afford consumers greater control over their shopping, we will likely see these trends continue to dominate the online strategy of brands and possibly even make their way into their offline presence as well.
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