Total Quality Management in E-commerce Retailing: A Case Study of Lazada Group

This report discusses the approach of total quality management in the context of ecommerce retail marketing. The report represents a brief analysis of the TQM approach adopted by Lazada Group’s online retail market.

Running head: PROJECT MANAGING QUALITY
Managing project quality
October 18
2018
Total Quality
Management

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Abstract
Emerging technologies are taking the global business over the web world. Businesses are
operating in the e-commerce market to take their business at a global platform. Organizations
operating at such global platforms need to improve their quality of products as well as their
services. To improve their quality, total quality management has been identified as the most
suitable and efficient tool. Continuous improvement strategy applied through TQM is the best
alternative to take a competitive advantage in such emerging market environment. The below-
presented report discusses the approach of total quality management in the context of e-
commerce retail marketing. This report represents a brief analysis of the TQM approach adopted
by Lazada Group’s online retail market.

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Table of Contents
Introduction......................................................................................................................................3
Organization background.................................................................................................................3
Total quality management...............................................................................................................4
Literature review of TQM...............................................................................................................6
Limitations and shortcomings of TQM in E-commerce retailing...................................................7
Risks and challenges........................................................................................................................9
Analysis.........................................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................13

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Introduction
In the last few decades, the world business environment has gone under tremendous change. In
the changing business environment product quality enhancement and continuous improvement
have become essential tools used to get a competitive advantage (Chen, Choi, & Xia, 2017). In
order to manage the quality and continuous improvement organizations use different strategies.
Total quality management is one among these theories providing a competitive advantage to the
organization to make their business more sustainable in the changing market. Along with these
tools, organizations use continuous improvement tool to manage the quality enhancement
process for a sustainable market growth (Ghazzawi, Alharbi, & Aziz, 2016). Continuous
improvement tool is the strategic tool used to produce continuous improvement in the product
quality to maintain the progressive quality management for the organization. This report
discusses the total quality management tool along with continuous improvement strategy used to
manage the product quality and make a business more sustainable (Ponte, Carvajal-Trujillo, &
Escobar-Rodríguez, 2015). In order to understand the theory in a better way repost includes the
total quality management strategy used by Lazada Singapore, an online retail business. Lazada
uses this management tool to enhance its product quality in past years showing a continuous
business growth in the competitive online market of Singapore.
Organization background
In south-east Asia, Lazada is the No. 1 online marketing business. Lazada, the e-commerce
business, founded in 2012 by Rocket internet and owned by Alibaba Group. As of 2014, the
company is operating in Singapore, Malaysia, Philippines, Vietnam, Thailand, and Indonesia.

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The company has raised a total amount of around 647 million US$ from many investment
rounds. Major investors of the company are Tesco, Temasek Holdings, Investment AB
Kinnnevik, JP Morgan Chase, and Rocket Internet. In 2012, the company launched its site to sell
inventory to its customers directly from its own warehouses (LAZADA, 2017). Next year in
2013, the company added its marketplace model allowing third-party retailers to market their
products through the Lazada’a official e-commerce site. By the end of 2014, its sale has
accounted for a marketplace of 65%. Company’s continuously fast-growing business model
attracted Alibaba group. In 2016, Alibaba brought the controlling stakes of the company to
support its own market expansion plan in Southeast Asia.
Lazada, with 300 million stake keeping units available, offers the widest range of products in the
online market industry. Starting from beauty and care to household goods. In December 2017,
the company became the first ever authorized online seller of Apple products in Southeast Asia.
Delivering an excellent customer experience has been the main focus of the company. Along
with this motive of serving excellent customer experience, it offers a hassle-free return through
company’s own supply chain management comprising of approximately 100 logistic partners.
This helps the company in serving a comprehensive customer care services. Majority of
company stocks are owned by Alibaba Group Holding Limited (NYSE: BABA).
Total quality management
In order to improve the quality management of any industry including service, manufacturing,
and SME, total quality management, six sigma, benchmarking, and continuous improvement are
identified as best strategies. Achieving success also has become prerequisite in the competitive
global market. In order to uphold the concept as well as the practice of an organization to engage

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it in specific market segments to enhance the customer attraction Total Quality Management
plays an important role. In the literature TQM identified as an integrated approach, aimed to
improve an overall quality and services of the organization, comprising of principles as well as
practices (Obeidat, Hashem, Alansari, Tarhini, & Al-Salti, 2016). Both the strategies of total
quality management and continuous improvement act as a strengthening tool to take a
competitive advantage in the global market. TQM mainly focuses on improving the quality of
the product or service measured by customer satisfaction. Therefore, customer satisfaction is the
first priority of a total quality management tool. Whereas, tools like six-sigma and benchmarking
are used to achieve these objectives of TQM (Billewar, & Babu, 2012). This strategy of using
six-sigma and benchmarking tools in total quality management practice lead the organization to
some periodic changes in the pre-existing management strategies.
Employees from top to bottom are involved in this approach, and the capabilities of the
organization are extended to make its customers satisfied with the products and services that the
organization is providing. In order to improve the previously existing services, TQM helps in
reducing the process variance (Ghavamipoor, Hashemi Golpayegani, & Shahpasand, 2017).
At the other end, six-sigma and benchmarking are used to make an effective strategy to
implement the TQM process in an organization. Six-sigma approach is used to identify all the
issues related to services, products, team management, staff, institutions and other competitive
organization which need to be improved through TQM. In addition to this, benchmarking used to
improve an overall performance as well as the competence of the organization in the market.
This technique, in recent times, has extended its applicability from larger organizations to SMEs.
This approach can be described with the help of below-given fishbone diagram showing every
action of the implementation of the approach.

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Fishbone diagram of TQM
(Source from: https://www.google.co.in/search?
q=fishbone+diagram+of+lazada&hl=en&source=lnms&tbm=isch&sa=X&ved=0ahUKEwitmeq
V24_eAhXUe30KHQaQAE4Q_AUIDigB&biw=1366&bih=608#imgrc=KJBQEN4zKrKNAM:
)
Literature review of TQM
Literature of TQM states that six-sigma and benchmarking are the techniques used to improve
product and service quality, by organizations since 1920. At this time, this was the very first
hypothesis developed to improve the quality of products as well as services. At that time, this
approach was known as total quality control (Govindan, Rajendran, Sarkis, & Murugesan 2015).
Later on, in 1940, Americans made some changes in the system of total quality control which

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can be observed in the Japanese literature over management system. There are several primary
segments introduced to describe the quality control of that time. Some of these primary segments
introduced that time is inspection, management hypothesis, control, add up to the quantity and
quality administration, and product quality. Scholars sought to shed some focus on the
importance of Japanese management style and TQM in institutions of higher education (Laureti,
Piccarozzi, & Aquilani, 2018). Other studies state the term total quality management as a
divergence of cultures. In a wider context, TQM is described as a framework to direct the
business in the direction of morality (Cui, & Pan, 2015). Efforts of those directly involved, either
within the organization or from outside of the organization, are considered and rewarded in the
practice of total quality management.
Limitations and shortcomings of TQM in E-commerce retailing
E-commerce businesses in the emerging world are integrating the practice of total quality
management in their business growth strategies. Although TQM is showing significant results in
every industry at the same time it has its own limitation in e-commerce businesses varying from
industry to industry (Hahn, Sparks, Wilkins, & Jin, 2017). In order to achieve their desired
objectives, many organizations have implemented total quality management but unfortunately,
they did not get the expected results. Such in evidence support the limitations of TQM in e-
commerce businesses (Akter, & Wamba, 2016). In terms of implementation and effectiveness,
Lazada operating in E-commerce business of retail marketing also has its limitations. In e-
commerce business, quality management is directly related to the services provided by the IT
system of the business. In such environment surrounded by the information technology, TQM

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has several limitations like in terms of web designing, technical infrastructure of the company,
security, content provided, and supplemental services (Yu, Wang, Zhong, & Huang, 2017).
In the recent market environment e-commerce business measure their quality management
system with the help of the number of customers joining or withdrawing from the business
portal. Withdrawal of customers from a particular website might be due to the complex design of
web page or a rapid change in the technology used for business. Therefore, in order to measure
the quality of business services, customers’ feedback plays an important role (Subramanian,
Gunasekaran, Yu, Cheng, & Ning, 2014). Organizations operating in the e-commerce market
have their own challenges or limitations to implement TQM. Some of these limitations are in the
form of a business environment, security of business, privacy, and service quality at the customer
end. Organizations operating in e-commerce business have to work on overcoming all these
challenges to make their business more sustainable in the competitive market (Wang, Wang, &
Liu, 2016). Among all these challenges, business security has been the most challenging task for
business in the e-commerce sector as cyber attackers are exploring the weaknesses of the
business. With these cyber-attacks, organizations may lose their control over their own business.
Therefore, organizations have to make effective policies for their business security and follow
them strictly (Nasim, Iqbal, & Khan, 2014).
Being a part of the e-commerce market, Lazada has the same challenges for its business.
Although, the business model designed for Lazada is quite different from other business, there
are several challenges common to all business models operating in the e-commerce market.
These common challenges arise due to certain business characteristics like competition, customer
expectations, and service quality.

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Along with these certain limitations of the e-commerce market, there are various challenges in
terms of logistics supply of e-commerce businesses. Logistic supplies of the e-commerce
business are responsible for the quality services providing the business to its customers and
providing best customer services are most challenging in the emerging global competitive
market. In the e-commerce market, businesses have to merge its adaptive business strategies to
make changes as per new technical challenges introduced in the technical world. These mergers
are on a periodic basis to implement the adaption of new technical changes. These changes are
essential to improve their business quality in continuously advancing technical world.
Risks and challenges
Along with the several limitations or challenges, e-commerce businesses are associated with
various issues or risks. E-commerce businesses like Lazada face these risks at a higher level
(Aung, & Chang, 2014). While implementing the total quality management strategy in such big
businesses, there are several risks associated with them and some of them are discussed below:
Asymmetry of information: Asymmetry of information is defined in terms of providing fake
information while delivering the services. This is doing fraud in delivering the promised quality
or sometimes delivering the ordered product. To avoid such practices TQM sub-characteristics
the accuracy or any other issues that may cause such risk in the whole business system.
Issue of payment: Sometimes, online marketing companies demand advance payment as COD
is not available for all products or all the time. In such a scenario, TQM helps the business to
make deliveries flexible as proposed in Atkinson’s “Flexibility firm” model. Such issues can be
resolved with the help of this flexibility firm model.

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Privacy: Businesses operating in the e-commerce market collect their customers’ transactional
information while making an online transaction. Safe storage of such confidential information
may cause a risk threat for the organization. Privacy risk is associated with the security as well
related to the customer details. In such issues, cyber-attackers may access customer details
illegally and can make fraud payments. These risks are directly connected with the organization
(Lewis, Tzilivakis, Warner, & Green, 2016).
Delivery time: In online retail market customer expect their products to be delivered at the given
time. Moreover, customers would appreciate the delivery scheduled as per their expectations
instead of retailer’s delivery plan. Supply and logistic failure may cause a delay in expected
delivery that may cause a serious impact on the TQM implemented in the business model.
Taxation: In global market organizations are doing business in different countries still their
respective tax collection authorities are monitoring their online transactions. Therefore, creating
a simpler mechanism, for taxation purpose, may cause risks related to the violation of
standardized policies and norms set by different governments. Lazada is operating in different
countries of Southeast Asia which may cause such risk for the organization.
Analysis
Lazada Group operating in Southeast Asia’s e-commerce market implemented the total quality
management strategy to make its business sustainable in the growing market. Now Lazada is
owned by Alibaba group that enhanced the business growth with high speed. Customers can buy
online products in an easy way. In order to make a purchase offer, customers can visit the online
website of the company or can order from their application. A monitoring management of the
company monitors all the orders placed and delivered to measure the quality of services. To

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attract more and more customers company ensures the privacy of confidential information of
customers. The company has its whole market at the online platform and makes business through
the e-commerce platform only. It is the result of companies total quality management strategy
that giant business group like Alibaba made an offer to Lazada and own it to expand its business
in the Southeast region of Asia (LAZADA, 2018). Along with this achievement, the company
took a competitive advantage as well with the help of its TQM strategy only.
To ensure the product quality, the company sells goods that passed a quality control check. In
order to monitor these quality controls company ensures the inbounding checks, inbounding
quality check, proper storage, product categorization, and ensures the packaging standards of the
company. Inventory management of the company ensures the 6s standards followed by the retail
stores, their daily stock updates and implementation of the cyclic count to match their actual
stock with the online stock updated (Mateos-Ronco, & Hernández Mezquida, 2018). The
company also ensures the replenishment by standardizing the stock requirements. Along with
these inbound management implementations company follow some outbound management
system to ensure the complete satisfaction of its customers. In order to satisfy customers,
company follows various outbound standards like providing the charge of the order process to its
customers, providing an availability of picking the packaging box to avoid mistakes.
Based on these findings it is very clear that the company has the potential of implementing
changes to its existing quality management system and can take advantages in the future as well.
This makes it able to adopt new techniques and systems to make its quality management more
efficient. To improve its management Lazada should utilize the best plans of Alibaba Group to
expand its business overseas. Adopting Alibaba Group's strategy will make it easier for the
company to plan a more effective as well as efficient plan for the expansion. Also, the company

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should provide an independent platform to private enterprises to sell their product. This will
attract more and more sellers and will increase the size of the business. This will showcase the
success of the business and provide a competitive advantage as well.
Conclusion
The above report presented on the implementation of total quality management concludes that
for retail business in the e-commerce market, TQM is the most suitable and effective approach to
get a competitive advantage. This approach makes the business more adaptive for new
technologies in the continuously changing environment. Literature of TQM shows that the
business development in the last decades has seen through the implementation of this approach
only. The report shows that the implementation of TQM has its own limitations or challenges
associated with the e-commerce market. The global world demandsfor the mitigation of these
risks to make any business operating in the e-commerce market to make it more sustainable in
the growing competitive business environment. For this purpose of mitigating the challenges
organizations use different business strategies. It concludes that successful implementation of
TQM makes a business more sustainable and enables it to compete in the competitive market as
well.

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References
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