Alibaba is increasing its stake in ecommerce firm Lazada from 51% to 83% in a deal that is reportedly to be worth nearly $1 billion. The deal sees Alibaba buy shares from existing backers, including Rocket Internet — Singaporean sovereign fund Temasek and the Lazada management team are the only investors that kept hold of their stock.
This investment by Alibaba shows the increased confidence in the growing Southeast Asia ecommerce market, as millions of first generation internet users embrace the delights and convenience of online shopping. The region’s internet economy is expected to grow by $200 billion by 2025, primarily driven the continual growth in ecommerce.
“The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us. We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities,” said Daniel Zhang, CEO of Alibaba Group, in a prepared statement.
Lazada’s chief marketplace officer and co-founder Aimone Ripa di Meana said that the investment from Alibaba and its market knowledge will position them in an advantageous position against the competition.
“We feel very confident about what we’ve built so far — we have a very unique approach to business,” Meana said. “Having built teams that have been with us for a long time that function in a very organic way that know the markets, know the complexities that are in each market, which can’t easily be replicated. I don’t think knowing how to do (business in) Singapore is in any way relevant to how you build your business in the Philippines or Indonesia.”
One of the key differentiators for Lazada against their competitors are their logistics operations, which will further be strengthened with the addition of Alibaba’s technical expertise, technology and processes. Currently, the company has over 100 logistics partners in the region with operations being split between last-mile delivery and a coordinating control tower that works out the most effective means of delivering parcels from merchants to their customers.
“For a consumer or merchant, this is completely seamless. They don’t need to make decisions or choices — all that is done by us, and in turn what that means is, a number of players that were maybe too small to catch the trend, that weren’t able to enter e-commerce, are now being able to leverage our infrastructure and be part of this phenomenal growth that we’re seeing in e-commerce,” said Meana.