Alibaba injects additional $912.5 million into Lazada to fuel its expansion
Alibaba has invested $912.5 million in its Southeast Asian e-commerce unit Lazada, bringing the year’s capital inflow to $1.3 billion, according to recent filings with Singapore’s financial regulator.
In 2016, the Chinese e-commerce giant spent $1 billion to acquire a 51% stake in Lazada and another $1 billion to increase its ownership in the company to 83%. By 2030, Alibaba plans to double Lazada’s customer base to 300 million and raise its GMV to $100 billion.
Lazada is one of the major e-commerce players in Southeast Asia, but has been falling behind local upstarts like Sea Group’s Shopee and Indonesia’s Tokopedia.
Alibaba’s increasing investment in Lazada stands in stark contrast to Shopee, which has shifted its focus from expansion to improving efficiency and profitability amid rising macroeconomic uncertainties.
After years of aggressive international push from Brazil to Poland to drive growth outside Southeast Asia, Shopee has been retreating since the first quarter of this year. It pulled out of the French and Indian markets in March, Spain in June, and cut personnel in its food delivery team the same month.
While its main rival is scaling back, Lazada is gearing up to expand its footprint, preparing to make its first foray into Europe.
“Europe is a very big market obviously and for most of the European brands, their largest retail partner is Alibaba Group because of their sales in China and in other markets,” Lazada CEO James Dong said in a recent interview with Bloomberg. “We go where the brands want us to go.”
After being acquired by Alibaba, Lazada has experienced frequent management changes due to its subpar performance. Dong, who previously served as CEO of Lazada Thailand and Vietnam, took the reins of Lazada in June, making him the company’s fifth CEO in five years.
Driving growth overseas is critical for Alibaba. In China, the ongoing COVID-19 lockdown and slowing consumer spending have clouded the giant’s development, as seen in the company’s financial data. For the first time in its history, Alibaba posted flat year-over-year revenue growth to 205.55 billion yuan ($31 billion) in the quarter ended June.
To fuel its growth in Indonesia, Southeast Asia’s largest and most important market, Lazada plans to add hundreds of employees and increase its office space in the capital, Jakarta, in the coming month
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