Alibaba doubles down on e-commerce in Southeast Asia

Internet Retailing

29th Jun 2017

Alibaba has announced it will invest approximately US$1 billion to increase its stake in Lazada Group, the leading e-commerce platform in Southeast Asia, from 51 per cent to approximately 83 per cent.

This brings Alibaba’s total investment in Lazada to over US$2 billion, demonstrating Alibaba’s confidence in the growth potential of the Southeast Asian markets, the Chinese e-commerce giant said in a statement.

Lazada has played a crucial role in expanding Alibaba’s footprint, giving it access to consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

With only three per cent of the region’s total retail sales conducted online, Southeast Asia is expected to offer tremendous growth potential.

“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, Alibaba Group’s CEO.

“As a market leader, Lazada has demonstrated its ability to execute and further lead the region in products and services with the best consumer experience in Southeast Asia while growing a strong ecosystem that supports small businesses going online.”

During the past 12 months, both Lazada and Alibaba worked on a number of initiatives to advance e-commerce in Southeast Asia, endeavoring to lower barriers and facilitate borderless commerce.

These include the establishment of an e-fulfillment center in Malaysia which forms part of Alibaba’s Electronic World Trading Platform (eWTP) strategy, advancing “Thailand 4.0”, and launching Taobao Collection in Singapore and Malaysia, allowing local customers to shop for high quality products from China.

“I couldn’t be more excited to deepen our relationship with Alibaba. With their support, we will continue to empower brands and sellers to offer a wide selection of unique assortment to consumers across Southeast Asia while delivering an exceptional customer experience backed by our best-in-class logistics network,” said Maximilian Bittner, CEO of Lazada Group.

Since Alibaba first acquired a majority stake in Lazada in 2016, its value has increased significantly. It now has an implied valuation of US$3.15 billion, up from US$1.5 billion a year ago.

The platform will continue to operate under the same brand following this investment.

Morgan Stanley Asia Limited acted as exclusive financial adviser for the transaction.