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Alibaba bets big on Southeast Asia

News, 29 June 2017
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HANGZHOU/SINGAPORE: Alibaba, the Chinese ecommerce giant, has increased its stake in Southeast Asian retail platform Lazada from 51% to approximately 83%, with a payment of close to $1 billion.

Back in April 2016, Alibaba invested an initial $1 bullion; just over a year later, the company’s total investment in Lazada now amounts to over $2 billion, according to a statement.

The move signals Alibaba’s intention to expand its global footprint, as Lazada has provided incredible access to a part of the world that only conducts 3% of its sales online, therefore offering incredible opportunities for growth.

"The e-commerce markets in the region are still relatively untapped," said Daniel Zhang, CEO of Alibaba Group, noting the "very positive upward trajectory ahead of us.

Last year, a report co-authored by Google, forecast that e-commerce spending in Southeast Asia will reach $88bn by 2025.

"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," he added.

The increased valuation "reflects the great performance and traction that Lazada has seen," Lazada CEO Max Bittner told TechCrunch. "It also reflects that Alibaba continues to be extremely positive about this region, doubling down on Southeast Asia and seeing the potential."

While Lazada is primarily an ecommerce site, its offering has grown in recent months. In April, the company announced a partnership with ride-hailing service Uber and streaming platform Netflix in Singapore. The offer brought these services together into one subscription package.

More broadly, Alibaba's offering is expanding beyond commerce, and beyond China. On Tuesday, analysts pointed out to investors the move toward "data monetization," CNBC reported.

Analyst Alex Yao told clients that "Such expansion not only allows Alibaba to tap into non-transaction-based corporate budget (e.g. market research, brand awareness, customer service), but also supports our investment thesis based on sustainable revenue/earnings growth."

Last week, during the Cannes Lions festival, Alibaba launched its Uni Marketing product, which "differentiates itself from other marketing tools by using the entire Alibaba ecosystem to inform businesses about their consumers, allowing them to target more effectively," CMO Chris Tung told delegates.

Data sourced from Alibaba, Google, TechCrunch; additional content by WARC staf

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