Deals | Alibaba Adding $2 Billion to Lazada to Speed up Southeast Asia Expansion

Alibaba’s total investment in Lazada now stands at $4 billion.

Photo by Son Vu Le on Unsplash. Modified by KrAsia.

Chinese e-commerce conglomerate Alibaba is adding another USD 2 billion capital injection to Southeast Asian online shopping startup Lazada, bringing its total investment in the e-commerce upstart to a whopping 4 billion, Alibaba said Monday.

The move came as Hangzhou-based Alibaba looks to replicate its China success in Southeast Asia against the backdrop of a fast-growing market in the region.

Alibaba invested two $1 billion into Lazada in 2016 and then 2017 respectively. The 2017 investment boosted Alibaba’s stake in the retailer from 51% to 83%. The financing announced this Monday, not just signifies Alibaba is increasing its bet on the region, but also helps secure its control over Lazada.

According to a statement, Lucy Peng, one of the 18 co-founders of Alibaba, will replace Max Bittner, founder and CEO of Lazada, to take over the chief exec role. Bittner will step down as CEO and take on the role as an advisor to the company.

Lucy Peng. Image from Baidu Baike.

Peng is already Lazada’s chairwoman. She’s also the executive chairwoman of Ant Financial, the financial affiliate of Alibaba.

Peng said in a statement that “(Alibaba) is confident to double down on Southeast Asia, Lazada is well-positioned for the next phase of development and of Internet-enabled commerce in this region.”

Jack Ma, co-founder and chairman of Alibaba, said last year at the company’s global investors day held in Hangzhou that “Alibaba definitely wanted to grow into a multinational.” Alibaba hopes that at least 50% of its revenue will come from overseas markets in the next decade.

And Southeast Asia is an important component to Jack Ma’s ambition.

Home to some 650 million consumers with quick-pace mobile internet adoption, the region represents a huge potential for local startups, as well as well-established and mature businesses that look to tap into the region for further growth.

According to a Google/Temasek joint report, the region’s internet economy is expected to hit $200 billion by 2025, while e-commerce market will cross $88 billion by 2025, mostly driven by mobile-first marketplaces such as Lazada and Tokopedia.

Alibaba has invested USD 1 billion into Indonesia-based Tokopedia mid-year 2017.

Founded by German Rocket Internet in 2011, Lazada operates a mix of B2C and C2C models, selling goods to customers from its own fulfillment centers as well as letting 3rd party retailers sell through Lazada site. As of 2014, the Singapore-based ecommercer operates in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

JD, the archrival of Alibaba in China, is also eyeing the burgeoning Southeast Asian e-commerce markets. It recently announced an investment in Vietnamese Toki, and would be helping its investee in logistics and delivery, two of the strong suits for JD which operates a self-owned reliable and efficient delivery service in China.

Writer: Ben Jiang