China's e-commerce giant Alibaba said it will invest US$1 billion in Singapore-based regional e-tailer Lazada, raising its stake from 51% to around 83%.
Alibaba first acquired its majority stake in Lazada in April 2016 and the new investment will bring the Chinese’s online retail giant’s total investment in Lazada to over US$2bn.
According to E-marketer.com, Alibaba is banking heavily on Southeast Asia as the engine that will spur continued e-commerce growth.
In a statement, Alibaba said its initial investment in Lazada had already brought “unrivalled access to consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam” – and “with only 3% of the region’s total retail sales conducted online, Southeast Asia is expected to offer tremendous growth potential.”
“The e-commerce markets in the (Southeast Asia) region are still relatively untapped, and we see a very positive trajectory ahead of us,” said Alibaba Group CEO Daniel Zhang Yong. “We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities.”
Southeast Asia becomes main battlefield of the e-commerce behemoths
E-marketer.com noted that Indonesia may well emerge as a particularly important market for Alibaba, given its large population and the growing number of smartphone users there. E-Marketer estimates that retail e-commerce sales in the country will total US$8.2 billion this year, an increase of 55.3% over 2016’s figure.
JD.com on way to catching up with rivals
According to a recent report by E-marketer.com, Amazon remains one of the global e-commerce players with the resources to battle Alibaba in Southeast Asia. But it pointed out that Alibaba’s main domestic rival, JD.com, is also envisioning a future that lies along a similar path through Southeast Asia.
Last month, JD.com announced its intent to expand into Thailand sometime this year. JD.com has seen success of late in China with its inventory-led model, a sharp contrast to Alibaba’s two main marketplaces: consumer-to-consumer (C2C) platform Taobao and business-to-consumer (B2C) service Tmall, said the report.
There have also been widely reported rumours that JD.com will soon release details of an investment of hundreds of millions of dollars in Indonesia-based e-commerce platform Tokopedia.
Nol van Fenema