Alibaba has invested US$2 billion in Lazada and increased its already hefty 83 per cent ownership stake in the company, the Chinese e-commerce giant announced today.
The deal brings the total amount Alibaba has invested in Lazada to US$4 billion.
Also announced was the replacement of Founder and CEO Max Bittner (pictured) by Lucy Peng — an Alibaba executive who was already the Lazada Chairwoman and acts as the Executive Chairman of Ant Financial. She is one of the original 18 Founding members of Alibaba and was notable as the firm’s Chief People Officer.
Bittner Founded Lazada in 2012 as a Rocket Internet company and was the man at the helm while Lazada built this company-defining relationship with Alibaba.
According to Alibaba, Bittner will remain a Senior Advisor and “assist in the transition and future international growth strategy.”
“Alibaba’s new commitment of capital and resources is good for Lazada and good for the Southeast Asia e-commerce market,” said Bittner in an official statement.
Alibaba hopes to position Lazada as the top brand for a burgeoning e-commerce industry in Southeast Asia. Despite the fact that the industry is fairly mature by regional startup standards, and holds a strong mind-share in Southeast Asia, only 3 per cent of total retail transactions are performed online.
For comparison, the United States is at about 9 per cent, South Korea is 13 per cent and Alibaba’s home country of China is approaching 24 per cent, according to Statista.
The assumption is that as Southeast Asia’s 650 million people continue to get online, the only direction e-commerce can go it up. The hope from Alibaba is that via their heavy investment, they can transform Lazada into the market leader once the region’s market catches up to it’s Asian and Western counterparts.
That is far from a given as the company faces stiff competition from Qoo10, Tokopedia (which also received a US$1.1 billion investment from Alibaba), Shopee, Carousell and, people assume, Amazon will eventually become more aggressive in the region.
Plus, smaller-scale e-commerce shops like Pomelo, Reebonz and Love, Bonito are finding success.
“With a young population, high mobile penetration and just three percent of the region’s retail sales currently conducted online, we feel very confident to double down on Southeast Asia,” said Peng in a statement.
“Lazada is well-positioned for the next phase of development and of Internet-enabled commerce in this region.”
Lazada is headquartered in Singapore and has a presence in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. It claims to have 145,000 sellers on the platform and 3,000 brands.