On Friday, Asia’s tech media — including e27 — cited a TechCrunch report that said Zalora was in acquisition talks with Indonesian retail giant MAP Group, following Zalora Philippines’ recent investment from Ayala Group.
The report indicated that the fashion e-commerce platform is retreating from the Indonesian market, as it has done with its Vietnam and Thailand operations.
Today, in a call with e27, Zalora Group CEO Parker Gundersen spoke up about the report.
“First of all, with respect to Indonesia, this is not a market that we are moving away from. So some of those reports that Zalora Philippines and Indonesia are leaving, that’s not the case. Indonesia represents one of the largest opportunities for e-commerce in Southeast Asia in years ahead, so you have a market that is rapidly emerging,” he said.
“So I want to make it very clear that the speculation that Zalora is closing down in Indonesia are simply not accurate,” he stressed.
Gundersen also elaborated that Zalora Indonesia is working with MAP Group today as a supplier; and the two companies are in close discussions about adding new brands to the site. But, he said, they are not engaged in any specific discussion about a direct investment into Zalora.
Has acquisition ever been part of the long-term plan for Zalora?
“Zalora’s focus right now is really about growing in our key markets. We did sell Thailand and Vietnam last year … [But] this is a very different situation in Indonesia and the Philippines where we are committing more to the Philippines, and I think Indonesia is the same way. We want to continue grow the business in the best way we see possible,” Gundersen replied.
“I will say that the idea of having a strategic partner in Indonesia, similar to what we have with Ayala, is something we are always be open to explore. Provided, of course, if it is the right partner at the right valuation. Indonesia is similar to the Phillippines in the business context where having a local partner would make sense,” he answered.
When asked about whether there has been any past approaches from MAP or other companies about a possible acquisition or investment talks, Gundersen declined to comment.
“I won’t comment on any past conversations or approaches that have been made … [But] there are no other discussions about deals in any of our other markets … There is no discussion about doing a direct investment in Indonesia,” he said.
Here to stay
Gundersen also clarified the role of Ayala Group’s recent investment in its Philippines’ operation.
“With respects to whether we are selling our assets in any of our market, it’s actually quite the opposite. The Ayala Group is actually making a strategic investment in our Philippines entity, and this is used to further accelerate our growth in the country. So the funds that are raised through this are staying in the Philippines, and used to grow the business,” he explained.
“This will give us a range of synergies through Ayala’s companies who have invested in us, that will give us far more reach to our customers in the market. So we are looking at those deals as partnership first with Ayala, and as well as fundraising for the Zalora Philippines entity second … So rather than selling off the asset, this is more like an affirmation to our commitment to the Philippines,” he stressed.
Will Asia Pacific continues to be a huge focus for Zalora, and its parent company Global Fashion Group (GFG), or will there be any shift to the Middle East and North African region?
Gundersen stressed that GFG has already have presence in different regions such as Middle East (with their brand Namshi), Russia and Eastern Europe (La Moda), Australia and New Zealand (The Iconic), and South America (Dafiti).
“We respect those markets and what they represent, and we let them operate in those territories. For Zalora, it is all about Asia,” he said.
The CEO further elaborated on how Zalora is focussing on “building strong business” in the countries it operates in, such as Singapore, Malaysia, Hong Kong, Taiwan, the Philippines, Indonesia, and Brunei Darussalam. Entering its fifth year anniversary in March, Zalora is set to open a new fulfilment centre in Kuala Lumpur.
Particularly in Indonesia, where infrastructural challenges such as logistics and data speed remain, Gundersen stated that the company is all about “strengthening its business fundamentals, unit economics, and improving brand portfolio.”
Zalora Indonesia has added new local and international brands into its platform and plans to introduce more this year.
“Given that Indonesia is still an emerging market, I think we are moving ahead at a very appropriate pace. It’s helping us to build a profitable model and a stronger base of customers in the market, and that’s what we are really focussing on,” Gundersen said.
“We feel we’ve got differentiated position in the market with a much higher focus on fashionability; we’re well ahead of other e-commerce players in terms of getting direct brand relationships with international and local brands,” he closed.