Alibaba to double investment in Lazada Group to $4bn

19 March 2018 (Last Updated March 20th, 2018 09:32)

Alibaba Group plans to double its investment in Singapore-based online firm Lazada Group to $4bn.

Alibaba Group plans to double its investment in Singapore-based online firm Lazada Group to $4bn.

The Chinese online giant bought a stake in Lazada in 2016 for $1bn and a year later increased its interest to 83% with an additional investment of $1bn.

The fresh injection of $2bn capital will improve Alibaba’s stake in Lazada to an undisclosed size.

Alibaba’s Spokesperson said: “The investment underscores Alibaba’s confidence in the future success of Lazada’s business and the growth prospect of the Southeast Asian market, a region that is a key part of Alibaba’s global growth strategy,”

Alibaba has also appointed its top executive to lead the business to compete with rivals such as Amazon.

Lucy Peng, one of Alibaba’s 18 co-founders and a chairman of Ant Financial, will assume the role of Lazada’s CEO.

Max Bittner, who founded Lazada and has been serving as its CEO since 2012, will become a senior advisor to Alibaba Group.

Bittner will help in the transition and oversee the overseas strategies for growth.

“Lazada is well-positioned for the next phase of development of Internet-enabled commerce in this region, and we are excited about the incredible opportunities for supercharged growth.”

Peng said: “With a young population, high mobile penetration and just 3% of the region’s retail sales currently conducted online, we feel very confident to double down on Southeast Asia.

“Lazada is well-positioned for the next phase of development of Internet-enabled commerce in this region, and we are excited about the incredible opportunities for supercharged growth.”

Alibaba’s latest deal signals that the company, which has significant presence in China, would enter Southeast Asia by buying an existing firm rather than starting fresh.

The latest investment comes as competition in Southeast Asia’s e-commerce market increases.

E-commerce represents only 4% of the total retail purchases in South East Asia, much lower than China and South Korea, but there is lot of growth potential.

Alibaba’s biggest rival, JD, competes with Lazada in Southeast Asian markets through its stand-alone unit in Indonesia, and a joint venture in Thailand.

Another Alibaba’s rival, Singapore-based firm Sea has made an ‘aggressive push’ for its e-commerce site Shoppee.

So far, Amazon’s growth has been conservative in Southeast Asia, and only recently launched Amazon Prime in Singapore.