Alibaba Group Holding Limited announced today that it had entered into an agreement to acquire a controlling stake in ecommerce company Lazada.
According to the company’s press release, the transaction is expected to help brands and distributors around the world that already do business on Alibaba’s platform, as well as local merchants, to access the Southeast Asian consumer market.
Founded in 2012, Lazada currently operates ecommerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. These six countries combined have a population of approximately 560 million and an estimated Internet user base of 200 million, according to Internet Live Stats. In the past four years, Lazada’s revenue from the six markets was $1.3 billion.
According to president of Alibaba, Michael Evans, Southeast Asia is one of the most promising regions for ecommerce globally.
“This investment supports our ecosystem expansion in Southeast Asia to better serve our customers,” he said.
Meanwhile, Max Bittner, CEO of Lazada Group, added that “Southeast Asia is an attractive mobile-driven consumer market that is highly fragmented and diverse with significant barriers to entry and a nascent modern retail sector that has large headroom for growth.”
“The transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products. Furthermore, leveraging Alibaba’s unique knowhow and technology will allow us to rapidly improve our services and provide an even more effortless shopping and selling experience,” he said.
In Vietnam, ecommerce is forecasted to grow at over 30 per cent per year from 2016 to 2020, according to the Vietnam E-Commerce Association (VECOM).
“Together with Alibaba, we will bring value to Vietnamese consumers by providing better choice, service, convenience and value,” said Lazada Vietnam’s CEO Alexandre Dardy.
In 2015, Lazada reported a four-fold increase in revenue in Vietnam. Dardy, in a recent interview with VIR, said Vietnam was one of the most promising markets among the six countries in Lazada’s network, with a high level of internet penetration and smartphone ownership. However, the challenges in doing ecommerce in Vietnam, compared to in other countries, are the underdeveloped payment methods, the smaller basket size due to the low trust between customers and sellers, and merchants’ lacking in professionalism.
Lazada Vietnam recently rolled out initiatives to enhance its shopping and selling experience including the option of faster delivery. Earlier this year, it opened a fulfilment centre in Hanoi to service northern Vietnam, complementing its recently-expanded facility in Ho Chi Minh City.