Chinese e-commerce giant Alibaba Group Holdings Ltd. recently announced raising its stake in e-commerce firm Lazada. The increase was said to be at 83% from 51%. An additional of $1 billion will be invested by Alibaba to the Lazada Group considering the latter’s Southeast Asian expansion.
Alibaba’s Double Investment
The recent move from the e-commerce giant marks a double investment in the firm after the former made the same deal with the same amount sometime in April a year ago.
Lazada CEO Max Bittner told reporters, “That is quite a significant uptick and overall that reflects the great performance and traction that Lazada has seen. It also reflects that Alibaba continues to be extremely positive about this region, doubling down on Southeast Asia and seeing the potential.
He further added that explosive growth has happened after the first investment of Alibaba to their company.
At present, Lazada is serving only six countries in Southeast Asia by means of an online commerce platform. Last year, it had expanded upon acquiring Redmart and made its way into e-groceries. Before this year ends, the e-commerce firm is strategizing to enter the Southeast Asian markets.
A 2016 report co-authored by Google forecast revealed that as the internet became widely accessible including the upward sales of smartphones e-commerce in Southeast Asia can grow to as much as $88 billion annually by year 2025. Back in 2015, the recorded sales was $5.5 billion.
“The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us. We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities,” said Daniel Zhang (Alibaba Group CEO).
Compete with Rivals
Lazada was founded in 2012, and according to Alibaba’s annual report it has approximately 23 million annual active buyers as of March 31, 2017.
CEO Max Bittner admits that the company is “suitably” funded to be able to participate even more in the market competition and be able to fight its rivals like Shopee.
“Obviously this allows Alibaba to expand its global footprint, giving them unrivalled access to users. E-commerce penetration in Southeast Asia is only roughly 3 percent, so the partnership is a great step change,” Bittner stated.
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