Alibaba to invest extra US$2b in Lazada

BEIJING/SINGAPORE: Alibaba Group Holding Ltd said it will invest an extra US$2 billion (RM7.8 billion) in Southeast Asian e-commerce firm Lazada Group and tapped a top executive to run the business, as it takes on rivals such as tech titan Amazon in an aggressive expansion in the region.

One of the 18 founders of Alibaba, long-time executive Lucy Peng will take over as Lazada’s chief executive, replacing founder Max Bittner who will become a senior adviser to Alibaba.

Alibaba’s stake will increase to an undisclosed size following the latest investment, a spokesman told Reuters. It held an 83% stake prior to the investment, which now totals US$4 billion after a US$2 billion infusion over the past two years.

“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 said in a statement.

Backed by large cash piles and soaring stock prices, Alibaba’s new funding in loss-making Lazada underlines an ambitious global push to secure a bigger share of the fast-growing multi-billion dollar e-commerce market.

It follows a year of brisk expansion in Southeast Asia by the Chinese ecommerce giant and its payment affiliate Ant Financial, as it faces off against the world’s biggest online retailer Amazon.com Inc and fellow Chinese retailer JD.com Inc to tap new consumers in the region.

“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,” said Peng, who is also executive chair at Ant Financial.

Alibaba operates in more than 200 countries and has more than 500 million people using its shopping apps every month, allowing Lazada to tap more of the e-commerce giant’s resources.

Rival firms are already ploughing billions of dollars building extensive logistics infrastructure in the region.

Consultancy Frost & Sullivan forecast total gross merchandise value of Southeast Asia e-commerce to rise to US$65.5 billion in 2021 from US$20.5 billion last year.

Singapore state investor Temasek Holdings and Lazada management are the only other stakeholders in Lazada. Launched in 2012, Lazada operates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.