Alibaba to grow Lazada amid intensifying SEA competition and scrutiny

e-commerce Lazada Alibaba
Image by Jirapong Manustrong | Bigstockphoto

Alibaba is set on growing its Southeast Asian e-commerce arm to rival Indonesia’s GoTo, Shopee, and MercadoLibre.

Alibaba plans to expand its e-commerce platform Lazada to reach a gross merchandise volume (GMV) of $100 billion in Southeast Asia.

In a recent presentation during the company’s Investor Day, Alibaba announced an elaborate plan for Lazada, which it acquired in 2016 and has since grown to 130 million users. Alibaba revealed its goal to serve more than 300 million consumers in the region in the future, substantially increasing its current customer base.

Toby Xu, incoming chief financial officer, Alibaba, said that this aggressive initiative emerged as Alibaba sought international growth opportunities against a backdrop of rising competition and a slowing Chinese economy.

Alibaba’s major rivals include the short-video e-commerce app Kuaishou and group buying platform Pinduoduo. Recently, it has also faced increasing scrutiny from Chinese regulators, who have been on a crackdown against Big Tech. Early this year, regulators levied a $2.8 billion fine on Alibaba after confirming it to have breached antitrust regulations.

“This has resulted in slower GMV and the revenue growth in the most recent quarter. But we also see opportunities to tap into new addressable markets to grow new users that will position us well for the long term,” he said.

Alibaba CEO Daniel Zhang agreed, saying that e-commerce penetration is only 11% in Southeast Asia, and yearly consumers on Lazada have reached just 34% of regional Internet users.

Apart from further expanding Lazada, Alibaba is also planning to leverage other growth engines after a tough year. Despite a focused plan to stimulate activity in Southeast Asia, Zhang said Alibaba would also continue to concentrate on China consumption, worldwide expansion and tech for future success.

“We believe we are in the best of times, in the digital era today, to capture opportunities of the future with the digital and technology capabilities that we have built over the years,” Zhang said.

By the year ending September 2021, Lazada had reached only $21 billion in GMV.

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