Alibaba is increasing its control of Lazada, its e-commerce marketplace in Southeast Asia it acquired control of in 2016, after it injected another $2 billion into the business and replaced its CEO with a long-standing Alibaba executive.
Alibaba’s first investment came in April 2016 when it bought 51 percent of Lazada for $1 billion, and it added another $1 billion last summer to increase its equity to around 83 percent. With today’s news, Alibaba has invested $4 billion to date which it said will “accelerate the growth plans” and help further tie the Lazada business into Alibaba’s core e-commerce service.
There’s already been plenty of evidence of increased ties between Alibaba and Lazada. The latter began offering products from Alibaba’s Taobao marketplace across Southeast Asia last year, and Alibaba has replaced Lazada’s tech team leadership with executives of its own. The latest shakeup is the appointment of Lucy Peng as Lazada’s new CEO to replace Max Bittner, who was installed by former owner Rocket Internet back in 2012.
Peng, who is one of Alibaba’s original 12 founders, has been Chairwoman of Lazada. Bittner will remain involved as “senior advisor to Alibaba Group” and apparently involved in future strategy, including further international expansion opportunities.
Lazada has progressed significantly since Alibaba’s first investment — which came at a time when the business had been close to running out of money — but the reality in Southeast Asia is that e-commerce in the region is a loss-making industry with plenty of competition.
Amazon entered the foray last year, but it remains only in Singapore, while Shopee is a two-year-old entrant bankrolled by Sea, formerly Garena, which raised over $1 billion in a U.S. IPO last year.
Alibaba hasn’t just limited its Southeast Asia approach to backing Lazada. The firm also invested $1.1 billion in Tokopedia which competes with Lazada in Indonesia, Southeast Asia’s largest economy and the world’s fourth most populous country.