The Southeast Asia e-commerce wars are heating up.
Doubling its investment, Alibaba Group Holding Ltd. has injected another $2 billion into e-commerce firm Lazada Group SA, a popular online shopping destination in Southeast Asia. Alibaba co-founder Lucy Peng will take over as CEO of Lazada, while current CEO Max Bittner will exit his post to become a senior advisor to Alibaba.
“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,” the company said in a statement.
Launched in 2012, Lazada boasts more than 145,000 local and international sellers and 3,000 brands throughout Indonesia, Malaysia, Thailand, Vietnam and the Philippines. Alibaba’s latest venture would significantly up its majority stake in the business to an undisclosed amount from its prior 83 percent — a move that comes only a week after Amazon.com Inc. revealed intentions to partner with the Vietnam E-Commerce Association, the largest consortium of local online sellers in the country.
Despite Peng’s account that just about 3 percent of the region’s overall retail sales are conducted online, tech companies have continued to flex their muscles in Southeast Asia. Both Amazon and Alibaba have long competed for the biggest global market share, with the former commanding United States e-commerce, while the latter remains strong on its home turf.
The China-based conglomerate operates in more than 200 countries, recently investing $20 million in Rent the Runway and beginning operations in its first Indonesia-based data center through its cloud computing arm, Alibaba Cloud. It also presented its “New Retail” strategic cooperation last month following a $486 million investment in big-data firm Beijing Shiji Information Technology Co. Ltd. as part of a bigger push to restructure the Chinese domestic retail market.
Meanwhile, Amazon reported plans to debut Shipping with Amazon, a package delivery service that will directly compete with FedEx and UPS in the U.S., as well as roll out its Fulfillment by Amazon program to thousands of third-party vendors in Australia. Last year, the retail titan ramped up its takeover with the launch of its two-hour Prime delivery in Singapore.
The Lazada acquisition also invites a showdown against fellow Chinese retailer JD.com Inc., which last fall formed a $500 million joint venture with Thailand’s top retailer, Central Group, to boost its e-commerce presence in the region.