Alibaba is banking heavily on Southeast Asia as the engine that will spur continued ecommerce growth. This week, the company invested $1 billion to expand its stake in Southeast Asia-focused ecommerce platform Lazada Group to 83%, up from 51%. The new investment raised the valuation of the company to $3.15 billion.
In 2016, Alibaba purchased a majority stake in Lazada from Germany’s Rocket Internet. With its latest investment, Alibaba bought out the stakes of all of Lazada’s other investors, save Singapore’s state-owned Temasek and company management.
With its expanded stake in Lazada, Alibaba is preparing for the inevitable slowdown of China’s fast-growing ecommerce sector—although that future is still years away. eMarketer estimates that retail ecommerce sales in China will grow by 33.1% this year. And although the annual rate of growth will slow over the next few years, it’s projected to still reach 18.9% in 2021.
“The ecommerce markets in the [Southeast Asia] region are still relatively untapped, and we see a very positive trajectory ahead of us,” said Alibaba Group CEO Daniel Zhang Yong. “We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities.”
With its Lazada investment, Alibaba is taking the opportunity to apply lessons gleaned from its rise in China in markets in Southeast Asia, which are generally perceived to trail the Middle Kingdom by five to 10 years.
Alibaba is already sharing its logistics expertise with Lazada; such information is likely to be helpful in markets where infrastructure—or the lack thereof—has created a significant hurdle for last-mile delivery of goods bought online. Alibaba affiliate Ant Financial also recently merged its Alipay digital payments service with helloPay Group, a payment service subsidiary operated by Lazada Group.
Lazada, for its part, is already a strong market leader in most, if not all, of the markets in Southeast Asia in which it operates. In fact, according to data from SimilarWeb cited by ecommerceIQ, Lazada-branded ecommerce properties drew more page views in April 2017 than any other ecommerce site in several markets in the region: Indonesia, Malaysia, Singapore, Thailand and Vietnam. In Indonesia, for example, Lazada’s site drew 54.4 million page views, more than double those of second-place Blibli.com.