Alibaba Plows Another $1 Billion into Southeast Asia’s Lazada

New funds signal Alibaba’s seriousness about dominating ecommerce in the region

Author: Rahul Chadha

June 28, 2017

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

Indonesia may emerge as a particularly important market for Alibaba, given its large population and the growing number of smartphone users there. eMarketer estimates that retail ecommerce sales in the country will total $8.2 billion this year, an increase of 55.3% over 2016’s figure.

But Alibaba’s main domestic rival,, is also envisioning a future that lies along a similar path through Southeast Asia. Earlier this month, announced its intent to expand into Thailand sometime this year. has seen success of late in China with its inventory-led model, a sharp contrast to Alibaba’s two main marketplaces: consumer-to-consumer (C2C) platform Taobao and business-to-consumer (B2C) service Tmall.

There have also been widely reported rumors that will soon release details of an investment of hundreds of millions of dollars in Indonesia-based ecommerce platform Tokopedia.

In addition, the threat of a significant move by Amazon into Southeast Asia still looms. Amazon has thus far focused most of its energy in India, having pledged to spend $5 billion on its efforts in the market over the next few years. According to TechCrunch, Amazon had planned to launch in Singapore—its first presence in Southeast Asia—in Q1 of this year, but postponed the move until later in 2017.

Amazon remains one of the global ecommerce players with the resources to battle Alibaba in Southeast Asia. But it remains to be seen if it has the will to do so.