Alibaba Group Holding Ltd (NYSE: BABA) stock generated over 15% in this year to date but trading weak this morning slightly falling over 1% (As of 10:40AM EDT; Source: Google finance).
The group has planned to double its investment in Singapore-headquartered Lazada Group to a total of $4 billion with the strategy of boosting its growth in Southeast Asia and further deepening the Lazada’s integration with the Alibaba. Alibaba had acquired its control of Singapore-headquartered Lazada in 2016 with an investment of $1 billion and had further increased its stake to 83% with another $1 billion investment in 2017. The $2 billion of additional capital will boost Alibaba’s stake in Lazada. Lazada is Southeast Asian online retailer and has operations in Indonesia, Malaysia, the Philippines, Thailand, Vietnam and Singapore. Furthermore, Alibaba had reported double-digit revenue growth every year since 2013, has started offering curated selections of goods from its own Taobao platform to Lazada users. Last April Ant Financial had acquired Lazada payment affiliate helloPay Group, re-branding it under its own Alipay brand. The group’s co-founder Lucy Peng, who is currently Lazada’s chairman, would take over as CEO. Lazada founder Max Bittner, who had been its CEO since 2012, will become a senior advisor to Alibaba Group and will assist the company in the transition and future international growth strategies. In addition, Lazada’s other shareholders include management and Temasek Holdings Pte. The company however has declined to say how the stakes will change with the latest additional $2 billion investment.
Meanwhile, Amazon had entered the Singapore market for the first time by launching its express, same-day delivery service, Prime Now last year. Southeast Asia is a lucrative market for e-commerce players as millions of first-generation internet users can go for online shopping. The region’s internet economy is expected to grow to $200 billion by 2025, primarily due to the growth in e-commerce. Further, the region has a young population, high mobile penetration and has just 3% of the region’s retail sales currently conducted online. As per the report, Google and statement from Singapore investment vehicle Temasek, the region’s internet economy is slated to hit $200 billion by 2025. Therefore, Lazada is well-positioned for the next phase of development of internet-enabled commerce in this region, and the company is looking forward to the incredible opportunities for superior growth.
Additionally, Alibaba’s stiff competitor JD.com is also targeting Southeast Asia and has pledged to be in every Southeast Asian country before the end of the year.