Alibaba injects capital into Lazada amid competition in Southeast Asia

Alibaba has invested a further 845 million USD into the Southeast Asian e-commerce company Lazada, based on reports from Singapore’s financial regulatory body released on July 19.

This comes just months after the previous round of investment in April, which saw the Taobao creator inject 470 million USD into the Singapore-based company. The recent series of funding is expected to help Lazada cope with competition in Southeast Asia, where Tencent-backed platform Shopee is currently the dominant e-commerce platform. Data from throughout 2022 showed Lazada’s monthly visitors hovering at around half that of Shopee.

Competition could be hotting up even more after the launch of TikTok Shop in Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand last year. The marketplace-style platform recently overtook Lazada as the second largest e-commerce platform in Vietnam, and with the advantage of impulse buying spurred by content on the app, TikTok Shop is well-placed to rise throughout the region.

Alibaba acquired a majority stake in Lazada in 2016 after buying 500 million USD worth of new shares and a further 500 million USD in existing shares. Alibaba then increased its stake from 50% to 83% in 2017, after which Lazada received no further investment until 2022. Under the leadership of the newly appointed president of International Digital Commerce Jiang Fan, Lazada received three instalments of capital last year. Alibaba’s investment in the e-commerce platforms now totals 5.8 billion USD.

Some commentators believe the injection of vast sums of money into Lazada signals Alibaba’s imminent departure from the venture.  With a new CEO appointed almost every year since taking control of Lazada, Alibaba has not shown a clear direction with the company and after seven years Lazada still trails far behind its main competitor. In light of its ongoing structural overhaul, Alibaba could be looking to make the asset more attractive to prospective stakeholders in preparation for a permanent change in strategy.


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