Alibaba continues to pump capital into Lazada’s e-commerce platform

DNHN - Lazada will be a part of Alibaba's global digital business, which also includes AliExpress, Trendyol, and Daraz. The move follows Alibaba's announcement of a historic restructuring decision last month.

Tech in Asia reports that Singapore-based legal filing company VentureCap Insights recently discovered that Alibaba's parent company continues to invest $353 million in Lazada. Since the beginning of 2022, Alibaba has provided Lazada with approximately 2 billion USD.

According to industry experts, the Lazada e-commerce platform is expected to serve 300 million people. Alibaba reportedly has ambitious plans for the Southeast Asian market, to increase the total value of goods to USD 100 billion, and the Lazada e-commerce platform. use. Lazada will be a part of Alibaba's global digital business, which also includes AliExpress, Trendyol, and Daraz. The move follows Alibaba's announcement of a historic restructuring decision last month.

Zerlina Zeng, a senior analyst at CreditSights who specializes in Chinese corporations, remarked that as a result of the change, Lazada's management could become "more decentralized and therefore more flexible with decisions"

"We expect Alibaba to continue to increase monetization and operational efficiency while minimizing losses from Lazada's operations," said a CreditSights expert to Tech in Asia.

Analysts believe receiving additional capital from the parent company will help Lazada increase its independence. The Southeast Asian e-commerce business has numerous opportunities to access external funding and does not rule out the possibility of an IPO.

Lazada used to be the leading e-commerce platform in Southeast Asia, but it has recently been challenged by formidable newcomers such as Shopee of Sea Group and Tokopedia of Indonesia.

Over USD 1.6 billion was invested in Lazada by Alibaba in three capital injections to the company in 2017. In 2016, the Chinese group purchased this e-commerce platform.

An analyst at CrossASEAN Research, Angus Mackintosh remarked, "As the Chinese government strengthens oversight, overseas investments will grow in significance. Alibaba's $1.6 billion investment in Lazada in 2022, as well as Lazada's investment in Indonesia's Dana e-wallet, indicate that e-commerce is becoming a higher priority for parent company Alibaba."

Alibaba reported in its most recent business results report that the e-commerce platform Lazada has recently improved not only its order growth rate and monetization rate but also its loss per order.

In the fourth quarter of 2022, Alibaba will realize a net profit of 46 billion yen, or 6.6 billion US dollars. This figure increased by 138% compared to the same period one year prior.

 Sixty-nine per cent of the group's total revenue for the quarter was generated by Alibaba's e-commerce business in China, which contributed $24 billion. In the meantime, international trade accounts for 8% of total revenue, or $3 billion. According to financial filings, the company laid off nearly 20,000 workers by 2022 to reduce expenses.

 Phuong Linh (t/h)