Tech and e-commerce Alibaba is increasing its control of Lazada, the marketplace in Southeast Asia it started controlling since 2016.
The China-based company by Jack Ma has invested another $2 billion into the business and replaced its CEO Max Bittner with Lucy Peng who is already a chairman of Lazada and an experienced Alibaba executive.
Alibaba’s first investment came in April 2016 when it bought 51 percent of Lazada for $1 billion. Alibaba added another $1 billion in mid-2017 to increase its equity ownership to about 83 percent.
And with this move, Alibaba has invested at least $4 billion to "accelerate the growth plans" and help further integrate Lazada e-commerce business into Alibaba’s services.
Southeast Asia is an important part of Alibaba’s global expansion. It's also the thriving region that its arch-enemy JD.com is targeting.
Previously, Lazada has been offering products from Alibaba's Taobao marketplace to people in Southeast Asia. And by Alibaba replacing a bunch of Lazada's high executives with its own, Lazada has been progressing significantly, especially after Alibaba's first investment which came just in time when the business had been running out of money.
"We feel very confident to double down on Southeast Asia," said Peng who is a billionaire and one of the original founders of Alibaba. "We are excited about the incredible opportunities for super-charged growth."
Southeast Asia is home to about 600 million people. And with an increasing interest in global e-commerce, the region is attracting a number of companies that are eager to get a foothold as more people get internet access, mostly via smartphones.
The region has tight e-commerce competition, and Lazada is just one of them. The Singapore-based company operates online marketplaces in six Southeast Asian countries, selling everything from lipstick to instant coffee and smartphones. But here, the company has been inside the field with loss-making business, before Alibaba steps in.
One big competitor, is Amazon that had entered the competition in 2017. But that the company only operates in Singapore. Another big competitor is Shopee which has raised over $1 billion in U.S. IPO in 2017.
To create a strong foothold in the region, Alibaba has also invested 51 percent of Lazada for $1 billion">$1.1 billion in Tokopedia which is a direct competitor to Lazada in Indonesia, Southeast Asia’s largest economy and the fourth most populous country in the world.