ALIBABA GROUP: ACQUIRING LAZADA

TO WIN THE SOUTHEAST ASIA E-COMMERCE BATTLE

Introduction :
Alibaba was founded in 1999 by Jack Ma, a former English teacher. Alibaba came up with a
vision to develop an online platform that would allow small and medium-sized exporters to post
their products while enabling buyers to purchase directly from them. In the beginning, Ma
managed to get USD 60.000 investment from his friends.

In 2009, Alibaba had raised USD 5 million from Goldman Sachs and CO. and USD 20 million
from SoftBank Group Corp.

By 2013, Alibaba’s online transactions had finally surpassed the combined transactions of eBay
and Amazon.

In 2014 Alibaba established B2B services and in September was listed on the New York Stock
Exchange. Valued USD 160 billion and plan to share 12%. Home to nearly 1.4 billion people,
Alibaba remained as dominant player though JD.com, its rival in China, increased its market
share from 18 % in 2014 to 24% in 2016.

By 2017, Alibaba had grown to become the second largest internet retail company behind
Amazon, however, its profit was more than double of Amazon

LAZADA Was founded by Alexander Samwer, Marc Samwer and Oliver Samwer who also
founded Rocket Internet SE, large German Internet-based incubator in 2011. The first CEO was
Maximilian Bittner. He grew Lazada become the prominent shopping marketplace in Southeast
Asia. Lazada's business model was similar to Amazon, selling products from its own
warehouse.

In 2016 Lazada was ranked as the number one shopping marketplace in Philippines, Indonesia,
Malaysia, Thailand, and Vietnam. However, Lazada had huge loss in 2014 and doubled in 2015
due to its heavy investments in expanding its logistics capabilities.

Acquisition By Alibaba
By the ambition to penetrate to South East Asia, Alibaba decided to acquire Lazada in 2016.
Acquired directly from Lazada and from another investor of Lazada. Until Alibaba has USD 1
billion from USD 1.5 billion value.

Post Acquisition
Payment Gateway
E payments through credit or debit card was a key to e-commerce growth, but only 2 - 11%
customer of SEA used online payment (excluding Singapore). Thus, Lazada introduced
HelloPay, a platform for online payment that enabled customers who don't have a card.
Logistics
Alibaba signed a memorandum with the government of Malaysia to open 45 hectares
warehouse near KLIA (Kuala Lumpur International Airport)

Strategic Partnership
In anticipation of Amazon’s entry to SEA, Alibaba partner up with Netflix and Uber, also
Unilever.

Opportunity:
Demographic of SEA, home for 600 million people. GDP will increase by double in 2020.

Define Problems:
1. Inconsistent cross-border customs & taxes as well as corruption.
2. Competitors such as Qoo10, JD.com, Rakuten, Amazon
a. Qoo10 has become leading e-commerce in Singapore
b. JD.com has its own logistics infrastructure. Make its own platform in Indonesia
and invested in Indonesian e-commerce TOkopedia
c. Rakuten penetrate with developing its own platform in Taiwan (Rakuten Ichiba),
acquired Thailand E-commerce (Tarad.com), a joint venture in Indonesia
(Rakuten Belanja), and entered Malaysia
d. Amazon launched its business in Singapore by its own platform, AmazonFresh
after the rejection of acquiring by Redmart (local e-commerce)

Solutions:
1. Focus on market penetration in less competition ASEAN country like the Philippines and
Vietnam
2. Create or Join Venture to local e-payment / e-money to create a direct payment into the
Lazada
3. Lobby / make a MOU to local government to get an incentive for creating some
infrastructure
4. Differentiate or specialize in the feature or category so Lazada can get loyal returning
customers
5. Give a SOP/guideline to Lazada merchant for posting their product (image, caption,
price) so it will look cleaner and more professional
6. Increase mobile transaction by attracting more users to download the app (because
people tend to

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Question :