Alibaba to grow Southeast Asia e-commerce arm to $100 billion

Hong Kong: Alibaba this week revealed an ambitious vision to grow its Southeast Asian e-commerce business to $100 billion in transacted sales as well as a pledge to reach carbon neutrality in its operations by 2030.
China’s largest e-commerce company unveiled its vision Friday for its Southeast Asian e-commerce arm Lazada in presentation slides uploaded to its site for its annual Investor Day, where it typically shares revenue figures and future strategies of its business units with investors. Alibaba’s top executive Daniel Zhang also outlined its carbon emission goals during a presentation Friday.
The plan to quintuple Lazada’s total gross merchandise volume defined as the total amount of sales transacted on its platform came as the Chinese company looked overseas for sources of growth amid increased competition and a slowing economy in the Chinese market.
Alibaba also eventually aims to have Lazada serve 300 million consumers, according to the presentation slides.
The Hangzhou-based firm took a controlling stake in Lazada in 2016, before investing an additional $2 billion to expand the business in 2018.
Alibaba’s incoming chief financial officer Toby Xu said during a presentation on Friday that its China commerce segment has faced near-term challenges of a slowing macro-environment and a heightened level of competition.
This has resulted in slower GMV and the revenue growth in the most recent quarter, he said. But we also see opportunities to tap into new addressable markets to grow new users that will position us well for the long term.
Currently, Lazada’s gross merchandise volume for the last twelve months from September 2021 reached $21 billion, with 159 million monthly active users.
Alibaba CEO Daniel Zhang said in a separate presentation Friday that the company sees a huge potential in the international markets going forwards.
In Southeast Asia, ecommerce penetration is only 11%, and Lazada’s annual consumers have reached only 34% of regional Internet users, Zhang said. There’s tremendous potential in both the overall market size and our penetration.
Alibaba’s push to expand its Southeast Asia business comes as it faces fiercer competition in its home market, from rivals in short-video e-commerce such as Kuaishou, as well as group buying platform Pinduoduo, which has invested heavily in sales and marketing expenses to expand its user base. The company has also faced tighter regulatory scrutiny over the past year, as Chinese authorities increased regulatory oversight in the technology industry following concerns that some Big Tech companies were engaging in anti-competitive and monopolistic behaviour. Alibaba was fined a record $2.8 billion earlier this year after authorities concluded that it had violated antitrust rules.

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