Alibaba Buys Into Southeast Asia With $1 Billion Lazada Purchase

On Tuesday, Alibaba Group Holding Limited announced that it acquired a controlling stake in Southeast Asian e-commerce platform, Lazada, for $1 billion USD.

The acquisition includes $500 million USD in Lazada shares, as well as purchased shares from other Lazada stakeholders, including Rocket Internet, Tesco, and Kinnevik. Following the transaction, Lazada’s valuation stands at $1.5 billion USD.

“With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China,” said Michael Evans, president of Alibaba.

Lazada’s e-commerce platform spans a number of important markets in Southeast Asia, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Despite the challenges posed by Southeast Asia’s cultural and linguistic diversity – not to mention its topology – the region’s half-billion residents make e-commerce a lucrative area with a lot of potential for growth. In addition to Lazada, other regional e-commerce startups include Tokopedia, Bukalapak, and Qoo10.

“Southeast Asia is an attractive mobile-driven consumer market that is highly fragmented and diverse with significant barriers to entry and a nascent modern retail sector that has large headroom for growth,” stated Max Bittner, the CEO of Lazada, in a press release. “The transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products.”

Alibaba’s billion dollar purchase shouldn’t be seen as simply a move into Southeast Asian e-commerce, though it’s certainly part of the tech giant’s ambitions. Just as Taobao paved the way for a range of other profitable products, such as Alipay under Ant Financial, the acquisition of Lazada may serve as a launchpad for other Alibaba products looking to enter Southeast Asia.