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Alibaba’s $912 Million Lazada Investment Targets Growth in Europe

Alibaba is pumping cash into its Lazada business as the Southeast Asian subsidiary looks to take on Europe.

The decade-old e-commerce platform, which carries a wide range of products from global brands, has received a $912.5 million investment from its Chinese owner, filings with Singapore regulators said last week. Lazada CEO James Dong told Bloomberg that regional expansion plans will take shape as the company continues to monitor macroeconomic and market conditions across Europe.

“We are here for the long haul, to achieve sustainable, long-term growth with all of our brands, sellers and partners,” he wrote on LinkedIn Monday.

The marketplace, which sells fashion, beauty, home and wellness products, along with electronics, has a logistics network across Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam. It processes and fulfills most orders using its own delivery infrastructure. In March, Lazada served more than one million monthly active sellers, it said.

Acquired in 2016, it is now one of Alibaba’s fastest-growing businesses. The parent company invested $1.3 billion into Lazada this year alone, as its core business loses ground to rivals like Amazon and Tencent. Alibaba reported the lowest quarterly sales growth in its history in early August, attributing the disappointing performance to Covid lockdown during April and May. But sales were stagnating before that period, and the company reduced its headcount by 13,616 during the first six months of 2022, though it never confirmed that it was conducting layoffs.

Dong sees Europe as a lucrative new frontier for Lazada. “Europe is a very big market obviously and for most of the European brands, their largest retail partner is Alibaba Group because of their sales in China and in other markets,” he told Bloomberg. “We go where the brands want us to go.”

Dong said Lazada also plans to hire hundreds of new employees in Indonesia in the coming months. The expansion of its Jakarta office will help drive growth in the region’s largest market. The company is also expanding its digital footprint through a $304.5 million investment in Dana, a digital wallet provider from Indonesia, and a $168 million investment in one of Malaysia’s biggest digital wallet companies, Touch ‘n Go.

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“At Lazada, we believe in creating an open ecosystem, by working with different partners and enablers, such as in retail, logistics and payments,” he wrote on LinkedIn, adding, “Our investments are a clear indicator of the confidence we have in our company’s growth potential and future.”

Alibaba chairman and CEO Daniel Zhang told analysts that the company began seeing a “gradual recovery of business performance” especially in fashion and electronics. “As we continue to grow our location-based digital commerce infrastructure in recent years, our diversified business models are showing complementary benefits,” he said.