Southeast Asia’s e-commerce platform Lazada Group – that sold a controlling stake to Alibaba last year and soon after acquired Singapore online grocery start-up RedMart – has no acquisition talks on the table for now as the firm does not want a “distraction” from its focus to improve in the six markets it is present in, a top Lazada executive told this portal.
“The focus today is winning in these six markets….At this point, we are focusing on the things that make us succeed. I think the way acquisition comes our way,it is a very opportunistic thing but there is nothing that we can comment on now. We are very happy with who we are, the battles and the challenges that we have picked and we want to focus on that,” Lazada Malaysia CEO Hans-Peter Ressel told DEALSTREETASIA.
The RedMart acquisition by the Singapore-based online marketplace for $50 million was done to build its own logistics capabilities. However, the move also prompted ideas if there were further acquisitions in line for Lazada in the region, mainly Malaysia which is considered Lazada’s poster boy with growth in merchandise volume (GMV) over 100 per cent year-on-year.
The company is present in six countries in Southeast Asia — Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Rocket Internet–backed Lazada was founded in 2012 in a bid to replicate Amazon in Southeast Asia at a time when Amazon did not have a large presence in the region. Now, however all e-commerce firms including Amazon consider the region an important market and have been making attempts to win the markets.
In fact, Alibaba Group made its $1-billion deal with Lazada for control, that made its entry to Southeast Asia easier, a market that none can ignore at the moment.
Lazada, is looking to prioritise and does “not want to get too distracted.” Ressel noted that there are too many opportunities (for acquisitions) out there but the firm is focusing on its strengths which is customer experience. “So, we believe when a customer buys and gets that item fast, the customer will come back. These are the things we are focusing on,” he said.
Meanwhile, e-commerce penetration in the region is not very high and that is an enormous opportunity for e-marketplaces. “There are still a lot of things to do. Still not all small and medium enterprises are online and neither are all consumers, so let us put all these online and convince them to stay there”.
The business models, he said, are different for each market. A lot of places have a combination while some markets have a focus on one or more categories and clusters. “We think we will succeed if we are the number one and we are number one by an extent. We have the scale,” Ressel said.
He added, “Southeast Asia is a very important market and big market. Some of the markets here may be a little bit behind. For instance Malaysia and Singapore are ahead of other markets in the region. But, once the people have internet, credit cards and they are online there will come further growth. In this region people have money to spend.”
Maintaining growth in Malaysia
On a recent visit to Malaysia, Lazada CEO Maximilian Bittner had said, “Malaysia is our poster child at the moment, compared to the rest of the five South-East Asian markets.” The company’s performance was backed by the assortment of products provided on the online retailer’s platform.
Meanwhile, Malaysia has a high internet penetration along with a smart phone penetration which is an advantage for shopping online.
“Malaysia has a fairly well developed infrastructure. Both local and international companies are present. Also because they have two big areas Peninsular Malaysia and East Malaysia as opposed to Philippines or Indonesia where the complexity is a little different,” Ressel told the portal.
He added that selling products is easy but shipping them and shipping them fast is another thing. So, a close partnership with the logistics firms is important where the firm shares its future plans and what it needs from them.
In fact, Lazada Malaysia even launched a dedicated page within lazada.com.my for Malaysian consumers to shop for reputable brands from China, Oriental Pavillion. The move was to introduce Chinese brands from TMall, China online retail platform operated by the Alibaba Group.
When asked if the competition from other players in the region has led them to step up the game, Ressel said, “We don’t focus on competition. We think that focusing on the couple main pillars that drive our growth is the right thing to do and what competition is doing is not changing our mind.”