Alibaba-backed Lazada to buy Singapore online grocer RedMart

An employee at online retailer Lazada walks into the company's office in Jakarta, Indonesia April 15, 2016. REUTERS/Darren Whiteside - RTX2A348

Lazada, a Southeast Asian online shopping and selling platform Wednesday announced that it had reached a deal to acquire Singapore-based RedMart, which pioneered e-grocer services in the city-state.

In a joint statement, the companies explained that through this partnership, they would be able to leverage of their respective technological and operational infrastructure, as well as an extended customer network.

While financial terms of the deal are undisclosed, earlier reports said that the deal was valued between $30 million to $40 million.

The deal will see RedMart continue to be led by its current management, and operate independently of Lazada post-acquisition. The transaction is expected to be completed in calendar Q4 2016, with Goldman Sachs acting as the financial advisor to Lazada Group while Credit Suisse advises RedMart.

RedMart said its fulfilment and technology platform has enabled a superior customer experience, and added that if offered the largest grocery selection in Singapore, with products ranging from fresh produce to frozen foods that can be delivered within a two-hour delivery window, and further said that the deal would allow Lazada to benefit from its (RedMart’s) strong fulfilment capabilities in Singapore.

Furthermore, it will accelerate RedMart’s expansion into new product categories and the further enhancement of its service offering to customers by leveraging Lazada’s seller base, ecosystem of third-party service providers and advanced technological resources, the companies added.

Commenting on this development, co-founder and CEO of RedMart Roger Egan said, “This partnership will help us to increase the scale at which we are able to deliver our mission to save our customers time and money for the important things in life. As a result of the complexity of our core business, online groceries, we have built a market-leading logistics infrastructure.”

He adds, “Through this partnership, we can further scale our logistics and tech platform to extend our product assortment and to offer an even more convenient service for our customers in Singapore. The capital flexibility provided through this deal will go towards innovating to delight our customers. We are partnering with Lazada to serve our customers better.”

Fresh online grocery adoption. Credit: Morgan Stanley Research

With a Morgan Stanley research note suggesting that the online grocery market is at an inflection point, the acquisition will provide Alibaba with a strong footprint in a leading global logistics hub, with the World Banks’ Logistics Performance Index ranking the city-state fifth globally and the first in Asia for 2016. Alibaba already has a footprint in Singapore through its investment in Singpost, with Singtel being another substantial shareholder.

The Redmart position will enable it to capitalise on Singpaore’s logistics infrastructure to drive its growth in the region, as well as enable greater access to the emerging Indo-Asia Pacfic markets (i.e. countries encompassed by the Indian Ocean and Pacific Ocean basins with a concentration on Asia), and particularly Indonesia, which is slated to be Asia’s next big e-commerce market.

“As part of our growth strategy, we are always looking for ways to serve our customers better by adding new product categories and improving our service offering. RedMart’s strong management team and their relentless focus on putting the customer first has resulted in customers loving them in Singapore,” Maximilian Bittner, CEO of Lazada Group, added.

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