Rocket Internet-backed Zalora is reported to withdraw from Indonesia after it decided to sell its Philippines operation to Ayala Corp, who announced that it will buy 43.3 per cent ownership in Zalora operator BF Jade E-Service Philippines for an undisclosed amount.
Zalora is also said to be in negotiations with Indonesian retail conglomerate MAP Group, according to a report by TechCrunch. The news also follows the selling off of Zalora’s businesses in Vietnam and Thailand last year.
When DEALSTREETASIA contacted Zalora, the company’s PR management team said that they “don’t comment on industry rumors.” The team also said that the reports are running on pure speculation. Here is Zalora’s statement in full:
“…the statement request, we don’t comment on industry rumors. With this said, the story that you mentioned is running on pure speculation.
Furthermore, Ayala Group’s investment on ZALORA Philippines is a testament of ZALORA’s leadership position in our markets. Global Fashion Group remains to be the majority shareholder and we are excited to work closer with the Ayala Group of companies in further investing and growing the fashion e-commerce space in the Philippines. The synergy between e-commerce and their business in retail, telecommunications, and banking will definitely cement our position as the country’s largest and leading online fashion retailer.
This investment marks Ayala’s first foray in e-commerce in the Philippines. Ayala is the Philippines’ most respected company and having them as a partner is a positive step for us in the Philippines.”
When asked if there’s a possibility for Zalora to team up with MAP Group like they did with Ayala, the team said:
“Southeast Asia is a diverse region and we will always look at adapting our strategy to local country dynamics and opportunities. Our objective is to build the online fashion leader in each of our SEA markets.”
MAP operates close to 2,000 retail outlets in Indonesia, including departure stores, fashion outlets and more in partnership with global firms like Zara and Marks and Spencer. The publicly-listed company employs over 22,000 staff across the country.
Christopher Daguimol, Zalora PR director, emphasized that there is “no evidence presented on our supposed retreat in Indonesia”. He also highlighted the fact that although there was a share acquisition by Ayala Corp in the Philippines’ operation, Zalora’s commitment in the region remains strong.
“The partnership between GFG and Ayala will usher in synergy between our e-commerce business with Ayala’s banking, telecommunications and retail business. The Group’s shares were up by 1% after the announcement refelecting positive reaction from the local market,” Daguimol said in an email to DEALSTREETASIA.
The fierce competition in Indonesia, the Southeast Asia’s largest economy, has just started to escalate, marked by the layoffs by Berrybenka and SaleStock a few months earlier. There were reports circulating that Zalora recorded a hefty $700 million in losses.
While smaller firms are gasping for breath, giants like MatahariMall.com and Lazada are steadily marching forward. Last year both companies received major funding from global investors, with MatahariMall snatching $100 million from Mitsui (and at least another $25 million from Matahari Department Store) and Lazada pocketing $1 billion from Alibaba.
Experts have projected that competition will start to sharpen even further – especially if US giant Amazon decides to enter Indonesia – and will force smaller firms to consolidate.