Alibaba has made additional investments in Lazada, a Southeast Asian e-commerce platform, totaling more than $8 billion

Lazada becomes Ali's "gold king"

Less than five months after the last capital injection, Alibaba made another move, throwing more than $600 million at Lazada.

Data from Alternatives.pe shows that recently, Southeast Asian e-commerce giant Lazada received another $634 million in capital injection from its parent company Alibaba Group.

And this is the third big financing that Lazada has obtained from its parent company Alibaba, which has been publicly revealed this year, and the total amount of these three financings alone has reached $1.8 billion!

Let's briefly sort out these injections this year:

In March of this year, after Alibaba announced its spin-off plan and established Alibaba International Digital Business Group, Lazada quickly received funding from its parent company, Alibaba. In April, Singapore's Accounting and Corporate Regulatory Authority (ACRA) document disclosed the exact amount of the capital injection: $352.9 million.

In July, ACRA filings showed that Lazada received another $845 million capital injection from Alibaba, the largest capital injection of the year.

Coupled with the recent capital injection of $634 million, Lazada has received a $1.8 billion capital injection from Alibaba Group in one year, which can be called Alibaba's "gold king".

Source: Lazada's official website

Looking back on history, it is not difficult to find that since Alibaba officially acquired Lazada in 2016, the capital injection from the parent company Alibaba has been flowing like a thin stream, and the scale and frequency of capital injection this year have far exceeded that of previous years.

This illustrates two problems: First, the Southeast Asian market is one of Lazada's overseas bases, and through continuous capital injection to form Lazada's differentiated advantages in Southeast Asia, from the perspective of Alibaba's strategic vision, even if it is worth investing more.

Second, this is different from the past, and the more the war is tightened, the more necessary it is to make a larger strategic reserve. As more and more cross-border platforms enter Southeast Asia, Lazada faces increasingly pressing challenges in Southeast Asia. The more at this time, the more Lazada cannot drop the chain in terms of strategic adjustment, and the most important thing for strategic adjustment is financial support.

Of course, there is a more direct reason, Alibaba has injected nearly $2 billion into Lazada a year, and the total capital injection in the past few years is as high as more than $8 billion, because it feels that it is worth it, and I believe that Lazada can double the capital injection over the years!

Here we cannot fail to mention a key gentleman: Jiang Fan.

After Jiang Fan took over, the overseas e-commerce business became a new growth point for Alibaba

In December 2021, Alibaba announced a new round of organizational restructuring, and Jiang Fan, who was once seen as having a promising future, was "released" by the group: he was transferred to the head of "overseas digital business".

At this time, Jiang Fan was only 37 years old, and for the company's executives, it was still a golden period for his career.

Being young means having more time for trial and error, and it also means that you may be able to make outstanding results in a short period of time with a momentum, Jiang Fan chose the latter.

It is reported that after Jiang Fan officially took up the post of head of overseas digital business, he did not take up three new positions as soon as he came up, but did not issue a new policy for several months.

Source: Dictionary Encyclopedia

What has Jiang Fan done in the past few months?

During that time, he frequently shuttled between several continents, conducting some mysterious investigations of Alibaba's overseas branches.

Lazada is the focus of Jiang Fan's attention, and it is also the closest business line to Jiang Fan.

In June 2022, Jiang Fan announced that he had found the CEO of Lazada Group: Dong Zheng.

It is understood that Dong Zheng joined Lazada in 2018 and has served as the CEO of Lazada Thailand and Vietnam, and is also the longest-serving person in Lazada.

Jiang Fan chose Dong Zheng as the CEO of Lazada Group, which he values the most, undoubtedly because of his practical experience accumulated over the years in Southeast Asia.

Using the person who knows the local market best to lay down the local market is also the basic way for Jiang Fan to take over the overseas business.

What's more, under this basic style of play, Alibaba's overseas business, which has been in a growth dilemma, has miraculously recovered!

It only took a year to expand the territory, and the overseas business under the leadership of Jiang Fan fought a beautiful turnaround.

According to the financial report for the fourth quarter of 2022, the revenue of Alibaba's overseas digital business segment was 19.465 billion yuan, a year-on-year increase of 18%, which is the largest growth in Alibaba's overseas business in the past few quarters.

As a result, in March of the following year, when Alibaba announced the launch of a new round of corporate governance reforms, International Digital Business unexpectedly became one of the six major business groups, and Jiang Fan naturally became the CEO of International Digital Business Group.

At this time, Ali International Digital Commerce, judging from the results, is indeed qualified to be among the six major business groups of Alibaba Group: in the Q4 fiscal quarter of 2023, the revenue of Alibaba International Digital Business Group will reach 18.541 billion yuan, accounting for 9% of Alibaba Group's total revenue in the current quarter, which is the same as the revenue of Alibaba Cloud business (18.582 billion yuan), which is the main advantage project of Daniel Zhang!

You must know that Alibaba's overseas business includes Lazada, AliExpress, Trendyol and Daraz, etc., and when Jiang Fan took over, Lazada lagged behind Shopee in Southeast Asia, and several other platforms did not get outstanding growth points.

But after Jiang Fan came over, after some operations, he still made a weak project that not many people were optimistic about to be on a par with the "top students" in the Ali Group, I have to say that this is Jiang Fan's ability.

Among them, Lazada has achieved double-digit year-on-year growth in Southeast Asia through localization strategy and continuous optimization of buyer experience, Trendyol's order growth has also rebounded significantly since this year, and after the launch of AliExpress's "fully managed" service, it has created a global "sample office" for cross-border e-commerce in South Korea and Spain.

Therefore, for the adjustment of overseas business under the supervision of Jiang Fan, Alibaba Group will certainly support it if it can.

Betting on Southeast Asia is to pry open up a larger market!

Jiang Fan's ambition for overseas business can be clearly seen from Lazada.

In 2022, in the Southeast Asian market, the GMV of the nine major e-commerce platforms such as Shopee, Lazada, and Tokopedia combined is 99.5 billion US dollars. Of course, this transaction volume is already nearly twice as high as in 2020.

In Jiang's design, Lazada aims to achieve a GMV of $100 billion a year and serve 300 million consumers by 2030.

There are two meanings here, one is that Jiang Fan believes that the transaction volume of the Southeast Asian market will double in the next few years, and the other is that Lazada is only settled in Southeast Asia, and more ways may be outside Southeast Asia.

Especially the latter meaning, after Jiang Fan took over the overseas business, it has been clearly revealed.

In Jiang Fan's own words, in the future in the field of TOC, international digital business groups will adhere to the investment of cross-border + local model. This means that in addition to continuing to invest in the Southeast Asian market, Jiang Fan is also focusing on more new regional market opportunities.

In the field of to B, Alibaba Overseas has also made some upgrades to its existing models, such as finance, logistics, digitalization, etc., in order to actively expand its B to B business model to other overseas regions.

Lazada, or Alibaba's overseas business, must increase investment in technological infrastructure, build its own logistics, and constantly improve the shopping experience of buyers.

Southeast Asia is the biggest springboard for Ali's overseas "extensive grain storage and slow king".

At present, the e-commerce market in Southeast Asia as a whole is still in a stage of rapid development, and it is also the best opportunity for Shopee and Lazada.

Source: Shopee official website

EMarketer data shows that in 2022, Southeast Asia's e-commerce growth rate will be the largest in the world, and by 2023, the total e-commerce sales will exceed the $100 billion mark.

As Alibaba's core business territory in Southeast Asia, Lazada is naturally also pinned on by the parent company.

On the other hand, in Southeast Asia, Lazada is facing a strong challenge from other rivals.

At present, in Southeast Asia, Shopee's GMV is nearly 50 billion US dollars, almost taking half of the GMV of the Southeast Asian market, followed by Lazada, with a GMV of more than 200 US dollars, and TikTok Shop, which has entered the Southeast Asian market in recent years, has a GMV of nearly 5 billion US dollars, more than half of which is contributed by a single market capitalization in Indonesia, which is a bit scary.

In other words, in Southeast Asia, Lazada has to desperately catch up with Shopee in front of it on the one hand, and on the other hand, it has to prevent TikTok from running in front of it at all times.

For example, TikTok Shop was able to make more than $2 billion in one market in Indonesia because it had a clear traffic advantage, and in Indonesia, it was only a matter of time before TikTok Shop conquered other markets in Southeast Asia. So, at a forum in June this year, TikTok CEO Zhou Shouzi said, "In the next few years, we will invest billions of dollars in Indonesia and Southeast Asia." ”

But we still believe that Jiang Fan will still use earth-shattering moves to play a big game of overseas business that exceeds expectations.

Because he is none other than Jiang Fan!

Author | Charlie