Lazada Group

History

Lazada Group was founded in 2012 by Rocket Internet in Singapore with the intention of establishing the Amazon.com business model in Southeast Asia to take advantage of the nascent online consumer market and Amazon's weak presence there; Rocket is a German incubator that builds companies that copy the business models of successful US tech companies in emerging markets. Lazada's e-commerce websites soft launched in 2012 in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. It raised four rounds of funding in 2012 and early 2013: JP Morgan invested an undisclosed amount in September, Swedish retailer Kinnevik invested $40 million in November, German private equity firm Summit Partners invested $26 million in December, and Tengelmann invested about $20 million in January 2013. It also added a 2-day guaranteed delivery services, addressing one of the most common complaints about Lazada's service, and one of its biggest challenges, which it had attempted to address by making a "massive, incalculable investment" in warehouses and delivery services.

In June 2013, Lazada announced it had raised an additional $100 million, and it launched mobile applications for Android and iOS devices. In December 2013 it raised an additional $250 million from Tesco PLC, Access Industries, and other existing investors.

In May 2014, Lazada launched in Singapore, its sixth country.

In November 2014 Temasek Holdings in Singapore led a funding round of $250 million, bringing the total Lazada had raised to approximately $647 million. Also that month, Lazada announced that its marketplace platform accounted for more than 65% of its overall sales, and that the number of third-party sellers on the platform had increased from ~500 in November 2013 to close to 10,000 in December 2014. The number of employees across the region reached approximately 4,000.

For 2014, Lazada's net operating losses were $152.5 million on net revenues of $154.3 million. However its percentage of losses relative to its Gross Merchandise Volume - the value of all the products sold through the site - was smaller in 2014 than in 2013 due to growth in its GMV from $95 million in 2013 to $384 million in 2014, driven by marketplace sales.

As of 2015, Lazada's challenges for growth were the preference for brick and mortar shopping among customers, with just about 1% of people buying online compared to 10% of US shoppers; the lack of credit cards and concomitant requirement to arrange cash on delivery systems, reliable delivery especially in rural regions, and the threat of competition from Amazon and Alibaba.

In March 2016 Lazada claimed it recorded a total of $1.36 billion in annualized across its six markets in Asia, making it the largest e-commerce player.

In April 2016, Alibaba Group announced that it intended to acquire a controlling interest in Lazada by paying $500 million for new shares and buying $500M worth of shares from existing investors. The British supermarket company Tesco confirmed the sale of 8.6% of its holding in Lazada to Alibaba for $129 million. The reasons why Alibaba was interested are: South-East Asia market has growing middle class income populations estimated 190 million people in the region with a disposable income of $16-$100 a day to grow to 400 million people in 2020, Lazada has also figured out how difficult it is in South East Asia, for Alibaba, this helps to save billions by investing from Lazada instead of re-building the e-commerce for this market with the logistics and infrastructure to replicate the China market, and lastly China sellers from Alibaba can also have access to new sellers and buyers from Lazada, this is beneficial to both companies.