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Lazada

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Lazada Group
Company typeSubsidiary
IndustryE-commerce
FoundedMarch 27, 2012; 12 years ago (2012-03-27)
FounderMaximilian Bittner[1]
Headquarters
Bras Basah, Singapore
Area served
Southeast Asia, except Laos, Cambodia, Brunei, Myanmar and East Timor
Key people
Jiang Fan (Group Chairman)[2]
James Dong (Group CEO)
Lucy Peng (Executive Chairwoman)
ServicesE-commerce
(Online shopping)
OwnerAlibaba Group
SubsidiariesLazada Vietnam
Lazada Singapore Pte. Ltd
Websitewww.lazada.com

Lazada Group (Chinese: 來贊達; t/a Lazada) is an international e-commerce company and one of the largest e-commerce operators in Southeast Asia, with over 10,000 third-party sellers as of November 2014, and 50 million annual active buyers as of September 2019.[3][4][5][needs update]

Backed by Rocket Internet, Maximilian Bittner founded Lazada in 2012 as a marketplace platform that sells inventory to consumers from its own warehouses.[1] Lazada modified its business model the following year to allow third-party retailers to sell their products on its platform too.[citation needed] The marketplace accounted for 65% of the company's sales in 2014.[6][needs update]

Lazada operates in Southeast Asia, except Myanmar, Laos, Cambodia, Brunei and East Timor.[7] The company raised over $685 million from investors such as Tesco, Temasek, Summit Partners, JPMorgan Chase, and Kinnevik AB, before Alibaba Group acquired a controlling stake in April 2016 to support its international expansion plans.[8][9][10][11][12][13]

Often, Lazada is compared to companies in Southeast Asia with a similar e-commerce platform, such as Shopee, Tokopedia, and Bukalapak.[14][15]

History

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In 2012, Maximilian Bittner founded Lazada with the intention of establishing an Amazon-like business model in Southeast Asia, to take advantage of the nascent online consumer market and Amazon's weak presence in the region.[16][17] Lazada's e-commerce websites soft launched in 2012, before iOS and Android mobile apps for its platform were launched in June the following year.[18][19]

Lazada commenced operations in Indonesia,[20] Malaysia,[21] Thailand, Vietnam in March 2012.[22][23] During 2012 and 2013, the company attracted significant investment from prominent firms like JP Morgan, Kinnevik, and Summit Partners, raising over $400 million in funding rounds.[24][25] This capital infusion fueled Lazada's expansion and helped solidify its position in the burgeoning Southeast Asian e-commerce market.[26]

The company commenced operations in Singapore in May 2014, where it is currently headquartered.[27][28] In 2014, Lazada recorded $152.5 million in net operating losses, with net revenues of $154.3 million, although the percentage of losses—relative to gross merchandise value—was lower than the previous year due to growth in marketplace sales to $384 million that year, compared to $95 million in 2013.[29][30]

A vehicle for Lazada delivery in Bangkok

Lazada faced challenges in 2015, when consumer preference for brick and mortar shopping was high. Less than 1% of people shopped online, compared to the international average of 10% at that time. This meant that Lazada had to tackle issues associated with the lack of credit cards, the concomitant requirement for cash on delivery systems, and the need for reliable delivery—especially in rural regions.[31]

In 2016, Lazada acquired Singapore's RedMart.[32][33][34] In March 2016, Lazada claimed it had become the largest e-commerce player in Southeast Asia, after recording $1.36 billion in annual gross merchandise value across the six markets it operates in.[35] In 2016, Alibaba Group acquired a controlling stake in Lazada for $1 billion, increasing it to 83% with a further $1 billion investment in 2017.[36] This positioned Lazada as Alibaba's Southeast Asian flagship.[37][38]

In September 2018, the company introduced LazMall on its platform to encourage its users to purchase from authentic brands. New services such as a 15-day return policy and next-day delivery options were also put in place.[39]

In October 2019, Lazada partnered with Citibank to launch a new credit card, first in Malaysia, and subsequently in other countries.[40]

In 2023, Alibaba was restructured internally into six business units held by a holding company in response to China's regulatory pressure to decentralise its business power.[41] and Lazada was placed under the Alibaba International Digital Commerce (AIDC) business unit.[42] AIDC would inject up to US$1.8 million into Lazada in 2023.[43]

Since 2023, Lazada had conducted several rounds of retrenchment. In October 2023, it had a small retrenchment exercise.[42] On 3 January 2024, it had another round of retrenchment.[44]

On 3 January 2024, Lazada began retrenching an undisclosed number of employees from its Singapore headquarters. Despite its workers being unionised, the union, Food, Drinks and Allied Workers Union (FDAWU), was not consulted by the company about the retrenchment exercise.[45] It was reported that the company would expect to reduce its Southeast Asia headcount by 25%-50%.[46] The retrenched workers were given 2 weeks of pay for every year worked with them.[47] Lazada later published an apology statement, stating it would consult the union for future retrenchment exercises. The union though accepted the apology, found that the retrenchment benefits was not satisfactory, and were in negotiation with Lazada for a better retrenchment benefits for the affected workers.[47][48] Later it came to light that the retrenched workers are being locked down by a set of 12-month non-compete clauses if they wish to retain their vested stocks.[49] The non-compete clauses include the prevention of working in an extensive list of companies such as in the supermarket chain NTUC Fairprice.[49]

Countries served by Lazada as of 4 October 2022:
  Available

Financing

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Lazada has raised multiple rounds of funding since its founding in 2012.

In April 2016, Alibaba Group announced its intention to acquire a controlling stake in Lazada by paying $500 million for new shares, and buying $500 million worth of shares from existing investors.[50] Tesco sold its stake in Lazada—totalling 8.6%—to Alibaba for $129 million.[51] Alibaba based its investment on the growth of the middle class in Southeast Asia, having estimated that the regional population with a disposable income of $16 to $100 a day would double to 400 million people by 2020.[52]

In June 2017, Alibaba injected $1 billion in Lazada, raising its stake from 51% to 83%.[53]

Date Funding Investors References
September 2012 Undisclosed JPMorgan Chase [8]
November 2012 $40 million Kinnevik AB [8]
December 2012 $26 million Summit Partners [8]
January 2013 $20 million Tengelmann Group [8]
June 2013 $100 million Verlinvest (lead), Holtzbrinck Ventures, Kinnevik AB, Summit Partners, Tengelmann Group [9]
December 2013 $250 million Tesco, Access Industries, Kinnevik AB, Verlinvest [10]
November 2014 $249 million Temasek (lead), Kinnevik AB, Verlinvest, Rocket Internet [11]
April 2016 $500 million Alibaba Group (acquisition) [50][51]
June 2017 $1 billion Alibaba Group [53]
May 2022 $378.25 million Alibaba Group [54]
September 2022 $912.5 million Alibaba Group [54]

Leadership changes

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Role Outgoing Start End Incoming References
Group CEO Maximilian Bittner March 2012 March 2018 Lucy Peng [55]
Group CEO Lucy Peng March 2018 December 2018 Pierre Poignant [56]
Group CEO Pierre Poignant December 2018 June 2020 Chun Li [57]
Group CEO Chun Li June 2020 June 2022 James Dong

Controversies

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Counterfeit products

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Lazada faces issues of counterfeit products being sold on its platform. The company has insisted a zero tolerance policy towards such products. As a response they have launched LazMall in 2018,[58] The Intellectual Property Office of the Philippines recorded Lazada to be the largest source of reports for counterfeit products it received in the first half of 2023 at 69 percent.[59]

LazEarth

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Lazada launched its LazEarth campaign in April 2022 to reduce plastic waste in its products and packaging.[60] This coincided with the launch of an Earth Day promotion, when 5,000 products labelled "sustainable" or "planet-friendly" were grouped into a promotional section on Lazada's platform, including polyester shirts, razors, electric toothbrushes, and more. Sustainability experts criticised the promotion as many of the products advertised were plastic disposable products, and offering discounts for such products did little to reduce plastic waste.[61]

Boycott by the Royal Thai Army

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Lazada faced a boycott by the Royal Thai Army in May 2022 due to a controversy arising from a TikTok video promoting a sale by the company. Posted on 5 May, the video included a depiction of a woman using a wheelchair, which was perceived as an attempt to mock the younger sister of King Vajiralongkorn, Princess Chulabhorn. Chulabhorn uses a wheelchair as a result of lupus. 245,000 members of the army were prohibited from patronising Lazada as a result.[62]

See also

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References

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  1. ^ a b Ansuya Harjani (17 April 2014). "Meet the man behind the 'Amazon of Southeast Asia'". CNBC. Retrieved 30 November 2019.
  2. ^ "Alibaba replaces Lazada CEO in South-east Asia shakeup". Garage - The Business Times. 3 June 2022.
  3. ^ Huang, Claire (6 November 2014). "Lazada grows revenue and stable of online 3rd-party sellers". The Nation.
  4. ^ Zhang, Jane (11 September 2019). "Lazada says it is e-commerce leader in Southeast Asia with more than 50 million buyers". South China Morning Post.
  5. ^ "Sea's loss widens on investment in Shopee e-commerce platform". Business Times Singapore. 23 August 2018.
  6. ^ Yaw, Min Jie (7 November 2014). "Lazada's Marketplace platform accounts for 65% of its sales revenue". e27.
  7. ^ Sanchez, Luis (28 January 2020). "These 2 Companies Dominate E-Commerce in Southeast Asia". The Motley Fool. Retrieved 4 October 2022.
  8. ^ a b c d e Russell, Jon (22 January 2013). "Lazada, Rocket's Amazon clone in Asia, raises 'close to $20m' to develop its e-commerce marketplace". TNW.
  9. ^ a b "Rocket Internet's e-commerce giant Lazada raises $100M". Vator. 20 June 2013.
  10. ^ a b Grant, Rebecca (9 December 2013). "Amazon clone Lazada raises jaw-dropping $250M to mainstream e-commerce in Southeast Asia". VentureBeat.
  11. ^ a b Purnell, Newley (1 December 2014). "Lazada Group Raises $249 Million, Led by Singapore's Temasek". Digits - Wall Street Journal.
  12. ^ Russell, Jon (29 November 2014). "Lazada, Rocket Internet's Amazon Clone In Southeast Asia, Raises $250M Led By Temasek". TechCrunch.
  13. ^ Choudhury, Saheli Roy; Kharpal, Arjun (12 April 2016). "Alibaba buys controlling stake in Southeast Asian retailer Lazada". CNBC.
  14. ^ "Here's how Lazada lost its lead to Shopee in Southeast Asia (Part 1 of 2)". KrASIA. 24 March 2021.
  15. ^ Florene, Ursula (4 June 2021). "Shopee pulls ahead of Tokopedia in Indonesia as e-commerce thrives". KrASIA.
  16. ^ Mac, Ryan (31 July 2014). "Germany's Samwer Brothers To Become Billionaires With Rocket Internet IPO". VentureBeat.
  17. ^ Lunden, Ingrid (12 November 2012). "Samwers' Online Shopping Mall Lazada Gets $40M From Shareholder Kinnevik To Push The Amazon Model In International". TechCrunch.
  18. ^ "Lazada launches mobile shopping app for Android OS". The Nation. 19 June 2013. Archived from the original on 7 May 2016. Retrieved 6 August 2015.
  19. ^ Russell, Jon (20 March 2012). "T-minus 10: Rocket Internet's ecommerce clones are aiming to conquer Southeast Asia". TNW.
  20. ^ "Lazada Indonesia aligns business model with Alibaba". Nikkei Asia. Retrieved 2024-11-06.
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  22. ^ Trí, Dân (2013-03-26). "Chuỗi sự kiện mừng Lazada tròn 1 năm tuổi". Báo điện tử Dân Trí (in Vietnamese). Retrieved 2024-11-06.
  23. ^ "Explainer: How the Lazada TikTok debacle began and how far it went". nationthailand. 2022-05-15. Retrieved 2024-11-06.
  24. ^ Montecillo, Paolo G. (2012-11-13). "Lazada to expand operations with $40-M fund from Swedish firm". INQUIRER.net. Retrieved 2024-11-06.
  25. ^ "Tech in Asia - Connecting Asia's startup ecosystem". www.techinasia.com. Retrieved 2024-11-06.
  26. ^ "Tech in Asia - Connecting Asia's startup ecosystem". www.techinasia.com. Retrieved 2024-11-06.
  27. ^ Tan, Vanessa (27 May 2014). "Lazada launches in Singapore with a new site and logo". Tech in Asia.
  28. ^ Ho, Victoria (4 June 2014). "Lazada launches in its home ground of S'pore". AsiaOne. Archived from the original on 24 September 2015. Retrieved 6 August 2015.
  29. ^ Cunningham, Susan (12 May 2015). "Rocket's Lazada And Zalora Lost $235.3 Million In 2014 But Are Moving Toward Profitability". Forbes.
  30. ^ Millward, Steven (20 March 2015). "Shoppers on Lazada last year spent $350 million as ecommerce booms in Southeast Asia". Tech in Asia.
  31. ^ Home-field advantage, The Economist, 7 March 2015
  32. ^ VIR, Vietnam Investment Review- (2019-01-31). "Lazada to fold RedMart into its platform, signals entry into online supermarket business". Vietnam Investment Review - VIR. Retrieved 2024-11-06.
  33. ^ "Wholesale suppliers Vietnam". sourcevietnam.com. Retrieved 2024-11-06.
  34. ^ "Tech in Asia - Connecting Asia's startup ecosystem". www.techinasia.com. Retrieved 2024-11-06.
  35. ^ "Lazada claims to be SEA's No 1 e-commerce player". Digital News Asia. 10 March 2016.
  36. ^ Kharpal, Saheli Roy Choudhury,Arjun (2016-04-12). "Alibaba buys controlling stake in Southeast Asian retailer Lazada". CNBC. Retrieved 2024-11-06.{{cite web}}: CS1 maint: multiple names: authors list (link)
  37. ^ Mac, Ryan. "Alibaba To Pay $1 Billion For Controlling Stake In Southeast Asia's Lazada". Forbes. Retrieved 2024-11-06.
  38. ^ Mac, Ryan. "Alibaba to buy controlling stake in Lazada for about $1 bln". Reuters. Retrieved 2024-11-06.
  39. ^ "Lazada launches Southeast Asia's biggest mall 'LazMall'". Primer. 3 September 2018. Retrieved 22 September 2021.
  40. ^ "Citi and Lazada Launch Co-brand Credit Card Partnership in Southeast Asia". www.citigroup.com. Retrieved 2024-02-01.
  41. ^ "Alibaba splits into six units, plans new IPOs in historic overhaul". The Straits Times. 2023-03-28. ISSN 0585-3923. Retrieved 2024-01-14.
  42. ^ a b Goh, Timothy (2024-01-03). "Lazada cuts staff amid speculation of upcoming IPO". The Straits Times. ISSN 0585-3923. Retrieved 2024-01-14.
  43. ^ Cordon, Miguel (11 December 2023). "Alibaba pours $634m into Lazada as competition heats up". www.techinasia.com. Retrieved 2024-01-14.
  44. ^ "Alibaba's regional online shopping unit Lazada marks new year with layoffs in Singapore (update)". 3 January 2023.
  45. ^ Goh, Timothy (2024-01-05). "NTUC 'deeply disappointed' over Lazada layoffs, says union was not consulted". The Straits Times. ISSN 0585-3923. Retrieved 2024-01-14.
  46. ^ Goh, Timothy (2024-01-09). "Lazada layoffs put spotlight on potential IPO, growing competition in South-east Asia". The Straits Times. ISSN 0585-3923. Retrieved 2024-01-14.
  47. ^ a b "Lazada apologises to FDAWU over retrenchments in Singapore". www.hcamag.com. Retrieved 2024-01-14.
  48. ^ "Workers' union accepts Lazada's apology over layoffs; talks on better retrenchment benefits ongoing". CNA. Retrieved 2024-01-14.
  49. ^ a b "Lazada employees question non-compete clause, clawback of shares after layoffs". CNA. Retrieved 2024-01-14.
  50. ^ a b Chen, Lulu Yilun; Wang, Selina (12 April 2016). "Alibaba Expands in Southeast Asia With $1 Billion Lazada Deal". Bloomberg.
  51. ^ a b "Tesco starts sell-off ahead of results with Asian disposal". BBC News. 12 April 2016. Retrieved 12 April 2016.
  52. ^ "Southeast Asia's middle class is diverse, confident, and growing richer by the day". QZ. 11 January 2016. Retrieved 4 July 2016.
  53. ^ a b Russell, Jon. "Alibaba ups its stake in International's Lazada with $1 billion investment". TechCrunch. Retrieved 20 December 2017.
  54. ^ a b Neo, Kristie (1 September 2022). "Alibaba invests another $912m in Singapore-based Lazada". Nikkei Asia. Retrieved 4 October 2022.
  55. ^ Russell, Jon (19 March 2018). "Alibaba doubles down on Lazada with fresh $2B investment and new CEO". TechCrunch.
  56. ^ "Lazada veteran Pierre Poignant is replacing Lucy Peng as CEO | The Star". The Star. 13 December 2018.
  57. ^ Gan, Joe (26 June 2020). "Lazada appoints a new CEO". Tech in Asia. Retrieved 29 June 2020.
  58. ^ Relativo, James (6 September 2022). "Lazada insists 'zero tolerance' for fake items, but can't inspect them one by one". The Philippine Star. Retrieved 14 October 2023.
  59. ^ Baclig, Cristina Eloisa (13 October 2023). "Anti-Piracy Month: Lazada tops PH list of online fake goods source". Philippine Daily Inquirer. Retrieved 14 October 2023.
  60. ^ "Lazada shows sustainability commitment with LazEarth campaign". Marketing Interactive. 20 April 2022. Retrieved 5 October 2022.
  61. ^ Hicks, Robin (27 April 2022). "Critics question labelling of plastic products as 'eco-friendly' in Earth Day promo". Eco-Business. Retrieved 5 October 2022.
  62. ^ Hoskins, Peter (10 May 2022). "Thai army boycotts e-commerce giant Lazada over video". BBC. Retrieved 10 May 2022.
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