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How Alibaba Is Trying to Keep Lazada out of the Storm

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Marketplace for authentic goods only

Alibaba (BABA) has invested ~$4 billion in Lazada, its e-commerce business focused on Southeast Asia. It has said it will continue to invest in the business to drive growth and customer reach. As part of the efforts to drive growth, Lazada recently launched a new marketplace in its platform called LazMall. About a thousand brands, including Apple, Samsung, L’Oréal, and Estée Lauder, have signed up to open virtual stores in LazMall.

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What’s distinctive about LazMall is that it’s a marketplace dedicated to selling only 100% authentic, original products. Through Lazada, Alibaba has committed to giving shoppers twice their money back if they receive non-authentic products from LazMall sellers. For years, Alibaba has struggled to rescue its reputation from counterfeiters. In the United States, for instance, its Taobao is blacklisted as a notorious purveyor of forged goods.

Guarding Lazada’s reputation

Counterfeiting has also led to Alibaba being sued by some brands, accusing the company of not doing enough to stop the sale of imitations of their luxury brands.

By ensuring that LazMall only sells authentic products, Alibaba should be able to avoid the storms that have marred its reputation. eBay (EBAY) has also introduced measures to screen luxury handbags and watches listed on its marketplace for authenticity.

International retail revenue soared 64%

Lazada contributes to Alibaba’s international commerce business, where revenue grew 48.6% year-over-year to $930 million in the June quarter. Amazon’s (AMZN) international retail revenue rose 27% year-over-year.

With JD.com (JD) teaming up with Google (GOOGL) to help it expand internationally, Alibaba knows it needs to do everything possible to ensure that its businesses such as Lazada can withstand escalating competition.

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