Alibaba getting Lazada weaponized
According to a joint report by Google and Temasek, the digital economy in Southeast Asia is set for booming growth in the next few years. For example, the e-commerce market in Southeast Asia (or SEA) is forecast to grow to $102 billion by 2025 from $23 billion last year. Alibaba and fellow e-commerce titans Amazon (AMZN) and JD.com (JD) are in pursuit of the enormous growth opportunity in the SEA region. In this race, Alibaba has Lazada, a Singapore-based e-commerce firm that operates online marketplaces across several countries in the SEA region.
Alibaba has been expanding more rapidly than JD and Amazon in the SEA region, but these rivals are starting to catch up and pose a threat to its ambitions. As the battle for e-commerce dollars in the SEA region rages, Alibaba seems to be getting Lazada weaponized against JD and Amazon.
Lazada seeking to boost merchant loyalty
Lazada CEO Pierre Poignant told CNBC recently that the company wants to expand its financial services by getting into business lending and trade financing. Alibaba, Amazon, and JD have used business loans for years to build merchant loyalty for their marketplaces, and Lazada is moving there as it prepares for more intense competition in the SEA region’s e-commerce industry.
Merchant lending is actually gaining popularity among marketplace operators. Last year, eBay (EBAY) made an arrangement with Square (SQ) to extend small loans to its sellers. Shopify (SHOP) also extends credit to its merchant customers. It disbursed $71.8 million in credit to this group in the fourth quarter, which ended in December.