Zalora CEO denies Indonesia exit rumour

Last week, there was a  speculation that Zalora was withdrawing from Indonesia following a share acquisition of Zalora Philippines by Ayala Group.

“The rumour that we are selling off our business in Indonesia is certainly not the case. And we announced a deal that’s actually very exciting – an investment from Ayala Corp into Zalora Philippines – which is in no way a signal of a retreat from the country, but more of a commitment,” Gundersen told this portal.

But why did the rumour surface in the first place? Had there been actual talks about possible investments from MAP Group?

Gundersen declined to comment. Right now, he said, discussions with MAP are only related to how Zalora could continue adding more brands from MAP’s large portfolio. The two companies have been working together with MAP as a supplier.

“We are not retreating from Indonesia nor the Philippines,” stressed Gundersen.

In 2016, Zalora sold its businesses in Thailand and Vietnam to conglomerate Central Group. When news about stake sale in Zalora Philippines and rumour on Indonesia exit emerged, it led to a speculation that Zalora had continued its retreat from the region. Gundersen denies this narrative, saying that the Philippines share sale was very different to what it had done in Thailand and Vietnam.

“Our investors looked at the operations in Thailand and Vietnam (like they always do, regularly), and decided that it did not have the best outlook. Whereas in the Philippines is very different because we remain the majority. It just made sense to us to have a local partner in the Philippines,” he explained.

Will Zalora implement the same partnership strategy in Indonesia, as it has now with Ayala? It is always a possibility that the company would always explore, Gundersen said.

Indonesia, in particular, is a massive market for e-commerce, with high social media and smartphones usage, coupled with growing income. Gundersen reiterated that Zalora is committed to bring more brands – local, international, and in-house – that are more relevant for its Indonesian customers.

The company is also on the lookout for ways to improve its services, particularly in payments, a sector which Gundersen called “very interesting” to watch.

“Definitely the space that we want to watch – anything that can help make it easier for our customers to make a purchase we want to be involved. It’s still early days but definitely we want to monitor close,” Gundersen said, when asked about a possibility to partner with local fintech companies.

Indonesian e-commerce industry has grown in two-digits annually over the past five years, according to a number of reports. This year, e-commerce transactions in the country are expected to reach $45 billion from an estimated $30 billion in 2016. While the opportunities are abundant, the competition is fierce.

A few months earlier, local firms Berrybenka and SaleStock were reported to have laid off hundreds of their employees. While smaller firms are gasping for breath, giants like MatahariMall.com and Lazada are steadily marching forward. Last year both companies received major funding from global investors, with MatahariMall snatching $100 million from Mitsui (and at least another $25 million from Matahari Department Store) and Lazada pocketing $1 billion from Alibaba.

Experts have projected that competition will start to sharpen even further – especially if US giant Amazon decides to enter Indonesia – and will force smaller firms to consolidate.

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