Chinese tech giant Alibaba is taking Lazada to Europe as part of its strategy to drive growth in overseas countries. It was reported that the plan to expand Lazada to Europe was due to Alibaba’s slowing opportunities in China.
The company’s latest interim report published in December 2021 unveiled that its revenue from its China commerce retail business for the six months ended on 30 September 2021 was US$40.8 billion, an increase of 33% compared to US$29.7 billion for the same period of 2020. However, revenue from international commerce retail business for the same period last year was US$3.29 billion, a year-on-year increase of 43% compared to US$2.23 billion for the same period of 2020.
When it comes to wholesale business, revenue in China for the six months ended on 30 September 2021 was US$1.26 billion, an increase of 14% compared to the same period of 2020. The increment was better in its international business, as the revenue was US$1.42 billion, an increase of 36% compared to the same period of 2020. Reuters’ report said that Lazada will target European vendors, while Lazada Thailand CEO James Dong will help spearhead the initiative. The destination of the expansion is still unknown at the moment. Moreover, Alibaba’s international digital commerce Jiang Fan visited Singapore in April to discuss the plan too.
The potential expansion plan is Alibaba’s another step to tap into opportunities in Europe. Its logistic arm Cainiao opened a hub in Belgium last November which, reportedly, was the largest of its kind in Europe and a key part of the agreement between the Alibaba Group and the Belgian government concluded in 2018 to join the global Electronic World Trade Platform initiative. Alibaba’s present in Europe also includes AliExpress, targets consumers looking for goods such as fashion, accessories, computer electronics, toys and tools from Chinese manufacturers.
Last year, Alibaba reorganised its international and domestic commerce platforms into two units to better drive synergies, including international digital commerce and China digital commerce. International digital commerce brings together Alibaba’s overseas consumer-facing and wholesale businesses under the leadership of Jiang. It will include AliExpress, Alibaba.com, and Lazada. According to Alibaba, these businesses propel its globalisation strategy and the newly-created unit is in line with Alibaba’s goal of serving two billion consumers globally. In its last quarterly earnings, the company said it had reached 285 million annual active consumers overseas.
Meanwhile, Lazada competitor Shopee also decided to pull out of France, after its foray into Europe. Shopee said that following a short-term, preliminary pilot, the company has decided not to continue the Shopee service in France. It added that other markets are unaffected, and Shopee will continue to adopt an “open-minded and disciplined approach to exploring new markets”.
Last year, Shopee said that it is looking to grow its presence in Spain with the launch of a new Instagram page. At that point, the expansion into Europe is still in the early stages and that Shopee was understood still testing the waters. Shopee’s strategy to enter the Spanish market came shortly after it announced its expansion plans into Poland.