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Business

Lazada Indonesia aligns business model with Alibaba

E-commerce operator to focus on adding small merchants

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Orders being filled at a Lazada warehouse in Jakarta.   © Reuters

JAKARTA -- The Indonesian unit of Lazada said it plans to focus on adding small merchants to its online marketplace, emulating the strategy of Alibaba Group Holding, the Chinese e-commerce company that acquired it last year.

Florian Holm, Lazada Indonesia's co-chief executive, told reporters on Wednesday the company will launch a campaign in April which will also mark the first anniversary of its acquisition by Alibaba to attract more small businesses online. It already partners some 15,000 third-party sellers in Indonesia. Holm said Lazada also plans to enable some merchants to sell products to shoppers in China through Alibaba's Taobao e-commerce platform.

"We are learning from [Alibaba] and trying to apply its learnings in how we can foster more entrepreneurship," Holm said. "We want to help all the people out there who have great business ideas ... because in e-commerce you can try with minimal cost."

Lazada operates in six Southeast Asian countries, and entered Indonesia in 2012 as an online retailer buying merchandise from electronic and fashion companies to sell on its website. It began selling products from third-party merchants the following year, and according to Holm these now account for more than 80% of products sold on the platform, and up to 30% of products shipped from Lazada's three warehouses in the country.

Lazada was one of the largest e-commerce operations in Indonesia, but Alibaba's $1 billion acquisition came at a time when it was facing increasingly stiff competition from local rivals like SoftBank-backed Tokopedia, Lippo Group's MatahariMall.com, and Bukalapak, which is funded by a local media mogul.

Small businesses play a large role in the Indonesian economy due to the lack of modern retail outlets outside major cities, and this is fueling the exponential growth of e-commerce, which is estimated to rise from $1.7 billion in 2015 to $46 billion in 2025.

The Lazada acquisition has prompted speculation about the possible rollout in Indonesia of Alipay, Alibaba's affiliated payment service. Holm said adding payment options is always a priority at Lazada, but said there is "no further news" on Alipay.

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