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Business

Lazada hastens expansion of Alibaba's Taobao in Southeast Asia

Chinese e-commerce giant counts on regional partner to rival Amazon

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Lazada's office in Jakarta   © Reuters

HONG KONG E-commerce in Southeast Asia is becoming a heated battleground, with Amazon.com the latest to join the competition. China's Alibaba Group Holding has invested $2 billion for a controlling stake in e-tailer Lazada, which operates in six markets in the region. Before the official announcement of Amazon's entry to the Southeast Asian market, the Nikkei Asian Review talked to Lazada's co-founder and chief marketplace officer Aimone Ripa di Meana about expansion, fake goods and how to take on Amazon.

Lazada's co-founder and chief marketplace officer Aimone Ripa di Meana (Photo by Yasuo Awai)

How will Lazada make use of Alibaba's brand name? Obviously, [Alibaba's] second [share] increase is a testament to the value that's been created by Lazada. This is a real sign of confidence for the team.

We embrace the Alibaba philosophy of enabling the ecosystem, unlike others that are more into doing everything in-house and empire-building, as opposed to enabling. ... [But] the reality is there is complexity in every step of the way -- from infrastructure to data centers, languages, seasonality, customs and regulations. What we are really working [on] together is how we can bring the [basic] infrastructure of Alibaba over to Southeast Asia and localize it.

Lazadarecentlytook Alibaba's Taobao Collection site to Singapore and Malaysia. What has the reception been like? That was a really fantastic project as it covered every part of the business, from payment to logistics, cardboard structure and merchant management. It's a true testament of the two teams coming together to build something in a fast and efficient way. We've seen a huge reception in Singapore, and in Malaysia also, because the Taobao brand is well-known there. ... We are targeting to roll out [Taobao Collection] in three markets -- Indonesia, Thailand and the Philippines -- by the end of the year.

How do you deal with the issue of counterfeit goods on Taobao? We have a very strict selection with the Taobao team, so it's not all of Taobao. It's a selected and curated assortment. We are leveraging all the data that [is] available not only on market trends, but also on certain types of behavior of merchants and [based on] our detection to really have a website that's clean. Taobao has 1 billion products. [Taobao Collection] has somewhere around 4 million per market.

What strategies are you implementing to beat the competition? Some [players out there] are household names and some are international players but they are very limited in their focus. Lazada is the only player that spans across six markets and is the leader in five.

For us, in 2013 and 2014, we shifted from being a retailer to a marketplace. It's not just about allowing merchants to sell directly to consumers. It's the way in which you open up the platform and allow entrepreneurs to use your website, logistics and payment methods ... to grow and get to the next level of growth. [They will] be able to go from a shop that's selling to a market of a couple thousand people in their neighborhood to a shop that now has access to all of Thailand and very soon, hopefully, all of Asia.

Your rivals are scaling up logistics networks in the region. What are your plans? Today, [Chinese company] JD.com and people are trying to look into warehousing and so on but it's a very complicated business to be in. It requires a real integration with the platform and the logistics, which is something we've been working on in the past five years.

Logistics doesn't limit itself to warehouses and domestic logistics. We also control the cross-border supply chain with a solution called Lazada Global Shipping, which is the first global supply chain that enables a merchant in Ningbo to ship a single item to a consumer in Balikpapan, in Indonesia, [for] cash on delivery.

Interviewed by Nikkei staff writers Jennifer Lo and Yasuo Awai in Hong Kong

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