Alibaba Group Holding Ltd (NYSE: BABA), a Chinese e-commerce company decided to invest $1 billion in a Southeast Asian online retailer called Lazada which would boost their stake by almost a third to 83 percent. This decision was based on the expanding operations of another rival Chinese e-commerce firm, JD.com Inc (NASDAQ: JD). Amazon also aims to enter the region of 600 million people where only a certain amount of online retail sales are conducted. This could be the first market where Alibaba and Amazon will go head to head once Amazon confirms their plans.
Last year, Alibaba’s investment in Lazada of a controlling stake for about $1 billion boosted global sales even though they had the option of buying the remaining stakes 12-18 months after the deal closed. The new investment now would double Alibaba’s investment as a whole.
Alibaba’s investment in Lazada has provided them with tons of benefits including access to a much wider range of merchants, improving their logistics capabilities, and helping them distinguish from Amazon and other competitors.
Today, Alibaba announced that they will purchase shares from certain Lazada shareholders valued at $3.15 billion.