Alibaba bets on Frenchman to lead SE Asia expansion

In December, Alibaba Group Holding Ltd put Pierre Poignant in charge of Lazada, the subsidiary spearheading the Chinese e-commerce giant’s high-stakes Southeast Asia expansion. The choice was out of character for several reasons. Poignant is a professional manager – a type Alibaba supremo Jack Ma has long disdained. He was part of Lazada’s founding team, also typically disqualifying. Finally, as a Frenchman, he’s one of a very few Westerners to have cracked Alibaba’s upper echelons. Poignant, 40, takes charge at a fraught moment for Lazada.

Since being absorbed by Alibaba, the Singapore company has been roiled by management turmoil – Poignant is the third CEO in nine months – even as it fights a multi-front war against well-funded, fleet-footed rivals. In Indonesia, by far the region’s biggest and most promising market, Lazada has fallen behind homegrown players. The MIT engineer-by-training will have to vanquish regional rivals if he is to achieve Alibaba’s long-held ambitions of becoming a truly global player in the mould of Inc or EBay Inc. Lazada is the single most important piece of a slowly coalescing international business that for now encompasses mainly sideline businesses in India, Pakistan, Brazil and Russia. With sales growth slowing in China, the eventual goal is to get half of Alibaba’s revenue from abroad.


Poignant: Bringing deep knowledge of the industry and region to his new role as in charge of Lazada, the subsidiary spearheading the Chinese e-commerce giant’s high-stakes Southeast Asia expansion

“Our vision at Lazada is to accelerate progress in Southeast Asia through commerce and technology,” Poignant said in his first major interview since becoming CEO. “This is fully part of the Alibaba vision.” Southeast Asia is one of the last major unclaimed e-commerce markets in the world, with no dominant player. One reason is that the population of more than 600mn is scattered across four time zones and 11 countries. Lazada was started in 2012 as an Amazon for Southeast Asia by Rocket Internet, a German company famous for cloning other people’s ideas. Today, Lazada sells 300mn products – from smartphones to Muslim prayer rugs – to consumers in six countries. With a separate site for each, Lazada echoes the look and feel of Alibaba and Amazon.

Its Lazmall sells brands directly to consumers, while Marketplace connects smaller merchants with customers. Like its Chinese parent, Lazada hosts ads and lets shoppers rate and review products. The similarities end there.Where Alibaba serves a largely homogeneous market, Lazada caters to a highly fragmented region with different languages, currencies and buying habits. Necklaces and headscarf pins are hot sellers in Indonesia, but shoppers in Malaysia tend toward more prosaic items: diapers, juicers and the like. Delivering packages is a challenge in the region’s chaotic, traffic-choked cities; getting the job done in Indonesia – a sprawling archipelago of more than 17,000 islands – can take weeks. With the exception of Singapore, cash on delivery still rules much of the region.

Countless startups are trying to tackle the problem with mobile payment services, but there’s no dominant player. As the first e-commerce company to serve six countries in Southeast Asia, Lazada has the first-mover advantage. Poignant was instrumental in stitching together a regional logistics network, which includes 31 fulfilment warehouses scattered around Southeast Asia and an outsourced fleet of planes, trucks, motorbikes and bicycles that can get packages to customers in as little as 24 hours in big cities like Jakarta and Bangkok. (Deliveries typically take two to three days.) Lazada has staked a claim on groceries, in 2016 acquiring RedMart, a startup that’s become a leading e-grocer in Singapore. It intends to take that business to at least one more country this year, Poignant said.

These assets have helped turn Lazada into the region’s largest e-commerce company as measured by traffic. In the last quarter of 2018, it attracted 183.4mn monthly web visits in six countries, according to the research consultant iPrice. Tokopedia came in at second with 153.6mn (from Indonesia alone), while Shopee had 147.6mn in six countries. (Lazada declines to disclose revenue or profit numbers.) Still, competition is ramping up fast. Attracted by a growing middle class armed with smartphones, venture firms and strategic investors alike are pouring money into homegrown online marketplaces. Shopee, which is part of Tencent Holdings Ltd-backed Sea Ltd, is already its closest regional rival with annual revenue of $270mn in 2018. It was the most downloaded shopping app in Southeast Asia in 2018, according to App Annie. Tokopedia, also backed by Alibaba, meanwhile is quickly evolving into a one-stop shop for services, from travel and insurance to mutual funds. In 2017, Amazon launched its Prime Now service in Singapore, offering same-day delivery of everything from chilled beer and meat to books.

Sources and photo-credits: Bloomberg