Rocket Internet is bringing yet more investment to its e-commerce businesses in Southeast Asia, after Lazada — its Amazon-like marketplace service — announced the closure of a $100 million round of investment. The deal comes less than on...
Rocket Internet is bringing yet more investment to its e-commerce businesses in Southeast Asia, after Lazada — its Amazon-like marketplace service — announced the closure of a $100 million round of investment. The deal comes less than one month after its sister site — fashion store Zalora — also raised $100 million.
The round is unparalleled by any other from a startup in Southeast Asia — Zalora aside — and it includes participation from existing investors (which are regular Rocket Internet co-investors): Holtzbrinck Ventures, Kinnevik, Summit Partners and Tengelmann Group. Belgium-based consumer investment firm Verlinvest also partook and becomes a new stakeholder in one-year-old Lazada.
If you’re struggling to keep up with Lazada and its fundraising activities at this point, we quite understand. So, let’s break it down.
The company launched in March 2012 and went on to announce four rounds of funding, today’s not included: JP Morgan invested ‘upwards of $50 million’ in September 2012, Kinnevik provided $40 million in November 2012, Summit Partners added $26 million in December 2012 and Tengelmann Group injected around $20 million in January 2012.
All in all, this latest figure included, that amounts to at least $236 million in money from investors.
That’s quite a haul for a company that just passed its first anniversary, let alone one that is in Southeast Asia, where funding deals are arranged at far more modest levels.
Lazada operates in Thailand, Vietnam, Malaysia, the Philippines and Indonesia. It began selling consumer electronics items, but today its range is as diverse as books, home appliances, kids and babies items and more. It accepts multiple credit cards, as well as cash on delivery — a big issue in markets where credit card and bank account ownership are low.
Like Zalora — the head of which we recently interviewed — Lazada is aiming to build an e-commerce business to serve Southeast Asia. Amazon only began shipping to some markets in the region this year, and Japanese Web retail giant Rakuten has a fragmented presence. Most other Western retailers are busy prioritizing other markets.
That may be down to a long-held belief that cultural, political, linguistic and geographical barriers make the region difficult to focus on; however Lazada aims to overcome them all.
Following the lead of other ventures backed by Germany’s Samwer brothers and their Rocket Internet incubator, the company is focused on building the logistics and infrastructure that will allow it to offer a “world-class” selection of products that are delivered within one or two days to any location across the region.
Lazada CEO Maximillian Bittner tells TNW that he believes Southeast Asia represents a “high single-digit billion US dollar opportunity” for e-commerce within the next five years, and he’s keen to see his company lead that market.
The Lazada service adjusted its model and adopted a marketplace-style approach this year, going on to pass one million orders within the last month. Like most Rocket Internet-backed businesses, Bittner does not reveal raw financial figures for Lazada, but he does say the firm sold ‘three-digit million euros’ in gross merchandise volume (GMV) — i.e total goods on its site — last month; unfortunately that’s suitably vague for us to gain no real insight into its finances.
However, we do know Lazada is not yet profitable. Bittner tells TNW that there is a “clear roadmap to profitability”, which he estimates will come by the latter end of 2014. That’s a statement that bears striking resemblance to an estimation made by Zalora MD Michele Ferrario, who said his company would be profitable by 2015.
“There’s no reason e-commerce shouldn’t be big in Southeast Asia,” Bittner explains. “There are a number of ‘social media capital cities’ [Bangkok and Jakarta are among the world's most populous Facebook cities], while tens of millions of people use messaging apps like Line, all of which indicates that there’s clearly a strong