Should Amazon.

com be worried of
Lazada.com attempting to dominate the
market share in South East Asia?

IB Business and Management SL IA

Word Count: 1500

Candidate Name: James Adhitthana

Candidate Number: ---
Examination Session: May 2016
Word Count: 1500
Candidate Number: --- Candidate Name: James Adhitthana

TABLE OF CONTENTS
1. Introduction .............................................................................................................................. 3
2. Analysis of Information with regards to the SWOT Analysis ................................................. 5
2.1. Market Analysis ............................................................................................................... 5
2.2. PEST Analysis.................................................................................................................. 6
i. Political............................................................................................................................. 6
ii. Economic.......................................................................................................................... 7
iii. Social ................................................................................................................................ 7
iv. Technological ................................................................................................................... 8
2.3. Market Research ............................................................................................................... 8
3. Conclusion and Recommendation ........................................................................................... 9
Appendix ....................................................................................................................................... 10
SWOT Analysis for Amazon .................................................................................................... 10
Supporting Documents.................................................................................................................. 11
Source Document 1 ....................................................................................................................... 13
Source Document 2 ....................................................................................................................... 15
Source Document 3 ....................................................................................................................... 17
Source Document 4 ....................................................................................................................... 22
Source Document 5 ....................................................................................................................... 24

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Candidate Number: --- Candidate Name: James Adhitthana

Should Amazon.com be worried of Lazada.com

attempting to dominate the market share in South
East Asia?
1. INTRODUCTION
Amazon.com has experienced massive growth and restructuring from being the top online

bookstore established over 20 years ago into the current biggest online retailer in the world with

more than 1.6 billion page views per day1. Amazon has also globalized by making its services

available to many countries of the world. The success of the company with $107 billion in revenue

in 2015has been the inspiration for bigger brick and mortar companies to provide online services

to combat the new e-commerce market and even spawn many competitors.

The issue, however, is that with the growing need of e-commerce in SEA (South East Asia)

and the demand of Amazon’s products in the region, Amazon does not seem to provide fulfillment

centers or warehouses. This means people in the region have to wait for weeks at a time for their

orders to come - not to mention transport laws that cause conflicts and problems with international

warranty policies - and, therefore, are hindered away from using Amazon. This springs up

Lazada.com, a new online retailer competitor owned by Rocket Internet that closed an astounding

$249 million round of investment back in 2014. It is even dubbed the “clone” of Amazon.com

because of the similarities in the business model and operation management. Lazada’s mission is

to be the world’s largest Internet platform outside the United States and China2. Currently, the

1
"Wolfram|Alpha: Computational Knowledge Engine." Wolfram|Alpha: Computational Knowledge Engine.
Wolfram|Alpha. Web. 1 Jan. 2016.
2
"We Build Companies." About | Rocket Internet. Rocket Internet. Web. 1 Jan. 2016. <https://www.rocket-
internet.com/about>.

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Candidate Number: --- Candidate Name: James Adhitthana

business is mainly focusing on SEA, trying to capitalize on the demand Amazon seems to ignore.

Thus this commentary will evaluate whether Amazon.com should be concerned of Lazada.com

attempting to dominate the market share in South East Asia. The discussion will be viewed from

different aspects: market analysis, PEST analysis, and market research.

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Candidate Number: --- Candidate Name: James Adhitthana

2. ANALYSIS OF INFORMATION WITH REGARDS TO THE SWOT

ANALYSIS
2.1. MARKET ANALYSIS

What makes Amazon’s unique selling proposition from its competitors is how they own

the widest range and the most complete bookstore in the world including Kindle, the most popular

and bestselling e-reader which has been their cash cow. An opportunity that Amazon is missing

out, however, is how the tablet is not officially supported or even sold internationally3. Being the

most famous e-reader, people have to resort on buying the Kindle on third party sellers which sells

for a substantial markup and even pirating e-books4. There is an increased demand in the region,

but the business’ oversight lead Amazon to lose a money making opportunity.

A business to customer (B2C) aspect to its online retail business is Amazon’s unique

program of their fulfillment centers. In fact, most of their retail sales work using the program. The

program works by letting other businesses sell their products on Amazon’s e-commerce platform.

This means that a business’ inventory will be handled and placed in many fulfillment centers

(packing warehouse) around the world. Amazon will then do the selling, packing, shipping, and

customer service. Essentially, this means that the business can save time and focus on other aspects

while Amazon does the rest at a fee5. This program is a win-win solution for a business in saving

time, for the potential customers in having more choices to buy on the website, and to the business

3
Hong, Kaylene. "Amazon Should Get Its Game On In Southeast Asia." Amazon, It’s Time to Get Your Game on in
Southeast Asia. TNW Network, 10 Jan. 2014. Web. 12 Dec. 2015.
4
Ibid.
5
"Amazon.com: Fulfillment by Amazon - Benefits." Amazon.com: Fulfillment by Amazon - Benefits. Amazon. Web.
2 Feb. 2016. <https://services.amazon.com/fulfillment-by-amazon/benefits.htm>.

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Candidate Number: --- Candidate Name: James Adhitthana

who will overall earn more revenue. With the same idea in mind, Lazada has exactly copied the

whole process and is operating this in the Southeast Asia region.

Amazon’s weakness is also what makes the business very popular and successful. This is

how Amazon uses their “zero margin strategy” which is a pricing strategy where the business runs

at very low margins and sells some items at a loss by utilizing economies of scale6. By doing so,

it attracts more customers into purchasing more items on their website. However, this means that

despite the high revenue, the business gets low profits. What about Lazada? Lazada is also trying

to employ this strategy by price-cutting products and competing with local competitors.

2.2. PEST ANALYSIS

i. Political

South East Asia is a huge region with multiple countries, different inter-country

relationships and multiple international policies. Political issues may occur since some

countries might not welcome a giant company taking over the sales of smaller local businesses.

Taxes will also be an issue since the different countries in the region may charge different taxes

which add to the costs of setting up the business in the region. Amazon may not want to bother

with the nuisance of setting up the fulfillment centers and the logistic networks because of the

different industry specific regulations from the multiple countries in the region. On the other

hand, Lazada has already achieved a reputation in these regions, which is an advantage and

one step ahead of Amazon for Lazada.

6
Chandler, Sean. "The Ultimate Stretch In Economies Of Scale." The Ultimate Stretch In Economies Of Scale
Amazon.com, Inc. (AMZN). Seeking Alpha, 30 May 2014. Web. 2 Jan. 2016.
<http://seekingalpha.com/article/2245923-the-ultimate-stretch-in-economies-of-scale>.

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Candidate Number: --- Candidate Name: James Adhitthana

ii. Economic

An article published on CNBC reveals how online shopping only makes up 1% of total

retail sales in Southeast Asia7. Since the region mainly contains developing countries, it would

mean that people will demand more affordable and enticing items. Fluctuations may cause

issues because of the different currencies from the various countries and the exchange rates

affecting the company’s costs. Taxes would also be an issue since multiple countries charge

different taxes for different items. The low percentage of online sales and the issues relating to

costs may hinder Amazon from entering the market compared to Lazada who has already

adapted their business model to the market.

iii. Social

Southeast Asia’s total population of over 600 million people could benefit Amazon in

earning much more revenue which is important considering their low margins. The challenge

is, with multiple countries to cater to, Amazon may have problems with the difference in culture

and lifestyle. Some cultures still prefer to purchase the products in brick and mortar stores

compared to shopping online. This is proven by the below average minutes spent per user on a

retail website, although there is a growing need for e-commerce in the region. Yet, Lazada has

already reached popularity in many countries in the region. Recently, it even took over

Amazon’s popularity in some of those countries as the result of their aggressive marketing

campaigns, such as online advertising and TV.

7
Harjani, Ansuya. "Meet the Man behind the ‘Amazon of Southeast Asia’." CNBC Meet the Man behind the
‘Amazon of Southeast Asia’. CNBC LLC, 17 Apr. 2014. Web. 4 Jan. 2016. <http://www.cnbc.com/2014/04/11/meet-
the-man-behind-the-amazon-of-southeast-asia.html>.

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Candidate Number: --- Candidate Name: James Adhitthana

iv. Technological

The market for tablets is exponentially growing in the region. It is estimated that about

three tablets are bought for every four laptops sold in the region. As mentioned earlier, this is

a good potential for Kindle, considering the current demand in the market. However, the IT

infrastructure in most of the countries in the region is not as developed, which means not

everybody has access to the Internet.

2.3. MARKET RESEARCH

An article by Takanori Okabe and Takayuki Kato exposes how in a short time, Lazada is

able to reach the top online retailers in SEA faster than any other online retailers8. According to

the analytics company comScore, Lazada was even ranked in the top 5 online retailer sites list at

four of the five Southeast Asian markets where Amazon is not9. Analyzing the market research by

using Google Trends uncovers the tendency of Google searches of Lazada and Amazon in

Indonesia from April 2012 to January 2016. Comparing both graphs verifies how much Lazada

has overtaken Amazon’s popularity back in 2012 and is now still growing exponentially while

Amazon is not10. The graph also shows how Lazada’s popularity skyrocketed far from Amazon

after 2012. Ansuya Harjani from CNBC.com has even stated that Lazada is even said to have 1

million visitors a day11, impressive for a new company.

8
TAKANORI OKABE, and TAKAYUKI KATO. "Lazada Seeks E-commerce Dominance in Southeast Asia- Nikkei Asian
Review." Nikkei Asian Review. Nikkei Inc, 11 Sept. 2014. Web. 14 Feb. 2016.
<http://asia.nikkei.com/Business/Companies/Lazada-seeks-e-commerce-dominance-in-Southeast-Asia?page=1>.
9
Ibid.
10
"Google Trends - Web Search Interest: Amazon - Worldwide, 2004 - Present." Google Trends. Google. Web. 3
Jan. 2016. <http://www.google.com/trends/explore?q=amazon#q=amazon, lazada>.
11
Harjani, Ansuya. "Meet the Man behind the ‘Amazon of Southeast Asia’." CNBC Meet the Man behind the
‘Amazon of Southeast Asia’. CNBC LLC, 17 Apr. 2014. Web. 4 Jan. 2016. <http://www.cnbc.com/2014/04/11/meet-
the-man-behind-the-amazon-of-southeast-asia.html>.

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Candidate Number: --- Candidate Name: James Adhitthana

3. CONCLUSION AND RECOMMENDATION

In conclusion, should Amazon.com be concerned of Lazada.com attempting to dominate

the market share in South East Asia? Yes, it is obvious that Lazada has overtaken Amazon’s place

in several countries in the region. Surprisingly, comScore’s data has proven that Lazada.com has

become one of the motivators of the growth of the demand of online shops. PEST analysis has

shown the potential revenue that Amazon could make with more than 600 million populations in

the region. Market analysis shows how Kindle is demanded in the region whereas Amazon does

nothing about it. These are good reasons why Amazon should set up in SEA. However, Amazon

should also consider that setting up in SEA is going to be costly. PEST analysis has shown how

each country in the regions has its own problems and how complicated it would potentially be for

Amazon. This might be why Amazon is currently not set up in SEA.

Amazon should consider going into the South East Asian market. Looking back at

Amazon’s “zero margin” strategy, the business could use the addition of the region to boost up the

total revenue and profits considering the total population. Another strategy proposed backed up by

my PEST analysis suggests that Amazon should purchase Lazada.com which is possible for

Amazon considering their deep pockets and history of purchasing and converting other businesses

into their own. Doing this helps with eliminating the legal and logistic problems and would be an

easy transition since Lazada operates similarly to Amazon.

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APPENDIX
SWOT ANALYSIS FOR AMAZON
Strength
 The world’s biggest and leading online
retailer with books as its main focus
 Ahead of the competitors in logistics
and distribution systems.
 The service is open globally and
reaches many parts of the world.
 The business owns Kindle the best-
selling and most demanded e-readers.
 Excellent customer service.
Opportunities
 Amazon could focus on more
innovation where they currently are
creating rivals to Google Play, Netflix,
and other services.
 Amazon could branch out further into
more countries and regions of the world
since Amazon is known for only
providing services to established and
well-populated countries.
Candidate Name: James Adhitthana
Weaknesses
 The “zero-margin strategy” (selling
with low markup) that Amazon uses
might be dangerous for the business’
profitability even if the company has
high revenues.
 Amazon needs high cost in operating
the logistics chain.
 Amazon does not have a fulfillment
center in South East Asia
 Kindle is not supported in multiple
countries.
Threats
 Amazon’s pricing strategy could put the
business in trouble of lawsuits from
other competitors.
 Online shopping might pose a concern
to users because of the possibility of
hacking and identity theft.
 New businesses/competitors and other
online retailers such as Lazada tries to
copy Amazon’s success.
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SUPPORTING DOCUMENTS

Bibliography:

"Amazon.com: Fulfillment by Amazon - Benefits." Amazon.com: Fulfillment by Amazon Benefits.

Amazon. Web. 2 Feb. 2016. <https://services.amazon.com/fulfillment-by-

amazon/benefits.htm>.

Chandler, Sean. "The Ultimate Stretch In Economies Of Scale." The Ultimate Stretch In

Economies Of Scale Amazon.com, Inc. (AMZN). Seeking Alpha, 30 May 2014. Web. 2 Jan.

2016. <http://seekingalpha.com/article/2245923-the-ultimate-stretch-in-economies-of-

scale>.

"Wolfram|Alpha: Computational Knowledge Engine." Wolfram|Alpha: Computational

Knowledge Engine. Wolfram|Alpha. Web. 1 Jan. 2016.

<http://www.wolframalpha.com/input/?i=amazon.com>

Supporting Documents:
Source 1:

"Google Trends - Web Search Interest: Amazon - Worldwide, 2004 - Present." Google Trends.

Google. Web. 3 Jan. 2016.

<http://www.google.com/trends/explore?q=amazon#q=amazon, lazada>.

Source 2:

Harjani, Ansuya. "Meet the Man behind the ‘Amazon of Southeast Asia’." CNBC Meet the Man

behind the ‘Amazon of Southeast Asia’. CNBC LLC, 17 Apr. 2014. Web. 4 Jan. 2016.

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Candidate Number: --- Candidate Name: James Adhitthana

<http://www.cnbc.com/2014/04/11/meet-the-man-behind-the-amazon-of-southeast-

asia.html>.

Source 3:

Hong, Kaylene. "Amazon Should Get Its Game On In Southeast Asia." Amazon, It’s Time to Get

Your Game on in Southeast Asia. TNW Network, 10 Jan. 2014. Web. 12 Dec. 2015.

<http://thenextweb.com/asia/2014/01/10/amazon-its-time-to-get-your-game-on-in-

southeast-asia/#gref>.

Source 4:

TAKANORI OKABE, and TAKAYUKI KATO. "Lazada Seeks E-commerce Dominance in

Southeast Asia- Nikkei Asian Review." Nikkei Asian Review. Nikkei Inc, 11 Sept. 2014.

Web. 14 Feb. 2016. <http://asia.nikkei.com/Business/Companies/Lazada-seeks-e-

commerce-dominance-in-Southeast-Asia?>.

Source 5:

"We Build Companies." About | Rocket Internet. Rocket Internet. Web. 1 Jan. 2016.

<https://www.rocket-internet.com/about>.

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SOURCE DOCUMENT 1

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SOURCE DOCUMENT 2
Meet the man behind the ‘Amazon of Southeast Asia’

Jay Directo | AFP | Getty Images

An office worker browses an on-line site in Manila.
From political unrest in Thailand to a typhoon in the Philippines, running a business in Southeast
Asia has thrown Maximilian Bittner, founder and CEO of e-commerce site Lazada, several curve
balls over the past year.
Lazada, which is billed as the "Amazon of Southeast Asia", is the fastest growing online
department store in the region, offering products ranging from consumer electronics to clothing
in Indonesia, Malaysia, Philippines, Thailand and Vietnam.
Despite the challenges, Lazada has made great strides in establishing its position in Southeast
Asia – a market that is home to over 600 million consumers and a rapidly growing middle class.
The site's sales have more than doubled in the last six months, while traffic has grown 70 percent
to almost 1 million visitors a day over this period.
"I expect it to only accelerate from here, as people get more used to shopping online," said
Bittner, a consultant-turned-entrepreneur, noting that online shopping makes up just 1 percent of
total retail sales in Southeast Asia. This compares with 8 percent in China and over 10 percent in
the U.S. and U.K., according to the Centre for Retail Research.
This presents a huge growth opportunity, he said, noting that the company still has a "long, long
way to go."
"When you look at companies like Amazon and Alibaba, the sheer size of what they've built is
an extremely exciting opportunity," he said.

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Candidate Number: --- Candidate Name: James Adhitthana

While Lazada shares a similar business model to Amazon, both selling their own inventory as
well as allowing third-party merchants to sell their products on their websites, Bittner says
launching an e-commerce business in Southeast Asia presents different challenges.
"When Amazon started in the U.S., it didn't have to think about how it would get the package to
the customer – there was UPS for deliveries," he said.
Lazada has established its own fleet of couriers in each of its markets, which covers 30 percent
of overall orders, he said. "In our market, we're not only dealing with logistics, the payment
network is different. Our largest payment method is still cash on delivery," he said.
"One of the challenges is really guiding the customer through the shopping experience. For
example, we send them a text message to say we've received the order. There's a lot of educating
the customer through the whole shopping experience," he added.
Nevertheless, having the ability to make it more convenient for consumers in far-flung areas of
Southeast Asia to purchase products that they would otherwise have to drive hours to buy, is
highly rewarding, said Bittner.
Another source of gratification is seeing the trust that investors have in us as a team, he said.
Since its launch two years ago, Lazada has attracted investment from the likes of JPMorgan and
most recently U.K. retail giant Tesco, which acquired a minority stake in the company in
December.
"At the same time it's humbling because they clearly expect something for their money also," he
added.
While Bittner's impressive resume includes Morgan Stanley, McKinsey & Company and e-
commerce focused venture capital firm Rocket Internet, he says there are a few things that
working at blue-chip companies can't prepare you for when it comes to entrepreneurship.
"One thing I wasn't taught is the people aspect of running a business, being able to manage big,
big teams," he said. Lazada, which currently employs around 1,500 people across five countries,
started with a core team of just 5.
"Also, what you don't expect is how much work it is...there's no weekend," he said.
"You can be prepared for a certain aspect of entrepreneurship, but in the end, what it really
comes down to on a day-to-day basis is trial and error. Constantly improving and adjusting what
you're trying to achieve, and having a flexible approach in the way you fulfill your vision," he
added.

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SOURCE DOCUMENT 3
Amazon, it’s time to get your game on in Southeast Asia
by Kaylene Hong— 10 Jan '14, 12:29pm in
There’s simply no excuse anymore. Amazon just doesn’t seem to care about Southeast Asia. Well,
what else would explain the fact that it has yet to enter this particular market?
It speaks volumes about the demand for Amazon products — especially in Singapore where I live
— when recently even Groupon Singapore jumped onto the ship to offer the Kindle Paperwhite
for sale at S$219 (US$172), a mark-up of over 40 percent on the listed price of US$119 on
Amazon. The Groupon Singapore deal is now sold out.
With the demand for Amazon’s Kindle products comes the natural demand for e-books. Yet, you
can’t buy a book directly from Amazon in this part of the world (I know because I own an old-gen
Kindle, acquired for an inflated price via a third-party retailer). It’s a hugely convoluted process
that I suspect many people don’t have knowledge of — first you must register a US postal address,
then top up a gift card and finally use a VPN to download the books you bought.
Trying to outsmart the system this way though has its risks — Amazon may just eventually suspend
your account.
Yet instead of taking the (easier) way out and downloading pirated books for free, a lot of friends
I’ve spoken with in Singapore actually take the effort to bypass the system so they get their hands
on legal e-books.
The Kindle ecosystem is just an illustration of the opportunities Amazon is missing out on in
Singapore, as well as the surrounding Southeast Asian region. There is definitely demand building

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in the region, which was once considered a backwater for technology and mobile adoption.

Other e-commerce operators

In the absence of Amazon, EBay and other giant US retailers in Southeast Asia, e-commerce
concepts and operators have stepped in to plug the gap — and Amazon would do well to step in
before all these other options are enshrined into consumers’ practices here.
F-commerce, a concept that has failed to ignite in the West, is taking off in Southeast Asia —
particularly in countries like Thailand, Indonesia and Vietnam.
At the same time, Amazon alternatives are sprouting up in the form of e-commerce operators
targeted at the region. One of the more well-known ones would be Lazada — an Amazon-like
marketplace service started by German startup incubator Rocket Internet. Lazada closed a
whopping $100 million round of investment in June last year, which is testimony to the high
demand (and potential) of e-commerce in this region.
Even Chinese e-commerce giant Alibaba has jumped onto the e-commerce boat in Southeast
Asia. It launched its Taobao marketplace in Singapore in September last year, creating a regional
landing page for Southeast Asia, and a dual-language registration page. This came after Chinese e-
commerce rival Jingdong announced a strategic partnership with IT products group iKnow
to launch JD.com’s Singapore site and pick-up stations for purchases made online.

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Japanese e-commerce juggernaut Rakuten also officially launched in Singapore just last month.
Investors have recognized too that e-commerce is the largest bottleneck in Southeast Asia. A team
of seasoned entrepreneurs in Thailand, from Ardent Capital, have dedicated their resources to
building aCommerce, an ambitious project to develop an end-to-end platform — including
analytics and marketing services — for retailers looking to tap into the potential of Southeast Asia.
Steps in Asia
It’s not like Amazon doesn’t know the importance of Asia and hasn’t successfully maneuvered
challenges to set up shop in the most challenging parts of Asia — India and China.
Amazon took over Joyo in 2004 to set up its seventh regional website in China. However, its
Kindle launch in the country was plagued with problems, as the company sought to stave
off challenges related to rampant piracy that has made Chinese consumers unused to paying for
digital content. Yet Amazon went all out to tackle this issue and in June the company’s
devices finally landed on China’s shores.
In India, Amazon managed to overcome the hurdle of restrictions on foreign direct investment
(FDI) that puts limits on selling goods direct to consumers — in June last year it launched its
flagship Marketplace business in India and subsequently began listing its Kindle tablets and e-
readers for sale.

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Amazon has also obviously taken note of Southeast Asia. In June 2013, it offered free shipping to
Singapore for orders above US$125, excluding taxes — but the Kindle and its e-books were still
not made available to consumers in the country.
Amazon’s online retail side could do well in Asia just via offering free shipping and not having a
localized platform, but the stickiness of the Kindle platform would likely give the company an
advantage against its competitors — and the demand in this part of the world for an ecosystem
with an e-reader and e-books is simply unmet.
Furthermore, Kindle tablets are well-priced and in turn, well-positioned for the Southeast Asian
market.

In September 2013, the company launched 7-inch and 8.9-inch versions of the Kindle Fire HDX —
with the 7-inch models starting at $229 (for 16GB) and $329 for an LTE-compatible device while
the 8.9-inch variant costs upwards of $349, or $479 for the LTE-version.
A GfK Asia report from July 2013 noted that the market for tablets is seeing a surge in Southeast
Asia, doubling over a year to reach an estimated 6.1 million units — with three tablets bought for
every four laptops sold in the region.
All these factors are seemingly prepping an easy entry for Amazon into Southeast Asia — what is
it waiting for?
Possible reasons for Amazon staying out

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It seems like Southeast Asia’s key problem — fragmentation — could be what’s stopping Amazon
from marching into the region. Conquering China and India is a no-brainer since their individual
populations number more than a billion each. Southeast Asia may be huge too — with a
cumulative population of over 600 million people — but it is made up of pockets of different
countries, and the hassle in terms of having to set up separate logistics and deal with individual
legal problems may have well put Amazon off expanding in the region.
However, it can’t be denied that Amazon has a ready (and I would argue, willing) target market in
Southeast Asia — and consumers would surely thank the company for stepping in to take up the
herculean task of bringing its highly-demanded products and e-commerce ecosystem to the region.
Amazon, Southeast Asia is simply sitting here waiting for you.

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SOURCE DOCUMENT 4
September 11, 2014 3:58 am JST
TAKANORI OKABE and TAKAYUKI
KATO, Nikkei staff writers

TOKYO/FRANKFURT -- Lazada is quickly

becoming an e-commerce behemoth in
Southeast Asia, branching out into six
countries in a mere two years, as global
giants and local players vie for a bigger slice
of this burgeoning market.
Lazada, founded in 2012, handles direct sales of goods both from its own warehouses and
from virtual shopping malls with over 2,000 corporate and individual merchants. Dubbed the
Amazon of Asia, it boasts a wide lineup ranging from beauty and health products to electronics.
As the first foreign player to set up shop across the region, its primary focus is operational
expansion. It launched services in Thailand, Malaysia, Indonesia, Vietnam and the Philippines all
at once, jumping ahead of global giants such as U.S.-based Amazon and China's Alibaba.
Its growth has been indeed remarkable. Monthly traffic at the site in March 2013 was up 84%
in Indonesia and 60% in Thailand from six months earlier. Lazada ranked among the top five e-
commerce sites at four of its five Southeast Asian markets that month, according to U.S.
analytics company comScore.
Chief Executive Officer Maximilian Bittner says
merchandise transactions doubled in the past six months.
He contends that the company must build its own
distribution network to maintain good service to
customers and expand business efficiently. Partnering
with local logistics companies, Lazada set up warehouses
and distribution centers early on in each country.
Feeding its rapid growth is the ample capital it
procured by touting its potential. The company received
about $430 million in funds from leading U.K. retailer
Tesco, JPMorgan and others willing to bet on its future.
Lazada's parent, Rocket Internet, is known for taking successful online businesses in the U.S.
and Europe and cloning them in emerging economies. It first started an online auction site,
Alando, in Germany, which eBay acquired for over $40 million just four months later. It has
since set up more than 100 Internet-based companies, entering markets in Africa, Latin America
and Asia.

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Rocket Internet announced Wednesday that it will raise 750 million euro ($969 million)
through an initial public offering. Co-founder and CEO Oliver Samwer sees a prime opportunity
to make further inroads into markets other than the U.S. and China, and the company is expected
to beef up investments in Southeast Asia.
And there is vast potential to be tapped. The e-commerce market in five major Southeast
Asian countries is expected to quadruple between 2013 and 2019, from $15.3 billion to $62.2
billion, according to CyberAgent Ventures.
Japanese giant Rakuten is also expanding its presence in the region, beginning with Thailand
in 2009 and following up with Indonesia, Malaysia and Singapore. Unlike Lazada, Rakuten
focuses on its online shopping mall business. Over 3,000 sellers across the four countries,
including small individually run businesses, offer about 1.35 million items on its site.
A team of e-commerce consultants from Rakuten visit the merchants to aid their marketing
strategies. The company hopes to differentiate itself by improving the quality of goods and
services through closer partnerships with the sellers, according to Masaya Ueno at Rakuten Asia.
South Korea-based Qoo10 also has operations in the region. And with local entrepreneurs
entering the field, competition there is bound to intensify.

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SOURCE DOCUMENT 5

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