Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on T Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on Twitter, Angel List, LinkedIn.
Lazada, the Rocket Internet-backed Amazon clone that operates in five countries across Southeast Asia, has announced that it has raised ‘an eight digit Euro investment’ from Tengelmann, a German retail group with a history of investing in the German incubator’s projects.
TechCrunch says that the company has raised “close to $20 million” and that chimes in with what we’re hearing too. Lazada is not overly clear on where the funding will be used, but it says it is continuing to ramp up its operations and evaluating the best ways to service customers and merchants across Indonesia, Malaysia, Philippines, Thailand and Vietnam.
Tengelmann is another of those investors that has backed a prolific number of Rocket Internet projects, including Linio, Jumia and others as its portfolio page indicates. This is the fourth investment that Lazada has announced, which, regardless of the fact that it is backed by ‘clone-factory’ Rocket Internet, is pretty impressive considering that it was only launched in March 2012.
Operating in Southeast Asia — a region of 600 million people where neither eBay nor Amazon has local businesses — appears to be popular with investors. Serial Rocket Internet investor JP Morgan invested an undisclosed amount (which sources told TNW was “upwards of $50 million”) in September, Swedish retailer Kinnevik put in $40 million in November and German PE firm Summit Partners added another $26 million in December.
We’ve heard precious little about Lazada business growth to date — bar the sizable funding rounds — but the company has provided a first indicator by saying that December was “an exceptionally strong” month. The company says its own take on US Cyber Monday — dubbed ‘Online Revolution’ — saw it partner with “hundreds” of suppliers and e-commerce platforms across Southeast Asia.
Again without revealing precise details, Lazada says its efforts in Indonesia, where it teamed up with operator Telkomsel and Yahoo among others, saw the cyber shopping day become “one of the biggest online events in Indonesian history”.
One thing that we do know for sure is that Lazada made a significant change to its business model in December when it launched its Amazon-like marketplace platform. This approach lets offline retailers ‘rent’ a ‘shop front’ through which they can sell goods to Internet users. In that respect, Lazada is both selling items and providing a space for merchants.
As well as Amazon in the West, this model has been successful for Japan’s Rakuten, which itself is placing greater emphasis on Southeast Asia.
Lazada says that it has also added a new fulfillment system to guarantee two-day delivery across. Certainly, as someone living in Southeast Asia, delivery issues are among the most comment criticisms that I’ve heard about Lazada, and fellow Rocket Internet-backed Zalora, so the firm is at least moving to address those.
The one metric that Lazada does provide is that it has one million Facebook fans; but you can be sure that investors haven’t poured more than $100 million in funding into the company based on that statistic.
Lazada says that it “continues to explore new opportunities to further improve customer satisfaction” and, with yet another retail giant on board, it may yet further diversify its range of services and business model in Southeast Asia.
Rocket Internet startups don’t win points for originality but, as we’ve said in the past, Lazada (and also Zalora) are providing benefit by addressing markets that barely existed a year ago, such is the nascence of online commerce in Southeast Asia. For that reason, much of what it is doing is pioneering a new industry; indeed the company actually says it “seeks to educate the market about the benefits and convenience of online shopping”.
The full announcement is below:
LAZADA receives more funding as Tengelmann joins investor group
LAZADA, Southeast Asia’s largest online department store, today announced that it has received an eight digit euro investment from German retail group Tengelmann Group (“Tengelmann”). Tengelmann invested in LAZADA’s German holding company in a similar fashion to the recently announced investments by Investment AB Kinnevik, J.P. Morgan Asset Management and Summit Partners. LAZADA will use the funds strategically as it continues to explore new opportunities to further improve customer satisfaction.
The customer experience has always been the main point of focus at LAZADA and the company is investing heavily to provide its customers with world-class services. By recently deploying a new fulfilment system, the company is already today able to guarantee two-day delivery on average across Southeast Asia. In December, LAZADA launched its marketplace platform, which allows offline retailers to leverage LAZADA as a sales channel while still being in control of logistics and operations, to further expand its product assortment and meet customer demand. LAZADA’s more than one million Facebook fans serve as a testament to LAZADA’s success in providing superior services to its customers.
The investment by Tengelmann was received on the back of an exceptionally strong December month. As an eCommerce pioneer in Southeast Asia, LAZADA seeks to educate the market about the benefits and convenience of online shopping and on December 12th the company launched its hugely successful Online Revolution campaign along the lines of Cyber Monday in the USA. By partnering with hundreds of suppliers across the region, the company were able to promote amazing supplier-backed deals to its customers. The company also worked closely with many of the region’s top eCommerce platforms to build excitement and awareness of this successful campaign. In Indonesia, LAZADA partnered with Indonesia’s leading telecom operator, Telkomsel, Yahoo! and several of the largest online portals and forums, making this one of the biggest online events in Indonesian history.
“We are very excited to join the LAZADA team,” Christian Winter, CEO of Tengelmann Ventures said, “their growth trajectory, management team and investor base speak for themselves and we are confident that the company will succeed in the long-run.” Maximilian Bittner, Regional CEO of LAZADA commented: “Having a strategic investor of Tengelmann’s calibre on-board is a huge win for LAZADA. They are bringing with them significant retail experience which will be of huge benefit as we strive to achieve our ambitious growth targets.”
LAZADA (www.lazada.co.id, www.lazada.com.my, www.lazada.com.ph, www.lazada.co.th, www.lazada.vn) is Southeast Asia’s fastest growing online department store, with operations in Indonesia, Malaysia, Philippines, Thailand and Vietnam. LAZADA is pioneering eCommerce across some of the fastest growing countries in the world by offering a fast, secure and convenient online shopping experience with a broad product offering in categories ranging from consumer electronics to household goods, toys and sports equipment. LAZADA is always striving to offer its customers the best possible offering – including multiple payment options, free returns and extensive customer service and warranty commitments.
Headline image via Flickr
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