Traditional Retailers / Mall Owners and Managers - consider the implications...

Alibaba buys controlling stake in Southeast Asian retailer Lazada


What does this mean to you?

1. Read this

http://www.cnbc.com/2016/04/12/alibaba-group-invests-1-billion-dollars-in-lazada-group-and-eyes-southeast-asia.html

Retrieved 14 Apr 2016 2051 hrs

Chinese e-commerce giant Alibaba has agreed to buy a controlling stake in Southeast Asian online retailer Lazada to tap into the region's lucrative consumer market.

Under the deal worth approximately $1 billion, Alibaba will buy around $500 million worth of newly issued shares in Lazada, as well as acquire shares from some existing shareholders.

Alibaba President Michael Evans said the investment will support Alibaba's expansion plans in Southeast Asia.

"With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-commerce globally," he said in a statement.

Max Bittner, CEO of Lazada Group, added, "the transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products."

Germany's Rocket Internet will sell a 9.1 percent stake in Lazada for $137 million in cash but will still have an 8.8 percent stake. British supermarket giant Tesco will sell an 8.6 percent equity stake in Lazada for $129 million, bringing down its stake in the company to 8.3 percent. Tesco said that the proceeds from the deal will be used for general working capital.

Both Rocket Internet and Tesco said they have entered into a "put-call arrangement" with Alibaba, giving the buyer the right to purchase, and shareholders the right to sell their remaining stakes at a "fair market value" within the 12 to 18 month period after the closing of the deal.

In buying Lazada, the idea is to help buyers and sellers on Alibaba's platform to get access to the Southeast Asian market. Lazada has already built up a supply chain, delivery and payment options in the regions in which it operates.

Marie Sun, a senior equity analyst at Morningstar, told CNBC that Alibaba is looking for future growth drivers outside China and has already invested in markets such as India, South Korea and the United States.

Sun added that Southeast Asia's e-commerce market is still underdeveloped, compared to those in China and U.S., which implies there would be higher growth in the future. "So if they can dominate the market when the mobile internet penetration increases in the region, Alibaba can benefit in the longer term," she said.

It also continues Alibaba's expansion beyond its home market. Last year, the firm appointed country managers in the U.K. and Italy as it looked to increase its footprint in Europe and help businesses in the region sell into China. Behind its expansion plans is the idea that Alibaba can become a gateway to China for buyers and sellers on its platform.

Lazada was founded in 2012 and serves regional markets including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. 

Earlier this month, Alibaba announced that as of the end of its fiscal year 2016, which ended March 31, it was the largest retailer in the world as measured by annual gross merchandise volume (GMV). The company has yet to announce earnings for the full fiscal year. 

2. Then read this

Who else does Alibaba own?

Alibaba takes bigger stake in SingPost

http://www.straitstimes.com/business/companies-markets/alibaba-takes-bigger-stake-in-singpost

PUBLISHED JUL 9, 2015, 5:50 AM SGT

Retrieved 

14 Aug 2016 2056 hrs

Chinese e-commerce giant Alibaba Group is investing about $279 million to expand its holdings in Singapore Post (SingPost) and take a share of its subsidiary, aimed at boosting growth in their e-commerce logistics platform across the Asia-Pacific, the two companies announced yesterday.

Mainboard-listed SingPost is growing its e-commerce business, and last year an Alibaba unit bought a more than 10 per cent stake in SingPost for $249 million.

In the latest deal, Alibaba said it was buying an additional 5 per cent stake for $187.1 million. Alibaba is the second-largest shareholder in SingPost, after Singtel.

On completion, Alibaba's deemed interest in SingPost will rise to 14.51 per cent from 10.23 per cent.

The acquisition is subject to approval by the Infocomm Development Authority of Singapore and SingPost shareholders.

Alibaba will also invest up to $92 million to buy a 34 per cent stake in Quantium Solutions International (QSI), a SingPost subsidiary that provides e-commerce logistics and fulfilment services across the Asia-Pacific. SingPost will hold the remaining 66 per cent interest.

"QSI will reorganise its business and become the joint-venture vehicle of SingPost and Alibaba Group. This will allow QSI to ramp up its development of e-commerce logistics infrastructure and services," SingPost said, adding that QSI will encompass e-commerce warehousing, last-mile delivery and other end-to-end e-commerce solutions.

Said SingPost CEO Wolfgang Baier: "We are now taking the next step by building a regional e-commerce logistics platform and infrastructure for e-commerce players across Asia-Pacific based on Quantium Solutions - our e-commerce logistics subsidiary. Alibaba started as our customer and then last year became our shareholder and business partner."

SingPost and Alibaba have also entered into a joint strategic business development framework to improve efficiency and integration of e-commerce logistics solutions. A joint steering committee will be created and drawn from their respective executives.

Mr Lim Ho Kee, SingPost's chairman, said the pace of transformation at SingPost has been accelerating. "As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes," he said.

"It is a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia."

Alibaba chief executive Daniel Zhang said that the additional investment in SingPost and the new joint venture signify the commitment to expanding the global logistics footprint, which will help Chinese businesses to sell and global brands to deliver more easily around the world.

3. Then read this!

Singpost Is Developing A Futuristic Shopping Mall To House Online Retailers

http://techcrunch.com/2015/10/28/singpost-is-developing-a-futuristic-shopping-mall-to-house-online-retailers/

Retrieved 14 Aug 2016 2100 hrs

Weeks after revealing plans to use drones to deliver the mail, Singpost — Singapore’s postal service provider — has unveiled another futuristic e-commerce concept, a mall that combines online and offline shopping together under one roof.

The mall (artist’s impressive above) will be located at Singapore Post Centre (SPC) and is scheduled to be completed by mid-2017. The company said it would feature 25,000 square meters of retail space spread across five levels. There’ll be an eight-screen cinema but, most importantly, Singpost envisages the mall being the future of retail — where shoppers can peruse items in store and order them online for delivery to their home. (The delivery and logistics are part are where Singpost truly brings its resources into play.)

The organization believes that marrying online and offline commerce will benefit both customers and retailers, as it explained in an announcement today:

A consumer could browse in-store, purchase the product and arrange for delivery of the product directly to their home. The consumer could then continue shopping, watch a movie or have a meal in the mall without having to carry bulky shopping bags. The retailer, on the other hand, could save on storage space in the store as fulfilment would be done at the backend of the warehouse.

 It’s certainly a bold vision, particularly since this mall would be the first of its kind — even though online-to-offline is already a trend that is enabling some physical retailers to extend their reach to customers through the internet.

Some types of shopping are based around instant gratification or spontaneity, i.e. actually taking a product home with you, but Singpost is betting that in some cases — such as bulkier items or more mundane purchases — shopping online and a speedy home delivery is what the people will want.

We’ve already seen Alibaba invest $4.6 billion in foster closer links between online and offline sales. That deal saw the Chinese e-commerce firm — which is an investor in Singpost — buy a 20 percent slice of Chinese physical retail giant Suning. Part of that coming-together will see Alibaba given the opportunity of “a physical experience” with products in store — i.e. try it in person and buy it via Alibaba — while there are plans to offer after-sales support for products bought via Alibaba’s online services.

Singpost, however, is taking this concept to the next level with a mall. For now, only cinema firm Golden Village Multiplex and coffee chain Kopitiam are confirmed tenants. It is easy to see how both of those businesses could benefit from closer alignment with internet sales and distribution, but it will be interesting to see which other companies inhabit the mall when it goes from vision to reality over the next 18 months or so. And, of course, whether the concept takes off in other countries.

3. Then understand this!

http://www.singstat.gov.sg/statistics/visualising-data/charts/age-pyramid-of-resident-population

Retrieved 14 April 2016, 2118 hrs

What this means to you - We'll be as politically incorrect as possible:

You're going to be screwed.  Big time.

This emerging business model will cut you off from your customers, and mess up your supply / delivery chain.

• Alibaba - global e-market place where they connect consumers, small businesses directly to manufacturers.

• Lazada - e-commerce platform where they engage in affiliate marketing, so everyone in their system will sell like crazy. You can buy almost anything there - they're a SE Asian Taobao.

• Singpost - logistics solutions provider

Their combined ecosystem reaches out to suppliers and consumers bypassing traditional sales and distribution channels will cause your sales volume to dip, and lower YOUR customers/shopper's propensity to spend with you.

Granted that the millennials (read : the massive spenders of the future) are all Linux, Windows, IOS, Android savvy, and spend loads of time browsing on their mobile devices, it's only a matter of time before you find yourself or your business irrelevant.

But, the good news is that people (especially in Singapore) still need to go out to their homes, spend time on leisure and on recreation, to do something, to eat something, to see something.

Shopping for merchandise (less perishable groceries perhaps) will be low on their priority.

If you are a mall owner / venue manager - how are you going to fill up those retail spaces? 

How are you going to get sustainable, let alone grow your footfall (that determines the amount of rental your tenants are willing to pay) ?

How are you going to get customers to spend with you?

What can you do, strategically and tactically?