Alibaba this week revealed an ambitious vision to grow its Southeast
Asian e-commerce business to 100 billion in transacted sales as well as
a pledge to reach carbon neutrality in its operations by 2030.
China’s largest e-commerce company unveiled its vision Friday for its
Southeast Asian e-commerce arm Lazada in presentation slides uploaded to
its site for its annual Investor Day, where it typically shares revenue
figures and future strategies of its business units with investors.
Alibaba’s top executive Daniel Zhang also outlined its carbon emission
goals during a presentation Friday.
The plan to quintuple Lazada’s total gross merchandise volume defined as
the total amount of sales transacted on its platform came as the Chinese
company looked overseas for sources of growth amid increased competition
and a slowing economy in the Chinese market.
Alibaba also eventually aims to have Lazada serve 300 million consumers,
according to the presentation slides.
The Hangzhou-based firm took a controlling stake in Lazada in 2016,
before investing an additional 2 billion to expand the business in 2018.
Alibaba’s incoming chief financial officer Toby Xu said during a
presentation on Friday that its China commerce segment has faced
near-term challenges of a slowing macro-environment and a heightened
level of competition .
This has resulted in slower GMV and the revenue growth in the most
recent quarter, he said. But we also see opportunities to tap into new
addressable markets to grow new users that will position us well for the
long term.
Currently, Lazada’s gross merchandise volume for the last twelve months
from September 2021 reached 21 billion, with 159 million monthly active
users.
Alibaba CEO Daniel Zhang said in a separate presentation Friday that the
company sees a huge potential in the international markets going forwards.
In Southeast Asia, ecommerce penetration is only 11%, and Lazada’s
annual consumers have reached only 34% of regional Internet users, Zhang
said. There’s tremendous potential in both the overall market size and
our penetration.
Alibaba’s push to expand its Southeast Asia business comes as it faces
fiercer competition in its home market, from rivals in short-video
e-commerce such as Kuaishou, as well as group buying platform Pinduoduo,
which has invested heavily in sales and marketing expenses to expand its
user base.
The company has also faced tighter regulatory scrutiny over the past
year, as Chinese authorities increased regulatory oversight in the
technology industry following concerns that some Big Tech companies were
engaging in anti-competitive and monopolistic behaviour. Alibaba was
fined a record 2.8 billion earlier this year after authorities concluded
that it had violated antitrust rules.
Separately Friday, Zhang also announced that the company is aiming to
achieve carbon neutrality in its own operations by 2030, while also
reducing the amount of emissions across its supply chain and business
ecosystem by half.
Zhang said the company also plans to reduce emissions by using more
renewables as well as energy-saving and efficiency-improving
technologies to reduce emissions.
Alibaba would also mobilise consumers, merchants, business partners and
service providers to take part in their carbon reduction efforts. Zhang
named examples such as promoting the consumption of green products,
green transportation options and encouraging the reuse and resale of
pre-owned goods.
Alibaba’s pledge towards reducing its carbon footprint also coincides
with China’s big push to achieve carbon neutrality by 2060. The country
is currently the world’s biggest carbon emitter, responsible for nearly
a third of global emissions.
Chinese authorities have since placed energy targets on many of the
country’s state-owned firms, although most have struggled to wean
themselves off coal consumption one of the biggest contributors to
China’s massive carbon emissions.
