SEA (Shopee) vs Alibaba (Lazada)

A couple articles that describe the competitive landscape for e-commerce in Southeast Asia……

Here are my take-aways:

  • Alibaba saw Southeast Asia as its next region for growth, hence it bought Lazada, a Rocket Internet start-up.

  • Instead of focusing on growth, Lazada spent a few years dealing with its back-end interface, conflict between Chinese owners and European management, and frequent management changes.

  • The approaches of Shopee and Lazada were very different. For example, Shopee focused on physical ads and partnering with celebrities while Lazada believed digital ads suited them best. Shopee focused on low cost items, bringing offline wholesalers onto its platform and offered free shipping. Lazada wanted to focus on bringing in big brands, did not reach out to offline wholesalers and struggled with shipping.

  • Lazada management found it hard to localize themselves in each country but SEA’s management found much greater success.

  • Alibaba introduced poor incentive structures with unrealistic KPIs for Lazada management.

  • SEA took this opportunity to ramp up Shopee’s growth. It pulled ahead in 2019. Thereafter, Shopee continued to invest heavily in user acquisition while Lazada focused on cost control.

  • Covid saw Shopee widen the gap with Lazada even further.