Mon. Sep 28th, 2020
Lazada's new CEO Chun Li. Taken from: https://www.alizila.com/lazada-appoints-chun-li-as-group-ceo/

Lazada's new CEO Chun Li. Taken from: https://www.alizila.com/lazada-appoints-chun-li-as-group-ceo/

Will new leadership change the game for Alibaba and Lazada?5 min read

Having the right leader to steer a fleet amidst a storm is important, but will Alibaba’s new CEO appointment be enough to get Lazada to the top and Alibaba to where it wants to be in Southeast Asia? We share our quick take.

Excerpts from this interview with Liza Lin were featured in the Wall Street Journal news story on “Alibaba Switches Lazada CEO Again in Tough E-Commerce Market

It has been eight years since Alibaba’s acquisition of Lazada, and solidifying market domination remains beyond reach with its fierce competition in Sea Group’s Shopee and many more strong local players and niche marketplaces emerging in the region. In what seems to be a bid to realign the company with China headquarters and double down on its technology infrastructure, Alibaba has appointed a new CEO for Lazada, its third in the last three years.

We took some questions from Wall Street Journal and shared our thoughts on what this CEO appointment means for Lazada and Alibaba’s play in Southeast Asia.

Q: What are the competitive dynamics Lazada is facing in Southeast Asia now? How has the competitive landscape for Lazada changed in the last one year (are they facing more competition? are they doing better than their peers?)

A: Since last year, Lazada has been facing fierce competition. And it’s not just from Shopee. There are more local marketplaces emerging and ecommerce is accommodating new business models and use cases. Even then, Lazada has not allowed itself to fall behind in evolving. The platform has been exploring grocery retail, brand partnerships, logistics solutions, and other adjacencies. In this regard, with the help of Alibaba’s resources and roadmap in China, Lazada has been ahead of its peers.

Now COVID19 has presented an opportunity for the platform to see which of its explorations are working, for example, Redmart and LazMall. Coming out of the crisis and under new leadership, the priority will likely be to optimize its user experience (and the ecosystem running behind it) for sustainability.

Q: What are the challenges Lazada’s new incoming CEO will face going forward?

A: Alibaba has been able to course-correct quite swiftly so this new appointment is likely in response to the more complex competitive landscape in Southeast Asia. Mr. Li’s appointment as CEO offers a fresh approach to the dynamic between Alibaba and Lazada moving forward, which has been subject before to culture tension. Having been on both ends, as CTO of Alibaba’s B2B unit and CEO of Lazada Indonesia, his leadership is likely part of a bigger localization play for Alibaba in the region.

Along with steering Lazada out of COVID19, the challenge will be to align Alibaba’s efforts to double down in Southeast Asia (which doesn’t just involve Lazada) with Lazada’s vision to be the dominant ecommerce ecosystem in the region. With countries coming out of the COVID19 crisis differently, looking through these two lenses of Alibaba and Lazada is becoming more complex. This is not to say that the two are at odds with each other but that in order for Lazada (or any company for that matter) to stay on top, the business needs to be focused, now more than ever.

Q: What does it mean for Alibaba’s global expansion, given how hard its been for them to succeed in Southeast Asia?

A: As mentioned in the previous question, Mr. Li’s recent role in growing Lazada Indonesia places him in a unique position of having been both Alibaba leadership and intimately acquainted with Southeast Asia’s local landscape. This gives him a different perspective from the previous CEOs: Poignant, who was Lazada in its Rocket Internet days, and Peng, who was an Alibaba co-founder. This will be critical in developing Lazada’s value propositions uniquely for Southeast Asia while still being able to leverage on Alibaba’s strengths in technology. Looking beyond Southeast Asia, the appointment could be an experiment in localizing top leadership that could be replicated in other regions in the future.

The fact that this is their third appointment in three years is a sign of how complex it can be to navigate this kind of role and relationship, amidst all the Chinese tech companies placing their stake in the region.

Q: Why has it been so difficult for Alibaba to succeed in Southeast Asia, despite being so successful in China?

A: The political, economic and cultural differences of the various Southeast Asian markets makes it difficult for a one-size-fits-all strategy, as Alibaba has been accustomed to in China. 

While there are similarities between the two regions that stretch back in history, these are ultimately two very different animals that Alibaba is dealing with. Success in China can build up the resources to enter Southeast Asia, but does not ensure success. Even within Southeast Asia the differences across countries make it difficult for local players to expand in the region. Apart from navigating the differences in space, there’s also the differences in time. Southeast Asia is also maturing and growing on its own learning curve as an ecosystem at the same time that Alibaba is getting a hold of how to win in the region.

It’s like trying to land a plane on a runway that is also moving and changing in shape. That said, their hands-on approach (compared to other China tech majors like Tencent) has enabled them to be more nimble and flexible, as this recent CEO appointment demonstrates. Whether or not this responsiveness will result in the right answers for the region remains to be seen. 

It’s also worth noting that Alibaba’s strengths in terms of rapid expansion and in-house technology translate differently in Southeast Asia, where rapid expansion is easily checked by market nuances and cross-border challenges and in-house tech can be difficult to implement locally in a market where tech talent remains challenging to come by. 

Leave a Reply

Your email address will not be published. Required fields are marked *