Alibaba’s Southeast Asia-focused retailing unit Lazada made its first monthly profit in July, CEO James Dong announced at a Tuesday internal meeting, saying the positive status of the firm’s earnings before interest, taxes, depreciation, and amortization (EBITDA) “proves the effectiveness of Lazada’s business strategy,” an attendee told TechNode.
Why it matters: The achievement could be a precursor to Lazada achieving sustainable profitability as parent company Alibaba’s domestic performance stalls. Alibaba is set to post its second-quarter earnings on Thursday.
Details: “Lazada will continue to increase investment in the Southeast Asian market under a sustainable operating model,” Dong said on the meeting, according to the attendee.
- Lazada operates in Thailand, Singapore, Vietnam, Malaysia, Indonesia, and the Philippines, with its Thai business the first to achieve profitability in 2022.
- Parent company Alibaba does not disclose separate financial records for businesses under its international digital commerce group, where revenue comes mainly from AliExpress, Trendyol, and Lazada, consisting of customer management services, merchandising, and logistics services, according to Alibaba’s annual report.
- Alibaba mentioned in its March quarter earnings report that Lazada’s loss per order narrowed significantly year-on-year during that period.
Context: E-commerce giant Alibaba has made at least ten investments in Lazada totalling nearly $8 billion since 2016. The retailer’s mature rivals like Shopee and TikTok Shop are also eyeing expansion in the Southeast Asia region, Lazada’s operating base.
- Temu, the budget-oriented retailing platform owned by PDD, entered the Thai market in August, one year after its expansion to Malaysia and the Philippines.
- Earlier this year, hundreds of Lazada workers were laid off amid overall workforce adjustments, with employees from all levels impacted, according to a CNBC report.
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