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Tesco Acquires Stake in Southeast Asian Online Retailer Lazada

Tesco Plc, the U.K.’s largest retailer, has bolstered its international presence online by acquiring a minority stake in Lazada, a seller of non-food goods to customers in southeast Asia.

The British grocer, which is strengthening its e-commerce capabilities while reining in spending on store expansion, has invested “tens of millions” of pounds in the online marketplace, Multichannel Director Robin Terrell said yesterday, declining to provide more details.

Lazada was founded last year by German Internet incubator Rocket Internet GmbH, owned by German brothers Oliver, Marc and Alexander Samwer. The company sells products including electronic goods, books, clothing, toys, homeware and cameras in Thailand, Malaysia, Indonesia, Vietnam and the Philippines.

Tesco is the latest European backer of the business, which says it’s southeast Asia’s largest online shopping mall, and the current funding round of about $250 million includes existing investors Investment AB Kinnevik and Verlinvest SA, according to a Rocket Internet statement.

“There are a number of things we can do from a customer and product perspective, whether it’s sourcing or supply chain,” Terrell said in an interview in London, adding that he sees scope for cross-promotion of products, as consumers in the region of 600 million begin to use smartphones to access retailers online.

Internet Grocers

Tesco Chief Executive Officer Philip Clarke is spending $750 million this year to develop online shopping and other digital services as customers worldwide shift to purchasing via smartphones, tablets and computers. The grocer is struggling with competition from discounters and Internet grocers and last week reported declining sales in all its markets.

Tesco isn’t concerned that the investment in Lazada will cannibalize existing general-merchandise sales internationally as “these markets are so early that there is more than enough room for multiple customer offers,” Terrell said.

The retailer provides online shopping in most of its nine non-domestic markets, including Thailand and Malaysia, where same-store sales declined in the third quarter.

Lazada also provides an eBay-like marketplace where third-party retailers can sell their services, which will provide Tesco with the opportunity to offer products in markets where it doesn’t have stores or its own website, Terrell said.

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