Alibaba Group Holding Ltd. upping its stake in Lazada Group SA looks like a great deal for sellers of the latest 32 percent interest.
Parties including Rocket Internet SE and Investment AB Kinnevik are among the winners, managing to wring a 59 percent increase in price since Alibaba took its first 51 percent shareholding in the Southeast Asian e-commerce player in April last year.
This second phase was always on the cards. Alibaba agreed to a call-put option when the deal was first struck, but that didn't make it inevitable. Rocket, for example, might have chosen to hold on and reap the benefits of a growing Lazada under Jack Ma's stewardship. Both sides believed in the many spoils from tackling e-commerce in the region.
In the end, it made sense for them to cash out, and pump the proceeds into the next startup.
Rocket and Kinnevik have also escaped the dark clouds of an expected entry by Amazon.com Inc. After making inroads in India, it would be reasonable for the U.S. firm to want some share of a geography that's home to 650 million people with an e-commerce penetration as low as 3 percent.
With Lazada, Alibaba is working on tackling warehousing, delivery and payments systems -- all of which help consumers get into the habit of shopping online. But growing smartphone usage and faster internet speeds are playing a crucial part also.
It's this second factor that may trip up Alibaba. While having a competitor educate customers on the how-to of e-commerce does make Amazon's job easier, it's a smartphone in every hand and ever-speedier networks that will be the real competitive advantage when Jeff Bezos decides to dive in.
The reason: Amazon Prime. Once little more than a members' club for cheaper and faster home delivery, Prime has grown to become one of the world's most potent forces in streaming video. Southeast Asia is perhaps more hungry for content than it is for toothpaste-to-your-doorstep.
Bundling the two allows Amazon to offer what consumers already want -- entertainment -- and sell them something they didn't yet know they need -- home delivery. As always in emerging markets, cost will be key, but Amazon has never been shy about slashing prices to win business. While Alibaba could follow suit, it doesn't have the content library to neutralize Amazon Prime's advantage.
Fresh from handing over his second $1 billion, Ma needs to think seriously about opening the checkbook again -- this time for content.
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