Alibaba grows empire yet again with South Asia acquisition

Alibaba founder Jack Ma / Photo credit: Alibaba

China’s online shopping giant Alibaba grew its fledgling worldwide empire today with yet another fresh acquisition.

Alibaba is now the owner of Daraz, an online marketplace startup that covers Pakistan, Bangladesh, Sri Lanka, Myanmar, and Nepal. This afternoon’s joint announcement doesn’t reveal any financial details. Daraz has 30,000 sellers and 500 brands offering 2 million products to its 5 million customers.

The move comes just over two years after Alibaba expanded into Southeast Asia by buying the region’s top online shopping destination, Lazada. The Chinese firm also runs Singapore’s Redmart, and owns stakes in India’s Paytm and Indonesia’s Tokopedia.

Rocket start

Just like Lazada, Daraz began life as part of Germany’s startup factory, Rocket Internet, which specializes in opening businesses in developing markets. It launched in 2012, initially focusing on Pakistan – arguably the largest relatively untapped market in Asia, with a population just over 200 million.

A model at Pakistan Fashion Week / Photo credit: Farrukh

Daraz’s five markets cover 460 million people, 60 percent of whom are under the age of 35. Although online shopping accounts for a tiny amount of the overall retail market in those nations, each one is poised for growth as more people come online. Pakistan’s online shopping spend is set to grow from the roughly US$100 million mark seen in fiscal year 2015-16 to more than US$1 billion in 2017-18, according to pundits.

“Pakistan is one of the last remaining ecommerce markets which offers large unfulfilled potential,” says Osman Husain, a tech analyst. Last year, when Husain was my colleague at Tech in Asia, he wrote that Daraz is what Alibaba founder Jack Ma should buy next in the billionaire’s increasingly global spending spree.

“Alibaba’s acquisition of Daraz is a vote of confidence in South Asia. China’s One Belt, One Road project impacts all markets where Daraz is present and it’s likely that small businesses across Asia will benefit from this move. It’s a bit sad to see Rocket Internet exit Asia, but there’s no doubt exciting times ahead,” adds Husain.

Jack Ma last year visited Pakistan and met with Prime Minister Nawaz Sharif amid a buzz of rumors about the company making moves into the nation.

Alibaba’s payments wing, Ant Financial, entered Pakistan in March by taking a 45 percent stake in Telenor Microfinance Bank, maker of the popular online banking service Easypaisa.

Updated 6:40pm: Swapped in a more recent projection for Pakistan’s online shopping market, replacing the original “US$1 billion by 2020” figure. Also corrected when Ma met the Prime Minister – it was last year, not this year.

Updated May 18: Added Daraz’s latest stats on merchants and customers.