Rocket Internet-backed GFG says it’s not selling Zalora in Indonesia

Photo credit: Zalora

Zalora last week sold parts of its Philippines operation to a local conglomerate, Ayala Group.

A TechCrunch report then suggested that this was a “retreat” from the country. The report also said Rocket Internet-born ecommerce company is in negotiations with Indonesian retail group MAP about a similar move, citing an anonymous source.

Zalora Group CEO Parker Gundersen today refuted that report.

He told Tech in Asia in an interview today that Zalora remains committed to Indonesia. He also claims there are no negotiations with MAP about any selloff, though MAP is a close partner.

String of asset sales

Zalora Group CEO Parker Gundersen.

Reports about a possible sale didn’t come out of thin air though.

Zalora, Rocket Internet’s online fashion store in Southeast Asia, went through some tumultuous changes last year. Its parent company Global Fashion Group (GFG) took a significant valuation cut mid-year. GFG sold Jabong, its ecommerce store in India, to Flipkart. And it sold Zalora’s branches in Thailand and Vietnam to Thai conglomerate Central Group. Amid all this, there was also a leadership change – Parker took over the reigns from his predecessor Michele Ferrario eight months ago.

“2016 was a year to really go back and identify which markets we wanted to be in,” Parker says of that time. Thailand and Vietnam, evidently, didn’t make the cut.

In Central Group, Zalora found a buyer looking for an opportunity to get into ecommerce. “Central Group has absorbed those teams in those countries, they saw an opportunity to take on a skilled workforce,” Parker says. Zalora Thailand will eventually merge into Central Group.

Increasing Zalora’s reach

The deal with Ayala follows a different logic, Parker stresses.

“Ayala is making a significant investment [in Zalora]. The funds will stay in the Philippines, so it’s not a selling off of assets.” Plus, Rocket Internet still holds control, having sold Ayala just 49 percent of the ecommerce firm.

And it’s not about the money, but about increasing Zalora’s reach in the Philippines, he says. GFG raised new funds mid-2016, at the time of the valuation cut, which gives it some flexibility. “We don’t need the capital.”