TOPIC ALIBABAS ACQUISITION OF LAZADA AND ITS IMPACT ON THE SOUTHEAST ASIAN CONSUMER GOODS MARKET

VAN LANG UNIVERSITY FACULTY OF COMMERCIAL —o0o— FINAL EXAM TOPIC: ALIBABA'S ACQUISITION OF LAZADA AND ITS IMPACT ON THE SOUTHEAST ASIAN CONSUMER GOODS MARKET Name : Nguyen Hung Cuong Student ID : 207TM63753 Course code : 212_DCO0530_E02 Subject business : Contemporary issues in international Lecturer : PhD Truong Hong Ngoc 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG Ho Chi Minh City, April 29, 2022 LIST OF TAB Figure 1.1 Transaction slace and growth of china's online retail market, China E-Retail Market Report 2016, 2017 .5 Figure 1.1 Alibaba's gross merchandise volume growth, "Will Alibaba's Fiscal 1Q17 Earnings Top Analysts' Esstimate" Y Figure 2.1.1 Internet users per ASEAN Memb= State IWS 2010 est 10 Figure 2.1.1 Internet Users per Country and % of total IWS 2010 est 10 Figure 2.1.1 Size of Southeast Asia's E-Commerce Market, Temasek Holdings, 2016 11 Figure 2.1.1 ASEAN Consumer Expenditure, Euromoitor 12 Figure 2.1.1 Usage of E-commerce before, during and after Covid-19, Temasek and Bain & Company .12 Figure 2.1.1 The Top 10 Most Visited E-commerce Websites in Southeast Asia 2020 13 Figure 2.1.1 How household incomes will change across developed and emerging asean (2019-2030) 14 P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG Contents LIST OF TABLE INTRODUCTION CHAPTER 1: OVERVIEW OF THE ALIBABA’S DEAL TO ACQUIRE LAZADA.5 1.1 The situation leading up to the event 1.2 The cause of the event 1.2.1 Looking for new markets 1.2.2 Acquiring an established platform was a more appropriate option 1.2.3 M&A is easier than building new logistics systems 1.3 Timeline of this event CHAPTER 2: THE IMPACT OF THIS EVENT ON THE ASEAN REGION 10 2.1 The effects of this event on the consumer goods market 10 2.1.1 The positive effects 10 2.1.2 The negative effects .14 2.2 The effects of this event on small and medium distributors 16 2.2.1 The positive effects 16 2.2.2 The negative effects .19 CHAPTER 3: PROBLEMS THAT ALIBABA IS FACING THROUGH THIS EVENT 20 3.1 The environment inside the business 20 3.1.1 Human resource management problems 20 3.1.2 The mistake of operation stage: Lazada is not Taobao 21 3.1.3 The influence of competitors 22 3.2 The environment outside the business .24 3.2.1 The risk of losing market share 24 3.2.2 Fake and poor-quality goods will become mass .25 CHAPTER 4: RECOMMENDATIONS .26 4.1 Solutions that Alibaba can take to overcome the obstacles mentioned 26 P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG 4.1.1 Strengthen distribution network 26 4.1.2 Develop unique marketing tactics 26 4.1.3 Adapt to di昀昀erent cultural aspects of di昀昀erent markets 26 4.1.4 Expand into new regions 27 4.1.5 Strengthen value network 27 4.2 Solutions for small and medium-sized goods distribution businesses in the region 28 4.2.1 Increasing people productivity: 28 4.2.2 Integrating seamlessly: 28 4.2.3 Providing access: 28 4.2.4 Keeping flexible: 28 4.2.5 Controlling cost to serve: .29 4.2.6 Use third-party of fourth-party logistic providers: 29 CONCLUSION .30 ACKNOWLEDGEMENTS 31 REFERENCES .32 P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG INTRODUCTION China's e-commerce market is easily seen as the most developed in the world - it's bigger than Western markets like the US and Europe China's e-commerce market has exploded in recent times and there doesn't seem to be enough space to increase market share Against such a backdrop, China's e-commerce giant Alibaba, of course, won't let the game end like that Alibaba, the company owned by billionaire Jack Ma is aiming for the next e-commerce gold rush, a new lucrative market: Southeast Asia Following Alibaba's $1 billion investment in April 2016 at a valuation of $1.5 billion, a second deal that later raised that valuation to $3.15 billion represented exactly that Jack Ma said about business strategy to investors in 2016, Alibaba planned to reach at least 1.2 billion people outside of China in order to achieve its goal - billion customers This statement shows the Chinese giant's ambition to dominate the international market, and Southeast Asia is a focus of Alibaba's plans This group started to buy back a large number of shares of Lazada in 2016 After that, Alibaba continued to increase the stake by billion USD in 2017 and then invested billion USD in Lazada in 2018 This essay builds on the above events and deals with issues about Alibaba and Lazada themselves and their impacts on the consumer goods market and SME distributors In terms of structure, this essay consists of four chapter: Chapter 1: Overview of the Alibaba’s deal to acquire Lazada Chapter 2: The impact of this event on the ASEAN region Chapter 3: Problems that Alibaba is facing through this event Chapter 4: Proposal solutions for Alibaba P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG CHAPTER 1: OVERVIEW OF THE ALIBABA’S DEAL TO ACQUIRE LAZADA 1.1 The situation leading up to the event After Jack Ma founded an online directory website for Chinese companies looking for international visitors, he came up with a new vision to develop an online platform that allows consumers, manufacturers, and distributors can cooperate, buy and sell directly with each other By 2013, his Alibaba was starting to get strong enough, and as evidenced by the fact that Alibaba’s online transactions had 昀椀nally surpassed the combined transactions of eBay Inc (eBay) and Amazon In 2014, Alibaba was listed on the New York Stock Exchange and was valued at $160 billion Through Alibaba, he not only created millions of jobs, but also changed the economic and social landscape of the country, making China the largest Internet market in the world The e-commerce market had grown substantially, and the online retail market was at peak in 2013, with a nearly 60 per cent annual growth rate However, this growth was expected to decline to 20 per cent in 2018 due to the economic downturn in the Chinese economy (see 1.1.1) In 2016, China’s economy grew at only 6.7 per cent—its worst performance in 26 years—and growth was expected to weaken further, to 6.2 per cent in 2018 Growth of gross merchandise volume (GMV) was the most important performance metric in the ecommerce industry Alibaba’s GMV was at 40 per cent in the fourth quarter of 2015 but was reduced to less than 25 per cent in the same quarter of 2016 (see Exhibit 1.1.2) Although Alibaba still managed to increase its revenue during this downturn, the company could not ignore the fact that competition among e-commerce players would become sti昀昀er and would potentially jeopardize its leading position P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG Figure 1.1 Transaction slace and growth of china's online retail market, China E-Retail Market Report 2016, 2017 Figure 1.1 Alibaba's gross merchandise volume growth, "Will Alibaba's Fiscal 1Q17 Earnings Top Analysts' Esstimate" In 2017, The slowdown in the Chinese economy, domestic competition, and expectations from capital markets all motivated the company to accelerate its globalization In fact, Alibaba had derived only per cent of its total revenue from international retail and wholesale markets in 2016 However, it aimed to generate over 50 per cent of its revenues outside China in the next 20 years, while serving billion customers around the world, empowering 10 million businesses, and creating 100 million jobs Regardless of the China’s economic situation, Alibaba was optimistic about China’s e-commerce market, because only 50 per cent of China’s population had Internet access at that point However, it would take time for Alibaba to grow further by 昀椀lling this gap Jack Ma saw a promising opportunity about the markets in Southeast Asia are having grown rapidly but was without dominant players, probably due to the region’s diverse cultures, languages, P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG geographical conditions, and consumer habits That is why Alibaba seeks to conquer Southeast Asia, takes $1 billion stake in Rocket Internet’s Lazada in 2016 and then the company doubles down on Lazada with fresh $2 billion investment in the next two years 1.2 The cause of the event 1.2.1 Looking for new markets As its home economy slowed and the competition continued to rise, Alibaba had to look for a new source of revenue to sustain its growth Southeast Asia was a fast-growing region with an increasing middle-class population that could potentially drive the e-commerce market Alibaba bought Lazada because the leading e-commerce company in the region has great appeal, with six di昀昀erent websites in each country Lazada shoppers spent $433 million on purchases in the 昀椀rst six months of 2015, a fourfold increase from the same period last year The result of Alibaba’s deal to acquire Lazada is Alibaba gained access to a huge and growing consumer base outside China 1.2.2 Acquiring an established platform was a more appropriate option As I have mentioned above, Southeast Asia is having a grown rapidly Despite its attractiveness, the region was challenged by its fragmented market, infrastructure, logistics, connectivity, and payment gateways Due to the diversity culture, languages, and The Personal Data Protection Act, Southeast Asian countries have been conducting many measures to protect the right to personal data, not only improving national law but also establishing and strengthening protection mechanisms, which will be hard for Lazada to collect and keep consumers’ information Given these challenges, entering the region early through a green昀椀eld investment might have been costly and risky Thus, acquiring an established platform was a more appropriate option P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG Despite the impressive growth of e-commerce in the region, Southeast Asia was lacking a uni昀椀ed logistics infrastructure Inconsistent cross-border customs and taxes as well as corruption in emerging markets continued to be barriers to online retail development In order to deliver an e昀昀ortless shopping experience, Lazada need to focus on building its own logistical supports while deepening its partnerships with third-party vendors Lazada had conducted a few rounds of fundraising and had managed to raise about $700 million However, this cash ran out quickly due to the challenges of serving six di昀昀erent emerging markets Raising additional capital was di昀฀cult due to the size of the investment and the fact that the company was not a usual start-up in the 昀椀rst place Lazada had 昀椀gured out how challenging it was to operate a successful e-commerce business in Southeast Asia However, they can’t give up on Southeast Asia, which is considered as a big piece of cake with numerous of potential customers “The total value of goods from e-commerce is forecast to reach about 174 billion USD by the end of 2021, will increase to 360 billion USD by 2025”- Google, Singapore's Temasek Group and US consulting 昀椀rm Bain Lazada with the slogan “To make it easy to business anywhere” has cooperated with third-party contractors called Lazada eLogistics (LeL) launched in 2012, to develop its own logistics service by built centers for logistics, ful昀椀lment, includes hundreds of vans and motorcycle instead of buy or ship its own inventory This strategy is the key to help Lazada “completely beat” Shopee – one of their biggest industry competitors, in the delivery time Moreover, it is the solution for the diverse and fast-growing market like Southeast Asia 1.2.3 M&A is easier than building new logistics systems Instead of spending money to build logistics systems, Alibaba can take advantage of them by acquiring Lazada while the company is short of capital In addition, Lazada itself is already a well-known and suitable platform to conquer the Southeast Asian market, taking advantage of these advantages helps Alibaba access to a huge and P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG growing consumer base outside China and save a large amount of money instead of building new logistics systems or establish a similar subsidiary It would have cost Alibaba years and billions of dollars to build such strategic assets to operate in the region if it had chosen green昀椀eld investments All those issues are very unfamiliar to Alibaba, which has things so much easier in China Although the country has an array of ethnic groups, most speak Mandarin Chinese Alibaba has to build only one site or app to cover a billion people Another boon is that China’s vast rail network and a profusion of new highways speed up shipping And lively competition in the logistics industry reduces costs Lazada’s position across its six markets would cost billions upon billions to replicate, with no guarantee of being able to beat it at its own game Put simply, M&A is cheaper for Alibaba than building 1.2.4 Political factors Of course, it wouldn't be without a political element - a sensitive one Alibaba was to establish the logistics, payment, customs and digital integrated eWTP test complex in 2017 Alibaba has been promoting eWTP as ‘digital Silk Road’ to complement the BRI and has been the face of private-sector support for digital BRI Alibaba’s eWTP is an online marketplace platform to link vendors and customers in China and partner countries It is supported by Alibaba’s technology and infrastructure in ecommerce, logistics, cloud computing and 昀椀nancial payment Although the prospects of the Malaysia-based eWTP are now uncertain after the Mahatir government took power in May 2018, subsequent eWTP projects are under way in Thailand, Pakistan, Rwanda and Russia Alibaba’s eWTP aligns with the Chinese government’s ‘online Silk Road’ policy, an extension of the BRI into cyberspace The State Council’s ‘13th Five-Year Plan for National Informatization,’ released in 2016, o昀฀cially recognized the progress in digital economic cooperation between China and BRI countries and called for more active participation of Chinese internet 昀椀rms P a g e | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG best e-commerce deals in local marketplaces in China, Hong Kong, Japan, Indonesia, Malaysia, and Singapore Until April 2015, Qoo10 had about 1.6 million registered users and processed about 45,000 transactions daily, generating monthly revenues of SG$25 million from its Singapore market Qoo10 was forging alliances with shopping malls and big retail chains in Singapore to scale up its web-based platform as an additional source of revenue for these traditional retailers and in response to their high rents and rising sta昀昀 costs Despite rising competition, Qoo10 remained a leading e-commerce platform in Singapore JD.com—Alibaba’s Ultimate Rival in China: JD.com was ranked second largest in China’s B2C market, after Alibaba JD.com’s GMV grew substantially (82 per cent) from 2011 to 2016 Unlike Alibaba, JD.com built its own extensive logistics network, which allowed it to have full control over the whole supply chain Its nationwide logistics network provided same-day and next-day delivery to over 600 million customers In terms of product authenticity and timely delivery, JD.com thus provided a stronger value proposition than Alibaba Direct sales contributed 94 per cent of JD.com’s total revenues, while the marketplace platform contributed only per cent of the total In 2015, JD.com entered the Indonesian market with a green昀椀eld investment, opening the JD.id online store, which had a localized Android app JD.id o昀昀ered 12 di昀昀erent product categories, ranging from clothing for mothers and children to electronics and luxuries The business grew rapidly as the number of stock-keeping units increased by 1,000 per cent, from 10,000 in 2015 to 100,000 in 2016 It also established a logistics network to serve over 365 cities in Indonesia, and it reportedly invested in Indonesia’s leading ecommerce player, PT Tokopedia, to accelerate JD.id’s expansion in the region This entry con昀椀rmed the attractiveness of the Southeast Asian e-commerce industry Rakuten—The Largest Online Marketplace in Japan: Founded in 1997, Rakuten was the largest e-commerce company in Japan Unlike its competitors, who adopted a standard B2C P a g e 29 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG model, the company operated using a business-to-business-tocustomer model Aspiring to be the world’s largest Internet company, Rakuten launched Rakuten Ichiba in Taiwan in 2008, acquired the Thailand-based e-commerce site Tarad.com in 2009, and established a joint venture in Indonesia to set up Rakuten Belanja in 2011 In 2012, Rakuten entered Malaysia through green昀椀eld investments, using this entry mode for the 昀椀rst time in its global expansion Rakuten emphasized the best local and international product assortments while maintaining Japan’s high service standards on its platforms It also provided tools to help sellers run successful online stores Amazon—U.S E-Commerce Giant: As the world’s largest online retailer, Amazon sold nearly everything, including books, CDs, DVDs, and digital content Amazon initiated Amazon Prime, a membership program that entitled its users to bene昀椀ts that included free shipping, unlimited access to digital content, and the ability to borrow books from Kindle at cheaper prices Amazon operated 11 online marketplaces across three continents, including North America (the United States, Canada, and Mexico), Europe (the United Kingdom, France, Spain, Italy, and Germany), and Asia (Japan, China, and India) Amazon was also making moves into Southeast Asia by 昀椀rst tentatively launching its business in Singapore It was reported that Amazon was actively acquiring assets and hiring people to facilitate this entry In fact, Amazon had made an o昀昀er to acquire a Singapore-based online grocery marketplace, Redmart, in early 2016 However, Redmart had turned down the o昀昀er, considering the price too low This initiative suggested that Amazon might launch its grocery service, AmazonFresh, in the region Given its strong 昀椀nancial ability and years of online retail experience, Amazon could likely accomplish the strategic move into Southeast Asia without much di昀฀culty, and this move would de昀椀nitely amplify e-commerce competition in the region P a g e 30 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG 3.2 The environment outside the business 3.2.1 The risk of losing market share If India is the 昀椀rst major battleground to see the confrontation between the US and China e-commerce giants, Southeast Asia is de昀椀nitely the second," Reuters quoted 昀椀nancial technology expert James Lloyd of EY evaluate That shows the importance of Lazada in Alibaba's overall strategy However, the Wall Street Journal con昀椀rmed that after 3.5 years since Alibaba invested in Lazada, this e-commerce platform has lost market share in a number of key markets in Southeast Asia Lazada operates in six Southeast Asian countries, but there is little data to show how pro昀椀table the company is Because Alibaba does not announce sales and speci昀椀c pro昀椀t - loss of Lazada but only gives the general 昀椀gure of the international retail block According to Alibaba's 昀椀nancial reports, international retail sales for the 昀椀scal quarter to the end of March 2019 increased by 25% year-on-year to $ 737 million This is quite a small number compared to the total revenue of nearly 14 billion USD of Alibaba Notably, Lazada's revenue (without speci昀椀c numbers) decreased by 4% In the following quarter to the end of June 2019, Alibaba's international retail segment achieved revenue of $811 million, up 29% over the same period last year And it's not clear what Lazada's speci昀椀c success or failure is like According to WSJ, Lazada's number one position in Southeast Asia is being threatened by Shopee In Indonesia, the largest market in the region with 280 million people and the e-commerce industry is expected to reach 53 billion USD by 2025, Lazada is trailing Shopee, Tokopedia and Bukalapak, companies that can be considered anonymous in the world micro global iPrice's survey shows that in Indonesia, both Shopee and Tokopedia attracted more monthly visitors than Lazada in the fourth quarter of 2018 P a g e 31 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG 3.2.2 Fake and poor-quality goods will become mass The market size is becoming wider, which means that businesses must take strict measures in the control of goods' information and customer experience A wider market will increase competition among businesses, not except the element of playing dirty to gain great pro昀椀ts This leads to the introduction of fake and poorquality goods If Alibaba does not have appropriate and strict legal policies, there is a risk that Lazada will be an electronic platform to sell fakes and poor-quality goods P a g e 32 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG CHAPTER 4: RECOMMENDATIONS Based on the overall internal and external analysis done above, this section will o昀昀er recommendations which will help the company take on strategic directions that will enhance its core competencies and capabilities, as well as reduce its chances for risks and threats? The following recommendations are thus made for Alibaba Group to Win the Southeast Asia E-Commerce 4.1 Solutions that Alibaba can take to overcome the obstacles mentioned 4.1.1 Strengthen distribution network a Control This is an important strategic recommendation as it will allow higher control to the company over its products in di昀昀erent markets The company will be able to control where its products are placed, and thereby, will also be able to enhance the accessibility and easy availability of its products b Stronger relation with consumers At the same time, the strengthening of the distribution network will allow the company to work more closely with end consumers by being able to reach them with the same high quality of products across di昀昀erent markets 4.1.2 Develop unique marketing tactics a Higher penetration This strategic recommendation will help the company reach a higher number of consumers and penetrate deeper into target consumer groups Also, this strategy will allow the company to increase trial and consumption and sales of its products b Forming a partnership with consumers Unique marketing tactics will involve new and informed strategic means of communicating with the consumers and engaging them with the brand One way that this can be done is by making P a g e 33 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG consumer co-producers for the brand Another way that Alibaba Group Acquiring Lazada to Win the Southeast Asia E-Commerce Battlecan this is through co-branding with other similar, yet dissimilar brands and companies to enjoy higher market visibility amongst target consumers 4.1.3 Adapt to di昀昀erent cultural aspects of di昀昀erent markets a Identify di昀昀erent consumer group characteristics Each market and target group has distinct characteristics This recommendation is suggested so that the company can connect better with di昀昀erent target groups in di昀昀erent markets b Adapt to and respond to characteristics By adapting to di昀昀erent cultural and regional characteristics, the company will be able to present itself better to target consumers – who would then feel a greater a昀฀nity, and more likeliness of consuming the product and the service 4.1.4 Expand into new regions a Market expansion Another strategic recommendation for Alibaba Group Acquiring Lazada to Win the Southeast Asia E-Commerce Battleis to expand into newer regions and markets This can be done by expanding into new markets, 昀椀rstly This expansion will give the company exposure to new consumer groups Increase the overall consumption rate, as well as diversify income streams Also, it will give the company related expansion exposure regionally as well as internationally b Product diversi昀椀cation Another means of expansion is through product diversi昀椀cation By adding new products, the company will be Abe to penetrate deeper into existing markets bye exploring new consumer groups, and new target consumer groups This will also diversify income streams for the company, and increase its overalls hare of the market 4.1.5 Strengthen value network P a g e 34 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG By strengthening the value network further, and by adding quality and enhanced elements at di昀昀erent stages, the company will be able to maintain competitive advantage, as well as put o昀昀 new players from the industry by increasing barriers to entry This will allow the company to maintain sustainable competitiveness over other players, as well as maintain a possible leadership position in the local and international markets and industry 4.2 Solutions for small and medium-sized goods distribution businesses in the region 4.2.1 Increasing people productivity: Being more productive boils down to keeping labor costs under control You want to try to conduct business with the same amount or even fewer people Depending on the type of business, 60 to 65 percent of gross profit dollars can get eaten up in labor compensation Your employees shouldn’t waste time manually re-entering data or suffer with inefficient processes Most businesses that operate only with e-commerce as their distribution channel so with a relatively low employee headcount 4.2.2 Integrating seamlessly: The last thing a distributor needs is to get bogged down with too many databases Eliminating multiple databases should be high priority to distributors Maintaining multiple databases is an expensive, error-prone, time-wasting headache It’s cost-prohibitive and difficult Distributors need to integrate their back office system with their e-commerce system so they’re not maintaining a customer database and a product database on their e-commerce system in addition to a customer database and a product database in their back office system 4.2.3 Providing access: Key business and customer information needs to be accessible Your customer business data needs to be shared throughout the company with the people who need that data Customer relationship management (CRM) software is the ideal portal for capturing, analyzing and viewing customer data It provides real-time, visible and accurate customer data P a g e 35 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG 4.2.4 Keeping 昀氀exible: Multi-channel marketing gives your customers options for how they want to place an order Maybe last week it was easiest for them to visit your website and place an order digitally But tomorrow they might be on the road and realize they need to order more products, so they call your phone center It’s very important that distributors stay flexible so customers have options 4.2.5 Controlling cost to serve: Distributors must avoid the pitfall of losing money in the logistics costs of ecommerce They could be losing money trying to compete by offering free or discounted shipping, for example Those selling costs may be the biggest cost for some distributors doing business Distributors need to control the cost to serve their customers You have to map out the cost to serve each customer, highlighting the services they’re willing to pay for The challenge is to match up the cost to serve with customers’ needs and what they’re willing to pay It makes no sense continue providing services the customer ultimately doesn’t really want or need Sometimes this means rethinking a pricing program or, in an e-commerce distribution channel, altering shipping and handling costs 4.2.6 Use third-party of fourth-party logistic providers: 3PLs or 4PLs are a big factor in e-commerce, and you should be considering them for e-commerce fulfillment These public warehouses make shipments for you, but they it in your name To the customer, it appears that the product came from the distributor, but it was actually fulfilled and shipped by a 3PL or 4PL While the 3PL or 4PL may handle all the parts, the distributor still handles the back-office details In nearly all situations, there’s an obvious advantage to minimizing distributors’ fixed costs through a 3PL or 4PL Your needs aren’t really predictable, and rather than committing to long-term capacity, through a 3PL or 4PL a distributor can adjust its capacity based on the needs of the customer Distributors: Be sure to fully embrace e-commerce as an effective, low-cost tool Integrating your e-commerce system with the rest of your databases will make your business thrive P a g e 36 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG P a g e 37 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG CONCLUSION Given their potential synergies, acquiring Lazada which is the market leader seemed to be a strategic move for Alibaba to extend its geographical reach into the promising Southeast Asian e-commerce market Lazada’s competitive advantages in the region, particularly its brand recognition, would take years for Alibaba if it chose to build them from scratch—that is, through greenfield investments For Lazada, the acquisition provided opportunities to use Alibaba’s strong online retail knowledge and other resources to position itself competitively ahead of its competitors With Alibaba’s backing, Lazada was able to build a stronger fortress to fight against the intensified competition in the region, particularly from the anticipated entry of Amazon Nevertheless, Lazada occupied only 20 per cent of the Southeast Asian e-commerce market, and the market—like the geographical conditions—was very fragmented; Lazada would have to double its efforts to consolidate its competitive position and increase its market share There were also reports early in 2021 that Amazon would delay its entry into Singapore to a later date Alibaba and Lazada had to determine what this delay meant: either that they had successfully created unbeatable competitive advantages—preempting even the world’s largest e-commerce player—and had already won the ecommerce battle in Southeast Asia or that Amazon was planning an even bigger strategic move to counter them in this new e-commerce market frontier P a g e 38 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG ACKNOWLEDGEMENTS First and foremost, I would like to thank my lecturer, PhD Truong Hong Ngoc Without her assistance and lectures every step throughout the process, this essay could have never been accomplished I am extremely grateful to you for advising and helping me during the past time I would also like to show gratitude to my old group, including Mr Nguyen Viet Anh, Ms Le Ngoc Han, Ms Duong Thi Xuan Nhi, Ms Quach Thao Vy and Ms Nguyen Kieu Viet Que We discussed early versions of the Alibaba Invests Additional USD2 Billion in Lazada and its impact on the southeast Asian consumer goods market with old group Both of the raised many precious points in our discussion and I hope that I have managed to address several of them here Even though I have had a mistake and I have not had the opportunity to work with Mr Nguyen Viet Anh, Ms Le Ngoc Han, Ms Duong Thi Xuan Nhi, Ms Quach Thao Vy and Ms Nguyen Kieu Viet Que previously, the impact of their work on my own study is obvious throughout this essay Getting through my dissertation required more than academic support, and I have many, many people to thank for listening to and, at times, having to tolerate me over the two weeks I cannot begin to express my gratitude and appreciation for their friendship My friends, Nguyen Tri Thong, Le Anh Quoc have been unwavering in their personal and professional support during the time I spent at the University For many memorable and inspired evenings, I must thank everyone above as well as Tran Thi Kim Sung, Nguyen Huong Giang and Truong Dac Trung Most importantly, none of this could have happened without my family My mother, who o昀昀ered her encouragement through phone calls every week – despite my own limited devotion to her phone To my parents and my sister – it would be an understatement to say that, as a family, we have experienced some ups and downs in the past four years Every time I was ready to quit my education, they did not let me down and I am forever grateful This essay stands as a testament to their unconditional love and encouragement P a g e 39 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat logistics system Due to working capital, distributors can improve their distribution systems to solve the problems of reducing inventory and delivery delays The store system introduces products that are replaced or supported by online showrooms Save on storage costs Finally, intermediaries may enter channels facilitated electronically Where this occurs, it will be because they perform one of the three fundamental channel functions of reassortment and sorting, P a g e 23 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG routinization, or searching more e昀昀ectively than anyone else ca Therefore, this helps small and medium-sized distributors increase the speed of product delivery to consumers, easily adjust customers and partner relationships, and reduce communication costs Currently, the goods distribution system in ASEAN has developed relatively strongly in both quantity and scale, initially satisfying the diverse needs of people In that process, Lazada as well as e-commerce support very e昀昀ectively for the processes of managin the goods distribution system, therefore, in order to develop modern goods distribution systems, it is necessary to promote accelerate the application of e-commerce in the distribution of goods in the ASEAN region today 2.2.2 The negative e昀昀ects Besides the above positive e昀昀ects An economic event alwa has a two-way e昀昀ect First, Alibaba's entry into the Southeast Asian market will lead to some disadvantages for distributors in the region Alibaba is China's largest e-commerce group, Alibaba’s entry into Southeast Asia will lead to 昀椀erce competition between domestic and Chinese produc According to the market, Chinese products are often very cheap, which leads to competition in the prices of Chinese products and products of businesses in the region According to the buying psychology of customers, they always prioritize cheaper products, and the Southeast Asian market has such purchasing tastes Alibaba, on the other hand, will tend to prioritize Chinese businesses, which would be detrimental to distribution businesses in the Southeast Asian market In addition, consumers will tend to choose products of reputable and well-known distributors in the market, so if those small and spontaneous distributors participate in the competitive trend not keep up will be eliminated Consequently, they will be swallowed up when they are unable to compete with Alibaba's Chinese distributors Second, Information Technology develops, and it also re昀氀ec the competitiveness of distributors Distributors that not yet have strengths in technology, speci昀椀cally: technology to support the sal force, reach customers, measure operational e昀฀ciency, and manage P a g e 24 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat Contemporary Issues In International BusinessNGUYEN HUNG CUONG inventory will be left behind and lead to the risk of being eliminated Therefore, it is necessary to develop a speci昀椀c technology developme strategy with a clear roadmap 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat P a g e 25 | 44 0 TIEU LUAN MOI download : skknchat123@gmail.com moi nhat ... We discussed early versions of the Alibaba Invests Additional USD2 Billion in Lazada and its impact on the southeast Asian consumer goods market with old group Both of the raised many precious... the intensified competition in the region, particularly from the anticipated entry of Amazon Nevertheless, Lazada occupied only 20 per cent of the Southeast Asian e-commerce market, and the market? ??like... invested billion USD in Lazada in 2018 This essay builds on the above events and deals with issues about Alibaba and Lazada themselves and their impacts on the consumer goods market and SME distributors