Alibaba-owned online retail firm Lazada is looking to boost its financial services products in a bid to gain an edge in South East Asia’s competitive online retail market, the company’s CEO told CNBC.
Singapore-based e-commerce company which serves markets such as Indonesia and Thailand. It hosts a platform which allows merchants to sell into the countries where it operates in.
Financial services could become a big part of it’s future as the firm looks to placing more resources there, said Pierre Poignant, the CEO who took the helm in December.
Lazada — which turned seven on Wednesday — currently operates an electronic wallet which allows people to buy and sell products on its platform. But Poignant is thinking about expanding that product range.
“The next steps are financing, more rewards to our wallets, so we will continue to invest in that direction,” Poignant told CNBC in an interview at the Boao Forum in China.
Last year, Lazada teamed up with small businesses financing platform, Finaxar, to offer credit lines to small and medium business on its platform. Poignant said the next step could be more financing products to make loans more efficient.
“Through our data, we will be able more precisely assess the loans. So I think, in a way, the future is to be more efficient, faster and bigger, that’s one part,” Poignant said. “Second part (is), we will venture in other parts of financing. For example, something which is very, I think, promising, is trade financing across countries which we will also look into.”
Trade financing takes place between exporters, who seek payments for their goods, and importers, who have to pay for the products they order. In conventional trading, a bank provides a letter of credit to the exporter on behalf of the importer, and the money is paid upon delivery of the goods.
It’s an expensive process, particularly for smaller businesses — but it could be a multi-billion dollar opportunity for Lazada.
The company’s push into more financial services mirrors its parent Alibaba — which is well known for its mobile payments system Alipay, run by affiliate firm Ant Financial. In China, Alipay is one of two major payments platforms. But it also offers other products to consumers including micro-loans.
By offering more financial services to businesses, Lazada can keep those merchants in their ecosystem through the data it’s collected.
“I think, as part of the Alibaba economy, the vision of the group is to have an economy of 2 billion people and millions of SMEs (small and medium-sized enterprises),” Poignant told CNBC.
“We have the data to understand both origin and local, so we can basically have a very accurate prediction of the demand and the supply chain, and therefore, we are able to provide super products when it comes to financing,” he added.
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