Lazada, an e-commerce platform owned by Alibaba, is reportedly undergoing a round of layoffs across Southeast Asia, signaling increased competition in Thailand’s e-commerce sector. The layoffs are aimed at improving profit growth and increasing investor confidence amidst the rise of new rivals in the market.
According to CNBC, Lazada has initiated these layoffs, although Lazada Thailand has not provided any official comment on the matter. The company’s profitability is not in question, but in a highly competitive industry, firms need to manage their fixed costs effectively.
Paul Srivorakul, the CEO of aCommerce, an e-commerce enabler in Southeast Asia, noted that public investors now expect e-marketplaces to deliver strong profits, not just impressive revenue growth or market share. Therefore, companies that aggressively cut costs are being rewarded by investors. He cited Spotify as an example, whose shares jumped following news of planned layoffs.
For Alibaba’s international digital commerce arm, Lazada’s parent company, sustainable growth with healthy unit economics is crucial. Lazada Thailand reportedly recorded a profit of 400 million baht from revenue of 20.7 billion baht in 2022. Meanwhile, Lazada Logistics Thailand generated a profit of 2.9 billion baht from revenue of 16.8 billion during the same period.
In terms of market share, according to Singapore-based venture builder Momentum Works, Shopee led the e-commerce gross merchandise value (GMV) in Thailand, accounting for 56% of the total GMV of $14.4 billion in 2022. Lazada held a 40% share, while TikTok accounted for 4%. In Southeast Asia as a whole, Shopee claimed a 47.9% share of the $99.5 billion GMV, with Lazada at 20.1%.
Pawoot Pongvitayapanu, the founder of Tarad.com, predicts that Thailand’s e-commerce market will grow significantly, with an expected value of nearly 700 billion baht in 2024, up from an anticipated 634 billion baht in 2023. This growth is driven by increased online shopping activity in terms of quantity and value.
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