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.”
Parker also points out there are no plans to back out of Indonesia anytime soon. “Indonesia is not a market we want to move away from. Speculation we are closing down are not true.”
“MAP is a partner for us today, we get a lot of our brands from them. We are not discussing taking on any investment right now.”
Ever since Parker took over, his goal has been to “take Zalora out of the startup phase” into a sustainable company. Granted, that’s always been Zalora’s goal – it had at one time predicted profitability by 2015.
One avenue Parker’s pursuing is to improve the overall product assortment and margins, so building close ties with retailers like MAP, which holds licenses to many international fashion brands in Indonesia, makes sense.
Zalora has been operating in Southeast Asia for close to five years, making it one of the pioneers in the fashion ecommerce segment. Since its launch, competitors in fast-fashion ecommerce have cropped up left and right. Many of them are smaller, more nimble operations that specifically target Southeast Asian shoppers who mainly explore the web using smartphones instead of home computers. Some of those competitors are Pomelo in Thailand, SaleStock in Indonesia, and Shopee, which is part of Garena.
“Zalora is still well ahead in terms of overall size,” Parker argues. “We have a very clear plan and we are delivering on where we want to go. Southeast Asia is a difficult place to be a pioneer in. You can’t fault a startup for finding its way. But now we don’t consider ourselves a startup anymore.” Zalora is ranked number 11 of shopping apps in Indonesia, according to App Annie data. In the Philippines, it’s fourth.
This post Contrary to reports, Zalora is not selling in Indonesia: CEO appeared first on Tech in Asia.
from Tech in Asia https://www.techinasia.com/zalora-not-selling-in-indonesia
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