Lazada CEO takes over Daraz, what next?

Two weeks ago, there were rumours about CEO change at Daraz, the South Asia-ex-India-focused ecommerce platform under the Alibaba International Digital Commerce group (AIDC).

Today, Daraz officially announced that James Dong, CEO of Lazada, will take over as the Acting CEO of Daraz with immediate effect. 

A few thoughts:

1. Like Lazada, Daraz was also initially built by Rocket Internet and later acquired by Alibaba Group. However, Lazada covers Southeast Asia, where the consumer spending power is not quite up to par with United States/Western Europe but much greater compared the South Asian markets Daraz covers: Pakistan, Bangladesh, Nepal, and Sri Lanka;
2. The total population of these four South Asian countries is 460 million, less than the 600 million of the six Southeast Asian countries. Their combined GDP is only about 25% of the six Southeast Asian countries. Moreover, the infrastructure is generally much less developed – so Alibaba’s acquisition of Daraz in 2018 can only be described as very visionary;
3. Infrastructure aside, geographically giant India separates these South Asian countries, where intra-regional travel has been difficult due to historical and political reasons. Daraz’s core management has been based in Singapore for a long time. For Rocket Internet, this was inconsequential: their business model is to build these regional e-commerce platforms from 0 to 10 and then sell them quickly, leaving the issues to the buyer;
   
   
4. Danish native and Goldman Sachs veteran Bjarke Mikkelsen has been the CEO of Daraz Group since its founding in 2015 – and this is not surprising. From the perspective of both the Alibaba Group, who would want to take on this role? Daraz’s leadership has also been predominantly non-Chinese (or Western) for a long time;
5. Among AIDC’s four major B2C ecommerce businesses, Daraz is the smallest, much behind AliExpress, Lazada, and Turkey’s Trendyol (which is doing very well and expanding in Europe);
6. It should be clear to everyone that the current state of Daraz is unsustainable. The question is, what are the next steps? At this level, AIDC and Alibaba should have learned a lot from their years of managing Lazada, which is going through a major restructuring. (see our recent commentary: With big layoffs, Lazada is digging in);
7. Deeper integration of Daraz with other AIDC companies should be the general direction. At least one of the positions that James Dong now holds is likely to be temporary.