While everyone on the ground in ecommerce in Southeast Asia has been talking about industry-wide decline (or decline in growth) as well as lukewarm response to shopping festivals.
Finally there is an official confirmation, from Alibaba’s Q3 earnings report. On page 3 of the full release:
International Commerce Retail
Our International commerce retail businesses include Lazada, AliExpress, Trendyol and Daraz. During the September quarter, the combined number of orders of Lazada, AliExpress, Trendyol and Daraz declined by 3% year-over-year, primarily driven by declining orders of Lazada and AliExpress, partly offset by strong order growth of Trendyol.
During the quarter, the decline in AliExpress orders slowed compared to prior quarters as the impact from European Union’s VAT rules became annualized. We continue to face challenges in cross-border ecommerce demand in Europe due to the depreciating Euro and increasing logistics costs.
In Southeast Asia, Lazada orders also declined year-over-year during the quarter, mainly due to shopping activities normalizing back to offline channels with the lifting of COVID-19 restrictions in the region. Lazada has continued to improve monetization rate by offering more value-added services as well as enhancing operating efficiency. During the quarter, losses per order for Lazada narrowed by over 25% compared to the same period last year.
During the September quarter, Trendyol’s overall orders grew by over 65% year-over-year as a result of strong growth of its e-commerce business and rapid growth of its local consumer services.
The reasons of Lazada’s order decline cited here are, in our opinion, quite apt. The observations about AliExpress’s Europe challenges are also quite in line with what we observed in our Shopee in Poland report.
The positive side of the story, however, is narrowing losses. Quoting Alibaba’s results presentation again:
International commerce adjusted EBITA was a loss of RMB960 million (US$135 million) in the quarter ended September 30, 2022, compared to a loss of RMB2,481 million in the same quarter of 2021. The decrease in loss year-over-year was primarily due to the reduced losses from Lazada and Trendyol. Continued narrowing of losses from Lazada was a result of continued improvement in monetization rate by offering more value-added services as well as enhancing operating efficiency. The reduced loss from Trendyol is primarily due to revenue growth and enhanced operating efficiency.
Ecommerce in Southeast Asia, as everyone is realising now, is a long game. Dig in!