Pakistan-Based Online Retail Firm Daraz Acquired By Alibaba

Chinese online retail giant Alibaba has disclosed that it has purchased Daraz Group, a Pakistan-based e-commerce firm with operations spread across Southeast Asia in countries such as Nepal, Sri Lanka, Myanmar and Bangladesh. Per a statement that was released after the deal there are 500 brands and 30,000 sellers on the platform of Daraz.

“With a combined netizen population of approximately 90 million, Daraz’s current market represents a sizable growth opportunity for Alibaba. Although the market is many years behind China, Alibaba’s investment is certain to accelerate online retail growth over coming years,” Declan Kearney, the APAC general manager for Clavis Insight, said.

South Asia market

In the last couple of months there have been rumors that Alibaba was eyeing a deal with Daraz Group and reports emerged in March that discussions were ongoing between the two firms. Alibaba has set its sights on expanding in South Asia and this is the second phase of the efforts. Initially Alibaba concentrated on Southeast Asia where it backs Lazada and India where it backs Paytm. Recently however Alibaba has been expanding into other countries in South Asia which command a lower profile but which are huge markets. For instance Pakistan boasts of more than 190 million people.

Alibaba is also reportedly eyeing a deal in Bangladesh whose population is now more than 160 million people who are increasingly turning to the internet. Last month it was reported that the Chinese e-commerce giant was interested in acquiring a 20% stake in bKash, a payment firm.

Strong quarter

Earlier this month Alibaba posted results which beat estimates and this was largely due to strong sales recorded in the clouding computing and commerce units. Revenues increased by 61% year-over-year to reach a figure of $9.73 billion. Analysts had been expecting an increase of 53%. This was the second year in which the quarterly revenue growth of Alibaba increased by more than 50%.

However Alibaba’s business investments in areas such as cloud computing and offline retail as well as its overseas expansion efforts have weighed on margins. The operating margin for the March quarter was 15% and this was a decline of 10 percentage points from a similar period a year ago.

The expansion efforts of Alibaba are expected to continue aggressively according to the chief executive officer of the online retail giant, Daniel Zhang. In an earnings call with analysts Zhang indicated that the expansion efforts are aimed at meeting the company’s goal of pushing gross merchandise volumes beyond a figure of $1 trillion by 2020.

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