Alibaba's Lazada Leverages AI in E-Commerce Race Against Shopee and TikTok Shop

Alibaba Group Holding BABA is doubling its artificial intelligence (AI) investments to regain its mojo in Southeast Asia’s e-commerce space.

Over the past two years, the Chinese e-commerce juggernaut has invested about $2 billion in regional platform Lazada, a portion of which is going behind AI and logistics upgrades to fend off fierce competition in a region where profit margins are notoriously slim.

Shopee holds a dominant 45% market share in Southeast Asia, while TikTok Shop has rapidly captured 20% of the market since launching its e-commerce operations. Lazada, in contrast, held a 20% market share last year, the Wall Street Journal cites Bernstein Research.

Also Read: Alibaba And JD.com Ease Rivalry, Share Logistics In Response To Economic Challenges

While Lazada appeals more to older shoppers, platforms like Shopee and TikTok Shop have gained popularity among younger, tech-savvy consumers who prefer livestreaming and social commerce.

AI-driven improvements, including personalized shopping recommendations and AI-based after-sales services, are in the works, the WSJ cites Lazada’s CEO, James Dong.

Dong emphasized that these innovations will help Lazada attract a broader user base and streamline logistics for sellers on the platform.

With AI tools embedded into Lazada’s platform, sellers can generate market-specific content, forecast demand more accurately, and improve logistical planning.

Recent reports indicated Lazada is courting European luxury brands to boost its moat.

Lazada targeted $100 billion in e-commerce volume by 2030. For the first time, Lazada became EBITDA positive in July 2024, backed by its artificial intelligence-enabled operations and improved online marketing.

Alibaba’s move signifies its efforts to boost growth via geographical expansion as China battles a weak economy further exacerbated by regulatory crackdowns and geopolitical tensions with the US.

Alibaba’s e-commerce business is already grappling with intense price rivalry with domestic rivals, and the US sanctions restrict its prospects of integrating AI technology from the likes of Nvidia Corp NVDA.

Alibaba stock gained 21% in the last 30 days as China slashed key rates, and reports indicated additional stimulus to boost growth.

Investors can gain exposure to Alibaba through Invesco Golden Dragon China ETF PGJ and JPMorgan US Tech Leaders ETF JTEK.

Price Action: BABA stock is down by 0.82% at $101.34 premarket at the last check Thursday.

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