Profitability in Lazada’s basket for IPO

In The Checkout this week, we analyze Lazada’s shift to profitable growth and how Temu looks like in Southeast Asia. [Read from your browser]( The Checkout 🛒  --------------------------------------------------------------- Welcome to The Checkout! Delivered every fortnight, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we spotlight: - Lazada [downsizing]( to profitability - Buttonscarves’ [bootstrapped bound]( - Temu’s underdog status in Southeast Asia --------------------------------------------------------------- Hello {NAME} Whenever we need more dog food at home, I turn to either Lazada or Shopee and try to find the best deal for the brand my beagle wants. These past few months, I’ve ended up buying mostly from Shopee, which offers more generous discounts. As my colleague Melissa points out in this week’s first Big Story, it appears that Lazada has recently shifted its focus to making a profit. This has taken drastic measures like layoffs, as well as a bit of copying from low-cost competitors like Temu. Lazada recently launched Choice in Southeast Asia - a move that is said to be its response to Temu. This strategic shake-up has affected Lazada’s gross merchandise value, which is estimated to have shrunk in 2023 compared to the previous year. The company, however, did hit EBITDA profitability for the first time in July of this year. Turning a profit means Lazada may now be primed for an IPO. However, it will still be haunted by the shadows of fierce competitors like Shopee and TikTok Shop, which are both larger in many Southeast Asian markets. But don’t count Lazada out just yet. There are still chances for the Alibaba-backed platform to catch up to Sea Group’s Shopee. Read Melissa’s piece to find out more. In the second Big Story, I take a closer look at Buttonscarves’ growth toward becoming Indonesia’s “Louis Vuitton of scarves,” which was pushed by its embrace of live selling. And to cap things off, this edition’s Hot Take explores Temu's underdog status in Southeast Asia. -- Miguel  --------------------------------------------------------------- THE BIG STORIES 1️⃣ [From layoffs to profit: Is Lazada finally ready for an IPO?]( Lazada could be valued at US$8 billion if spun off, but sustaining monthly profit amid strong rivals remains uncertain. 2️⃣ [Indonesian ‘LV of scarves’ dresses up modest fashion space]( The company was one of the first brands in Indonesia to embrace live selling.  ---------------------------------------------------------------  THE HOT TAKE US giant Temu is an underdog in SEA Here’s what happened: - Temu is now the second-most visited ecommerce platform worldwide. - The Chinese company achieved this feat after just two years of operations. - However, it has yet to make a similar impact in Southeast Asia. Here’s our take: Temu has overtaken eBay to become the second-most visited ecommerce platform in the world, according to SimilarWeb data. While the PDD Holdings-operated platform still [sits firmly behind US giant Amazon]( it beat out Alibaba’s international platform Aliexpress, which landed in fourth place. What’s impressive is that Temu accomplished this just two years after its initial launch in the US in September 2022. Since then, the platform has entered countries like Australia, Italy, Spain, and the UK. It also found its way to Southeast Asia last year, where it competes with regional giants like Shopee and Lazada, as well as relatively new player TikTok Shop. However, Temu is still touted as “the next big thing” in ecommerce a year after its launch in the region, which signals slower adoption in the area, compared to the US. Figures from Data.ai support this. Temu still lags behind Shopee, Shein, and Lazada in terms of downloads and total number of users in Malaysia and the Philippines - its first two Southeast Asian markets. This relative lack of traction may be explained by looking at ad spend. Temu was first introduced to the American market through ads during the 2022 Super Bowl, one of the most-watched televised events in the US. Getting an advertising spot during the Super Bowl isn’t exactly cheap, and Temu has already [spent billions of dollars]( in advertising to get to as many phones as possible in the country. Temu has yet to make similar levels of investment in advertising to push for its expansion in Southeast Asia. However, the Chinese company may still be biding its time in the region before investing more heavily. There may be good reasons for this, as it is less certain to achieve great unit economics in Southeast Asia compared to the US. Regulatory troubles also stand in Temu's way in certain markets. For example, its plans to register a trademark for its brand in Indonesia have already been [blocked by the local government]( three times. Isy Karim, director general for domestic trade of the Ministry of Trade of the Republic of Indonesia, said the company’s “factory-to-consumer” model is “not compatible” with the country’s policies. But it seems Temu remains optimistic about the region, with the company [launching its services in Thailand]( just last month. Right now, Temu’s status in Southeast Asia is still up in the air, and it will likely still be holding on to its “next big thing” title for a while. ---------------------------------------------------------------  LEADERSHIP COLLECTIVE: BUILDING AT SCALE ON SEPTEMBER 26 Build better products, faster Deeper integration between design and engineering - opportunity or headache? Senior product developers and engineers are tackling this question head-on at our exclusive roundtable on September 26 at Coriander Leaf Chijmes. We'll explore proven strategies for effective communication, uncover the true potential and challenges of advanced design tools, and discover how to empower true collaboration that transforms your product development process - and yes, spark a little healthy debate along the way. Space is extremely limited - [apply for your invite today!]( ---------------------------------------------------------------  EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Tech in Asia Conference Jakarta on October 23 - 24]( Feeling lost in the Gen Z lingo? Join us at TIA Conference Jakarta and hear from these media moguls who will spill the tea. Learn how to navigate the world of short-form content, leverage AI to personalize content recommendations, build authentic and engaging communities, and more. No cap, this session is gonna be fire. [Get tickets at 40% off]( before price increases on September 19. [Gemini Day for Startups: Indonesia on September 26]( Everyone's talking about AI, but how many of the solutions actually deliver? Join Google Cloud’s Xavier Prasetyo to get hands-on with generative AI solutions built for real-world impact, walk away with actionable strategies, and leave ready to transform your business with AI. Limited seats available - [apply for your invite today.](  [SYNC 2024 on October 08]( Elevate your startup journey at our exclusive founder’s roundtable at SYNC 2024. Expect candid conversations on topics such as turning AI ideas into viable products, the unique challenges of raising capital for AI startups, and strategies to attract potential investors. You’ll uncover insights on how to find and retain top AI talents and, most importantly, how to tailor your solutions to the needs of your market to achieve product-market fit. Find out more about [SYNC 2024]( today. [Experience #TIAConferenceJKT like a pro | October 23 - 24]( Ever felt overwhelmed at a conference? Too much to see, too little time? At TIA Conference Jakarta, we've got you covered. Our Pro Pass gives you exclusive access to networking events, catered meals, and on-demand sessions, ensuring you make the most of your time. Focus on building relationships and leave the logistics to us. Bond with your new connections over five-star meals and catch up on sessions at your own pace with video replays. But hurry, this pass is in high demand and sells out quickly. [Grab your Pro Pass now]( for US$153 before prices increase on October 2.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you soon! 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