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A consortium led by the Chinese e-commerce giant invested $400 million in The CrownX, a subsidiary of conglomerate Masan Group that operates retail chain WinMart.
The investment was seen as a chance for Lazada, Alibaba’s e-commerce platform, to create a business relationship with WinMart for the online groceries business, Singapore-based technology media company Tech in Asia said.
Kenny Ho, Head of Investment for Southeast Asia at Alibaba, said the combination of Alibaba's online retail expertise, Lazada's e-commerce platform in Vietnam and Masan's leading offline network will be a strong catalyst for modernizing Vietnam's retail landscape.
WinMart will become the preferred grocery retailer on Lazada, while its outlets will be used as pick-up points for online orders, Ho said.
The investment by Alibaba indicates that the company is tapping into a pandemic-fueled growth in the demand for online groceries, Tech in Asia reported.
The pandemic has elevated groceries into the hottest e-commerce vertical. Vietnamese consumers who have tried online grocery shopping have doubled in 2020, according to a report from Google, Temasek, and Bain & Company, with over 75 percent indicating they would continue the practice even after the pandemic has subsided.
Another reason for Alibaba’s investment in Vietnam is its high growth potential. The nation’s e-commerce market expanded by 18 percent last year to $11.8 billion, the only country in Southeast Asia to record double-digit growth amid the pandemic, according to the Vietnam e-Commerce and Digital Economy Agency.
A report by market research company Global Data’s E-Commerce Analytics said Vietnam’s e-commerce is likely to see compounded annual growth of 18.8 percent between 2020 and 2024, with the value rising to $26.1 billion.
Vietnam has a stable growth economy, which grew by 2.9 percent last year despite the Covid-19 pandemic. The number of middle-class households in the country is expected to reach 17 million by 2030.
