Thai retail giant swallows up Zalora Vietnam to expand online market

According to TechCrunch, the Bangkok-based Central Group won the bidding to buy Zalora after putting $10 million into the business in both Thailand and Vietnam. The deal is awaiting finalization.

Central Group is interested in Vietnam's retail market. Photo by TechCrunch

Rocket Internet offloaded the company after failing to meet its e-commerce profit projections. The Berlin based company has also sold a 9.1 percent stake in leading Vietnamese online retailer Lazada to Chinese billionaire Jack Ma’s Alibaba for $137 million.

E-commerce is estimated to account for about three percent of total transactions in Southeast Asia and has been growing continuously as the internet has gained in popularity and become easier to access. However, traditional retailers still consider this a new segment and are reluctant to invest in this potential market, TechCrunch said.

Based on Rocket Internet’s latest financial report, Zalora’s revenue increased 78 percent year-on-year to $234 million in 2015, but it's profit fell by 36 percent ($105 million).

According to TechCrunch, Central Group may not be a well-known global brand, but it is one of the largest retailers in the region. The Thai retail giant has expanded its network to Vietnam, Malaysia and Indonesia with numerous shopping malls and supermarket chains worth nearly $10 billion, and more than 700,000 staff.

A Central Group representative said: “Vietnam has been becoming a target market with large potential for retail investors.”

Central Group has expanded Vietnam both online and offline, trading in fashion, electrical goods and household appliances. The Thai retailer has already bought a 49 percent stake in local retailer Nguyen Kim and opened two Robins Shopping Centers in Vietnam.

Central Group also has interests in Vietnam with SuperSports, Crocs and New Balance, and introduced globally famous brand Marks & Spencer to the local market.