- Alibaba may invest $3 billion in Grab to use its delivery capabilities and variety of services to bolster its business in Southeast Asia.
- And Grab may be interested in an investment from Alibaba due to its financial woes during the pandemic.
- Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Payments & Commerce industry with the Payments & Commerce Briefing. You can learn more about subscribing here.
The Chinese e-tailer is in talks to invest $3 billion in the Southeast Asian ride-hailing firm, which was valued at approximately $14 billion in March 2019, Bloomberg reports. If the firms come to an agreement, it would expand on Alibaba’s existing interest in Southeast Asia (SEA): It has already invested $4 billion in Lazada, which is now its ecommerce arm in the region.
Working closely with Grab would enable Alibaba to strengthen its ecommerce operations in SEA and build a broader payments and commerce ecosystem, like Alipay and WeChat Pay have in China.
- Lazada may take advantage of Grab’s delivery capabilities if an investment comes to pass. Grab offers on-demand delivery and food delivery, and handles online orders and delivery for merchants like grocery stores. Alibaba’s Lazada could use Grab’s existing delivery network to expand its offerings in SEA, helping Lazada take advantage of ecommerce’s rise in the region and build its order growth, which is already surging during the pandemic.
- Grab could give Alibaba the opportunity to push its offerings through a single app, which proved successful for Alipay in China. Alipay, which is operated by Alibaba-backed Ant Financial, and WeChat Pay lead China’s massive mobile payments market, partially because they offer access to a variety of features like payments, social media, and food delivery on one platform. Grab can offer consumers a similar suite of offerings with its ride-hailing service, GrabPay digital wallet, and ecommerce capabilities. Alibaba may be aiming to integrate Lazada into Grab’s app so that the ride-hailing firm can attempt to replicate Alipay’s and WeChat Pay’s success, which would position Alibaba to do well in SEA.
And Grab may be interested in an investment from Alibaba because of its financial woes during the coronavirus pandemic. Grab laid off almost 5% of its employees in June due to the pandemic, which may have hurt its ride-hailing business. In addition to accepting an investment from Alibaba, Grab is reportedly considering a merger with fellow SEA ride-hailing firm Gojek, but regulatory concerns could prevent the combination from occurring and potentially bolstering Grab’s financial situation.
So, accepting $3 billion from Alibaba and leaning more heavily into ecommerce should be appealing to Grab because it would give it fast access to funds it may need to weather the pandemic and a greater ability to tap into online sales, which are increasingly important to consumers while they try to limit their chances of contracting the virus.
Want to read more stories like this one? Here’s how you can gain access:
- Join other Insider Intelligence clients who receive this Briefing, along with other Payments & Commerce forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
- Explore related topics more in depth. >> Browse Our Coverage
Are you a current Insider Intelligence client? Log in here.