Alibaba’s Lazada Turns to AI to Compete in Southeast Asia

Alibaba’s (BABA) e-commerce platform, Lazada, is making strides in generative AI to broaden its user appeal amidst increasing competition in Southeast Asia. Over the last two years, Alibaba has invested approximately $2 billion into Lazada.

This sizable investment comes at a time when Lazada faces challenges in retaining its market share. Shopee currently commands a dominant 45% of the market, while TikTok Shop has swiftly grabbed 20%. Interestingly, Lazada is favored by older consumers, whereas Shopee and TikTok Shop resonate more with younger, tech-savvy shoppers.

In response to these challenges, Lazada is enhancing its platform with AI innovations to attract a wider audience and improve the experience for both sellers and customers. AI will enable personalized recommendations for users and support after-sales services via AI agents. Furthermore, AI tools will assist sellers in producing targeted content, accurately predicting demand, and streamlining logistics.

BABA Aims for Growth Beyond China

Alibaba’s focus on Southeast Asia is part of a larger strategy to expand geographically. With ongoing regulatory issues and geopolitical tensions impacting China’s economy, Alibaba is utilizing its technology and AI expertise to secure an advantage in the Southeast Asian market.

Is BABA a Smart Investment at This Time?

On Wall Street, BABA boasts a Strong Buy consensus rating based on 16 Buys and three Holds recorded in the last three months. Currently priced at $123.74, the average price target for Alibaba suggests a potential upside of 23.65%. Notably, BABA shares have appreciated by about 32% year-to-date.

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