Zalora, the fasion e-commerce site, is selling its businesses in Thailand and Vietnam to Central Group, according to sources close to the deal.
The deal is reportedly agreed in principle and currently subject to paperwork and red tape.
Central Group is one of Southeast Asia’s largest retail companies with a huge presence in Thailand, but also Vietnam, Malaysia, Indonesia and other countries in the region. Its assets, including shopping malls and department store chains, are worth almost $10 billion and it employs 70,000 people in total.
The group has been rumoured to enter the online commerce sector for a while, and sources reported by tech site TechCrunch say it’s struck a deal to buy the businesses from Zalora for $10 million each country. Online spending accounts for around 3 percent of all commerce in Southeast Asia, and still remains a segment that has huge potential for growth.
The low level of online commerce has been challenging for startups owned by Rocket Internet, which owns Zalora currently, with many of them missing projections for profitability. Lazada received a $500 million investment earlier this month after it ran out of cash, and Zalora is still unprofitable. The latest financials show Zalora’s revenue rose 78 percent to $234 million in 2015 but net loss increased 36 percent to $105 million.