Alibaba, Amazon battle for global market
Updated 2017-04-21 10:00:58
Southeast Asia to become key arena for e-commerce giants
China’s cash-rich tech giant Alibaba Group Holding is racing to expand beyond its home market, heralding possible battles with Amazon.com Inc for global e-commerce and cloud computing market share.
One of Alibaba’s latest steps toward further global presence came with the announcement on Wednesday of a merger between its financial affiliate Ant Financial with helloPay Group, a payment platform on Southeast Asian e-commerce site Lazada.
Alibaba is betting on Southeast Asia’s e-commerce, which is expected to be worth billion to 2 billion by 2025, according to a report co-issued by Singapore investment firm Temasek.
Gaining a controlling stake in Lazada, known as the Amazon of Southeast Asia, came after Alibaba further expanded in the Southeast Asian market in late March by planting an e-commerce hub in Malaysia under the initiative of the Electronic World Trade Platform, proposed by Alibaba founder Jack Ma Yun.
Shen Difan, president of Alibaba’s global retail site AliExpress, said in a press release sent to the Global Times that Alibaba aims to reach 2 billion consumers around the world by 2025, at least 1 billion of whom will be from markets outside China. AliExpress, a business-to-consumer online shopping platform targeting only overseas consumers, said on April 10 that its users had surpassed 100 million from 220 countries and regions.
By contrast, Amazon has now entered 14 marketplaces, including the U.S., Canada, UK, China, India and Mexico, and has more than 300 million worldwide active customer accounts, according to information Amazon sent to the Global Times Thursday.
Southeast Asia is surely a prize that Amazon will not pass up, as the US company is seeking new growth areas around the world, Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times Thursday.
Amazon refused to give details of its plans either globally or for Southeast Asia when contacted by the Global Times Thursday. But unnamed sources were quoted by a TechCrunch report in late March as saying that the U.S. e-commerce giant planned to make an entry into Southeast Asia via Singapore this year.
“If it happens, this will be another face-to-face fight between the two giants on the global stage,” said Lu.
The Amazon-Alibaba matchup has been on the cards since the Chinese e-commerce powerhouse invested in India’s payment and e-commerce firm Paytm in 2015, while its U.S. counterpart has enlarged its presence in the region by pumping billions of dollars into its Indian business since 2014.
Their battle in India reached a new level in early March this year when Alibaba made its third round of investment into Paytm, in which the Chinese firm now holds a controlling stake.
Alibaba also backed Snapdeal, which was ranked by U.S. data intelligence firm 7Park Data as India’s third-largest e-commerce platform in terms of monthly mobile users with a 10.8 percent share of the market as of March.
By March, Amazon accounted for 30.3 percent of India’s monthly mobile e-commerce users, closing in on local Flipkart, which captured 30.7 percent, making it India’s top e-commerce player, according to 7Park Data.
Beside e-commerce, the stage has also been set for an Alibaba-Amazon cloud computing battle in the Middle East.
In November 2016, Alibaba’s cloud computing arm Alibaba Cloud launched a new data center in Dubai via a joint venture with Dubai-based property developer Meraas Holdings. A month later, Amazon’s cloud computing arm Amazon Web Services announced it would open a new office in Dubai to gain clients in the Middle East.
However, experts said that the war between Amazon and Alibaba will not be a full-scale one, given their different focuses in different markets.
Their paths crossed in some regions, but Lu said that Alibaba’s e-commerce business would not breach the North American market where the retail industry is mature, while Amazon’s main focus is on developed countries in Asia, North America and the EU.
Alibaba’s Ma reportedly said at a forum in Russia that his company’s priority is Europe, Central Asia and Southeast Asia along China’s “One Belt and One Road” route.
“Even in Southeast Asia and India, the fight between the two will not be very fierce,” as Alibaba and Amazon need to make great efforts to deal with barriers such as poor logistics and payment systems, Ma Jihua, a Beijing-based independent IT expert, told the Global Times Thursday.