In the red corner:
Weighing in at an IPO value of $21.8bil (roughly RM85.2bil) at the end of 2014, Alibaba has paved milestone after milestone to become one of the largest and most valuable e-commerce companies in the world.
On its first day of trading, Alibaba eclipsed both Amazon and eBay, displaying a rough gauge of the power that this juggernaut is quietly packing.
As of now, Alibaba operates a multitude of platforms targeting various types of sellers. Alibaba’s Taobao is considered one of the group’s most profitable marketplaces, responsible for more than 80% of Alibaba’s total sales.
Investors insist that the tremendous growth seen from the Chinese market and the middle-class is a development of Alibaba’s direct contribution to the overall economy.
This, among many other things, is part of the reason why the Chinese giant has caught up at break-neck speed with its competitors. They’ve also attracted a few big names in the hedge-fund space along the way, including David Tepper and Dan Loeb, who both picked up shares in 2017.
In the blue corner:
Amazon is up next, a company that needs no introduction, has been taking large strides forward since its inception. 2015 was one of many big years for the e-commerce giant, with regards to logistics and globalisation.
Making its way swiftly into the shipping industry, Amazon registered in China as a freight forwarder and a shipping broker for 12 routes, including from Shanghai to Los Angeles and Hamburg to establish better footing within the Asian markets.
Additionally, Amazon has been busy bolstering its prominence/presence as a cross-border logistics service and an ocean freight company with ports in Japan, Europe and the United States.
The whole idea of the exercise is to allow better access to Amazon warehouses for Chinese and Indian sellers as well as manufacturers. By strengthening the reputation of the brand as a key player in the trucking, shipping and warehousing sectors, Amazon is also able to lower its shipping costs and open doors for smaller merchants to promote more products.
The crowd goes wild:
Southeast Asia had been a little behind in terms of e-commerce’s penetration rate for some time.
Today, spurred on by the rising popularity/acceptance of online sales, it has begun to transform itself into a market that promises higher growth for the foreseeable future. The ensuing rewards are expected to be exceptional, and available to those with enough resources to reap them.
Joint research by Temasek Holdings and Google have estimated that the Southeast Asian e-commerce market was worth just $7bil (roughly RM27.4bil) in 2016 and predicts that it could jump to $22bil (roughly RM86bil) in 2020, and $88bil (roughly RM344bil) in 2025, more than a twelvefold increase in a single decade!
Research by Business Insider estimates that Amazon accounted for 43% of annual online retail sales in the U.S. in 2016.
This battle of giants is predicted to impact all in its path. Small businesses and online retailers across Southeast Asia would do well to keep a close eye on the developments that follow.
These factors also imply that Amazon’s entry into Southeast Asia could mark a potential growth to nearly $40bil (roughly RM156.3bil) a year if it achieves a similar level of dominance that it has reached on its home turf.
As Amazon continues to tackle developed economies in the region, this giant will add on to the already-fierce competition heating up between online retailers, payment services and other businesses.
Nevertheless, challenges persist. This vast yet rocky battlefield is a region that accounts for more than 600 million people spread across six countries, with each nation differing in infrastructure, regulations and languages.
Gaining entry into these different fragments will present their own issues which players on all sides will have to face head-on.
Pound for Pound:
As the bell rings and these decorated heavyweights touch gloves, Amazon is off to an aggressive start, making intimidating advances into Singapore with its highly-anticipated delivery service Prime Now, offering tens of thousands of products ranging from champagne and diapers to instant noodles and more.
Amazon Prime Now Asia Pacific director Henry Low, is betting on the size of the available market of this nation, which packs more than 5.6mil people into an area about half the size of Los Angeles.
“Singapore’s density works really well for us. For the first time, we can launch [Prime Now] and have it open to the entire country at the same time," said Low.
Amazon began its marketing initiatives through online influencers in 2017, with a number of high-profile Instagram users posting sponsored teasers of its Prime Now service.
The distinctive tick on the packaging was a dead giveaway of a brand new Amazon original offer.
Amazon followed up with another punch, committing $5bil (roughly RM19.5bil) to India’s massive market, luring customers to sign up for its Prime services. These include television shows and Western movies for a fraction of the annual membership price back in the U.S.
All the while, unfazed by the flurry of strikes levelled at it by its opponent, Alibaba stands firm against fierce competition.
The relentless e-commerce behemoth has been busy setting up defensive positions. In all the areas that Amazon strives to gain complete dominance, it will find Alibaba.
The company has spent more than $2bil (roughly RM7.8bil) to take control of Lazada, a five-year old online shopping company based in Singapore, with business arms spanning six different countries. Recently, Lazada bought RedMart, an online retail grocery.
The Chinese giant has also invested roughly $500mil (approximately RM2bil) in stakes for Pytm, India’s largest mobile payments platform and its e-commerce affiliate, Paytm Mall.
It has also followed its Japanese ally SoftBank Group, by investing in Snapdeal, the current No. 3 online retailer.
In 2017, SoftBank came onboard with Alibaba to invest in Paytm as well. This spells trouble for Amazon, as Alibaba follows up with a strong grip on Southeast Asia’s online shopping eco-system.
To conclude
As the round ends and the dust clears, one thing is obvious, both sides are putting on one heck of a show and the crowd is loving it!
It also seems that Alibaba has the leading edge on this long and winding battle for Southeast Asian e-commerce glory, but Amazon is just getting warmed up.
Amazon has a market cap of $427bil (roughly RM1.7tril), whereas Alibaba stands at a "mere" $265 billion (roughly RM1tril).
Although Amazon has 310mil customer accounts, Alibaba is charging ahead with 493mil monthly users and according to stats from Singles Day (an annual shopping holiday in China created by Alibaba), this Chinese Warrior drives $17.5bil (roughly RM68.4bil) in sales, dwarfing both Cyber Monday and Black Friday in the U.S.
Alibaba chooses to focus on acquisitions and equity investments in order to enter markets in India and Southeast Asia, while Amazon follows through with its own strategy, building local services from scratch.
As both heavyweight champions continue to strengthen logistics and service infrastructure in some of the world’s most populous economies, neither has managed to celebrate a significant victory as of yet. The battle for e-commerce glory in Southeast Asia rages on.
