2015 was a big year in terms of logistics and globalization for Amazon, who began making their way into the shipping industry, registering in China as a freight forwarder and a shipping broker for 12 routes, including Shanghai to Los Angeles and Hamburg.
They’ve also named themselves as a cross-border logistics service and an ocean freight company, with ports in Japan, Europe, and the United States. By becoming key players in trucking, warehousing, and shipping, Amazon is able to lower its shipping costs, open doors for smaller merchants to publish more products, and allow Chinese and Indian sellers and manufacturers to access Amazon warehouses. Moreover, the company also launched their same-day Amazon Prime delivery service in 14 US states that year. This was further expanded to 11 more metro areas early in 2016, including an Amazon Prime service in China. Later this year Amazon proceeded to invest US $3B in expanding their ecommerce reach in India, in addition to a previous $2B in 2014. Now, Amazon is further expanding their reach, announcing their plans to enter Southeast Asia with a launch in Singapore in the first quarter of 2017.
Alibaba, the prominent ecommerce leaders in China, has its share of expansions. Now, with 80% of China’s online shopping sales, they have made moves to expand into Southeast Asia. Beyond ecommerce, Alibaba acquired a minority stake in the Chinese smartphone maker, Meizu in early 2015. Later that year, they bought the South China morning post and other communication assets, including a dabble in the gaming industry. The Chinese-owned company has made regional investments and acquisitions like M-Daq for easier cross-border transactions; Ascend Money, which operates in six SEA countries; and Singpost for delivering parcels across Asia, among others as they increase their spread in the region. Lazada, a privately owned Singaporean e-commerce company, is the leading marketplace in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Meanwhile, Redmart–—Singapore’s leading online supermarket for groceries and essentials—competes as the region's most effective warehousing and delivery. Lazada now owns Redmart and Alibaba has a controlling stake in Lazada.
Reports state that the e-commerce market in Southeast Asia will reach US $200B by 2025 with online sales growth at a CAGR of 32%. With 600 million consumers and 260 million people online, it is the largest market of Internet users in the world. To add to that, online media sales are expected to grow at a CAGR of 18% in the next 10 years. With such promising numbers, it’s no wonder both companies want to get a big share of the market. For now, it seems like Alibaba has the firmer grip on Southeast Asia. With no business in the region, Amazon is planning to start small, likely with their Amazon Prime delivery and AmazonFresh grocery service. Rumors are circling that the company is planning a launch in Singapore in early 2017. Such reports are not entirely unfounded as Amazon has been quietly securing assets in Singapore, like getting new hires and buying refrigerated trucks.
This isn’t the first time the two companies are waging a turf war. Alibaba has made moves in the United States, while Amazon has done the same in China, with both of them investing heavily in India. And although their business models differ, with Amazon being a direct-to-consumer retail model and Alibaba operating as a giant online middleman, their strategies to expand will be interesting to follow.