Word of Amazon.com Inc. (AMZN) entering a current market generally,normally sends shudders through the local retail and online shopping worlds, but Alibaba Group (BABA), the Chinese ecommerce giant, isn’t losing any sleep over its rival’s impending push into Southeast Asia.
With expectations surging that Amazon will enter the region soon, Alibaba’s Lazada thinks it will maintain an edge that will prevent Amazon from disrupting the marketplace similar to what it has done elsewhere. It’s no surprise the U.S. ecommerce giant would set it sights on Southeast Asia. It has a growing number of internet users who are starting to embrace online shopping. A report from Google and Temasek Holdings, the Singapore investment firm, forecasts the internet economy in Southeast Asia to increase to $200 billion by 2025, driven in a gigantic portion by ecommerce. (See also: Alibaba Makes a Lifesaving $1B Investment in Lazada.)
In an interview with CNBC, Aimone Ripa di Meana, co-founder and chief marketplace officer at Lazada, the online retailer majority owned by Alibaba, said the company has an edge because it has intimate knowledge approximately the regional marketplaces as well as the logistics network and backing from Alibaba and its deep pockets.
Touting Regional Expertise
“We feel very confident approximately what we’ve built so far—we occupy a very unique approach to commerce, trade,” Meana said in the interview. “Having built teams that occupy been with us for a long time that function in a very biological way that know the markets, know the complexities that are in each market, which can’t easily be replicated. I don’t judge knowing how to accomplish (commerce, trade in) Singapore is in any way relevant to how you build your commerce, trade in the Philippines or Indonesia.”
The executive argued it’s not only differences between people and languages that effect it difficult to function in Southeast Asia. There’s the challenges of setting up the infrastructure in each country for logistics and delivery and understanding how the local languages can impact the way internet searches work. That’s made easier for Lazada because of Alibaba’s expertise and reach. “We are in a market that is at the beginning of its curve,” said Meana in the report. “While obviously the numbers are huge and exciting, I judge the opportunities that lie ahead are much larger than anything that’s been built behind us.”
Upping Its Stake
In late June, Alibaba announced it spent $1 billion to boosts its stake in Lazada to 83% from 51%. With the current $1 billion, Alibaba has invested a total of $2 billion in the firm as it looks to expand external of its core Chinese market. (See also: Alibaba Invests $1 Billion in Lazada Bringing Stake to 83%.)
While Amazon has yet to say what it plans to accomplish in Southeast Asia, Lazada has been rolling out current features aimed at countering an exodus to its competitors. In the spring it hooked up with ride-hailing app Uber and streaming video service Netflix (NFLX) to create an online rewards program for users in Singapore that could be expanded to other countries and markets. The program is called LiveUp and it rewards users who pay $20 a year with discounts on Netflix streaming, Uber rides and free delivery of purchases on Lazada and Taobao, the other online marketplace owned by Alibaba.