The battle for Southeast Asia’s coveted e-commerce market is intensifying with Chinese giants Alibaba Group and rival JD.com Inc now scrambling to gain control of the second largest e-commerce player in Malaysia, 11street, a partnership between Celcom Axiata Bhd and Korea’s SK Planet.
“Alibaba and JD.com are actively discussing the deal with 11street. It will finally go to the one who wants it more desperately,” a source close to the development told DEALSTREETASIA recently.
11street, an online marketplace for fashion, electronics, groceries, health and beauty, kids and baby products, leisure and sports, home and living, books and services, and deal offerings such as e-vouchers trails Lazada, the top e-commerce player in Malaysia based on monthly visits and apps installed.
For Alibaba, which has so far invested more than $2 billion in Lazada already, the 11street buy could help it strengthen its foothold in Malaysia. For JD.com, this could be a chance to mop up significant market share by acquiring the number two e-commerce player in the country.
“If Alibaba takes it, it will prevent JD.com from entering the Malaysian market as it did in Indonesia with Tokopedia. The acquisition will take place largely for the local partner. A partnership with Axiata in Malaysia would be similar to those with Provident Group in Indonesia or Central Group in Thailand,” said the source.
In an emailed response to a DEALSTREETASIA query on the 11street deal, JD.com said, “As corporate policy, we don’t comment on market rumors.” Alibaba did not respond to queries at the time of writing this article.
SK Planet launched the 11street online marketplace in Thailand earlier this year. It had launched the brand in Turkey in 2013 as n11.com (numara onbir), in Indonesia in 2014 as Elevenia (which it has now exited to Salim Group), and in Malaysia in 2015 as 11street.
There have been news reports that the Korean telecom company may now be looking to exit overseas markets such as Malaysia, Thailand, and Turkey. However, SK Planet has maintained that it is still interested in these markets.
Alibaba and JD.com’s SEA push
Maintaining its push in Southeast Asia, Alibaba recently led a $1.1 billion investment in Indonesia’s Tokopedia. The e-commerce firm had previously raised $100 million from Japan’s SoftBank and Sequoia.
In June this year, Alibaba had announced an investment of $1 billion in Lazada to raise its stake to 83 per cent from the 51 per cent it had acquired last year.
Riding on each other’s partnership, Lazada will now be selling select items from Alibaba’s Taobao marketplace in many countries in the region including Indonesia, Philippines and Thailand, apart from Singapore and Malaysia where it was already selling the items since earlier this year.
Meanwhile, rival JD.com, which is also the largest e-commerce company in China and the largest Chinese retailer by revenue, is looking to make Thailand as its hub for Southeast Asia. It has already announced a $500 million joint venture with Thailand’s Central Group focused on e-commerce and financial technology.
Under the terms of the agreement, half of the investment will come from Central Group, with the remainder coming from JD.com, JD Finance and Provident Capital, which is also JD.com’s strategic partner for its Indonesian e-commerce business.
In an interview earlier, JD.com Chairman and CEO Richard Liu said that he plans to make Indonesia the centre for the island area of Southeast Asia and Thailand the hub for mainland Southeast Asia.
Regional and global players vying for share too
Apart from Alibaba and JD.com, regional players such as Sea (earlier known as Garena) may also end up eroding market share for other players. Recently, the Singapore-based company, which has an online shopping platform Shopee, announced that it is listing in US to raise $1 billion. The company, backed by Chinese internet giant Tencent, is one of the region’s biggest homegrown startups.
Meanwhile, US-based Amazon led its push into Southeast Asia with the launch of its services in Singapore in July this year.
With a growing middle class and improving internet penetration, growth rates for Southeast Asia’s e-commerce are expected to be in double digits. In the region, Indonesia is the biggest growing e-consumer market, followed by Thailand, Malaysia, Vietnam and the Philippines.
With a strong logistics network paramount to e-commerce success in the region, Alibaba recently announced it will invest $807 million in its affiliate Cainiao Network, raising its stake to a majority 51 per cent, and put in an additional $15.2 billion over the next five years to expand its logistics network.