Company Trend Analysis - Southeast Asia To Be's Springboard For Expansion - JAN 2018

BMI View : Regional and international e-commerce players have started making moves to become leading players in the Southeast Asia n e-commerce market. Chin a ' s has made a series of investments into local partners, establishing a presence ahead of what we predict will eventually be a more substantial expansion .

We forecast the e-commerce sector in emerging Southeast Asia (Indonesia, Philippines, Malaysia, Thailand and Vietnam) to be worth USD59bn by 2021, up from an estimated USD26.2bn in 2016. A market of this worth and growth potential is obviously attractive and we are not surprised that e-commerce majors have begun to step in.

Indonesia Offers Largest Market In South East Asia
South East Asia e-Commerce Sales (USDmn)
e/f = estimate/forecast. Source: BMI

In October 2017, China-based invested USD19mn in Pomelo, a Bangkok-based online fashion portal, but with a presence in Indonesia and Singapore. Earlier it had announced a partnership with Thailand's retail conglomerate Central Group to establish two joint ventures in Thailand covering e-commerce and financial technology (fintech) services, with an aggregate investment of up to USD500mn. is accelerating its overseas expansion programme as it still lags behind rival Alibaba, which made a USD1.1bn investment into Tokopedia, one of Indonesia's biggest online marketplaces; and a USD2.1bn investment in Lazada, an Amazon-like e-commerce company serving six countries in Southeast Asia, to increase its stake in the company to 83%.

Both and Alibaba have been fierce competitors in the region, with previously indicating its plans to invest into Tokopedia. However,'s strategy in China has emphasised logistics and it has built its own warehouses and fulfilment centre, as well as a last-mile delivery fleet. It is also more focused on a business-to-consumer (B2C) rather than a consumer-to-consumer (C2C) model. We believe will continue this strategy as it expands in Southeast Asia, differentiating itself from Alibaba, which has an asset-light business model. Since its acquisition by Alibaba, Lazada has been expanding its C2C offer, while other regional players, such as SEA ( Garena)-backed Shopee, only offer online marketplace platforms.

So far, Indonesia currently accounts for almost all of's investments outside China, with its own network of warehouses. However, it is planning its entry into Thailand, with moves such as the joint venture with Central Group and investments into local partners like Pomelo. also plans to use Thailand as a hub for servicing other regional countries, including Vietnam and Malaysia. Because business-to-consumer (B2C) e-commerce is a long-term, cash-intensive, winner-takes-all game, and still benefits from economies of scale, we believe that will continue building up its brand and improving logistics before a full launch in Southeast Asia.