E-Commerce Cold War in Asia, Where is Southeast Asia?

Perhaps a very powerful e-commerce battle on the earth straight away will not be between Amazon vs. Walmart or Amazon vs. the brand new wave of omnichannel players like Warby Parker and Dollar Shave Club. Rather, it’s a chilly war between Alibaba and Amazon. It’s a battle that can likely last many years, and can be most visible in Southeast Asia over the following few years.

Players

In India, everyone knows this story all too well. Flipkart and Snapdeal face a wealthy US competitor that is pumped up $3 billion to the country. There are rumors in Indonesia that Amazon may even be pumping $600 million to the country. Amazon is trying to overcome India within the west and Indonesia within the east. And with a possible latest focus SingaporeAmazon is selecting its battles fastidiously within the region.

Meanwhile, Alibaba wasted no time in attacking $1 billion acquire big-spending e-commerce player Lazada from Rocket Internet. Through its financial arm Ant Financial (with over $4.5 billion in a bank), Alibaba is expanding its interests with financial investments within the Southeast Asian region.

With large Chinese and American behemoths encroaching on Southeast Asia from all sides, is that this an excellent thing?

Dominant operators in Southeast Asia

Without a doubt, from a consumer perspective, corporations will burn as much as they will to achieve market share. It’s good for consumers. It’s obvious. But what’s going to this do for his or her competitors? Retailers and existing e-commerce sites in Southeast Asia?

Certainly, smaller e-commerce web sites usually are not prepared for an attack by Amazon or Alibaba. We can see this in India with Flipkart lowering its valuation. There is little evidence that e-commerce sites in Southeast Asia are higher prepared. And yet that is not the scariest thing.

In the US, Walmart needed to fend off the attack of Amazon, which overtook it when it comes to market capitalization in 2015. This is the corporate that published $10.5 billion information technology in 2015. Retailers in Southeast Asia actually come no higher prepared than Walmart. They are about to return nose to nose with two corporations able to outspend one another of their market.

Will Southeast Asia’s large conglomerates and governments passively wait? Will we soon see protectionist regulations that help support innovation and start-ups in local countries that may compete with the giants? Are giants sucking value from Southeast Asia? While they’re good for consumers, do they reinject capital into local economies?

Indeed, if your complete Southeast Asian ecosystem doesn’t treat it properly, it is feasible that these two elephants will trample everyone of their fight.

Southeast Asia, once more the mainstay

All this highlights the importance of Southeast Asia as a market. It’s a battlefield that would determine the fate of Alibaba and Amazon of their global expansion. There is little question that the Middle East, South America and Africa are pursuing a long-term strategy, but Southeast Asia is prepared for the harvest. China and America are closed and already dominated by their e-commerce operators. The closest greenfield area is Southeast Asia.

The importance of Southeast Asia shouldn’t be underestimated. The e-commerce consequences of the Cold War in Southeast Asia have implications for understanding American-China geopolitics. It also sheds light on Southeast Asia’s effectiveness as an innovator and its ecosystem of conglomerates, young startups and government stakeholders. Will these giants take away or add value to the best-funded tech industry and hottest subcontinent on the earth? We’ll see.

Tread evenly in a world with two suns.

(Forbes.com)

About the author:

Anh Minh Do ,

I’m a Vietnamese-American enterprise capitalist based in Singapore at Vertex Ventures. I’m excited about technology, science fiction, culture, society and philosophy. I even have strong connections with the Vietnamese startup ecosystem, whose networks extend to Singapore and Silicon Valley. Previously, I used to be an editor at Tech In Asia, writing about Vietnam and Southeast Asia, and Vietcetera.com.