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What Does Alibaba See in Tokopedia?

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Dec. 25 2018, Updated 12:30 p.m. ET

Alibaba makes another investment in Tokopedia

Alibaba (BABA) recently teamed up with SoftBank (SFTBF) and other investors to put an additional $1.1 billion toward Tokopedia. According to TechCrunch, Alibaba made a similar investment in Tokopedia last year.

Tokopedia is Indonesia’s largest online marketplace operator and one of Southeast Asia’s leading e-commerce companies. In Tokopedia, Alibaba sees a reflection of its own vision and a gateway to Southeast Asia’s booming Internet economy. According to a Google and Temasek study, Indonesia is the largest and fastest-growing Internet economy in Southeast Asia. The country’s e-commerce industry is estimated to be worth $12 billion and is poised to grow to $53 billion by 2025, accounting for 52% of Southeast Asia’s e-commerce industry.

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Financing to broaden Tokopedia’s scale and reach

Tokopedia is capitalizing on the boom, and its gross sales have quadrupled in the past year. The latest financing could help Tokopedia invest in technology and infrastructure to broaden its scale and reach.

Alibaba’s global strategy

Tokopedia fits in Alibaba’s global expansion strategy, which has seen the company invest in a number of overseas startups. In India, Alibaba backs Paytm, one of the country’s leading e-commerce and mobile payment providers. Meanwhile, Alibaba rival Amazon (AMZN) is investing more than $5.0 billion to grow its business in India. The heated race for India’s Internet revenue has also seen Walmart (WMT) purchase a majority stake in Flipkart, one of the country’s top e-commerce providers, and eBay (EBAY) is re-launching operations in India with a focus on cross-border trade after being quiet in the country for about a year. Alibaba’s international retail revenue rose 55% year-over-year to $650 million in the second quarter of fiscal 2019 (ended in September).

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