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Why Amazon May Want to Accelerate Its Southeast Asian Expansion

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Amazon’s rivals expanding aggressively in Southeast Asia

Amazon (AMZN) entered the Southeast Asian e-commerce market through Singapore in 2017, but the company has been slow to expand in the region. Outside Singapore and Vietnam, where it works in partnership with a local association of online merchants, according to a report from the Nikkei Asian Review, Amazon has a limited presence in Southeast Asia. Meanwhile, its rivals Alibaba (BABA) and Tencent (TCEHY) have been investing aggressively there, putting Amazon at risk of falling further behind the competition in the race for a lucrative revenue opportunity.

According to a new report from Google and Temasek, the e-commerce market in Southeast Asia is poised for robust growth in the coming years. The report projects that the region’s e-commerce market will grow to $102 billion by 2025 from $23 billion in 2018.

Chinese companies seeking to outpace Amazon in Southeast Asia

While Amazon has only been expanding slowly in the Southeast Asian e-commerce market, companies backed by Alibaba and Tencent are vying for leadership in the market. Alibaba owns Lazada, a leading e-commerce operator in Singapore. Alibaba also owns a stake in Tokopedia, the largest e-commerce operator in Indonesia. Last year, Alibaba teamed up with SoftBank (SFTBF) and other investors to inject $1.1 billion into Tokopedia, according to a Reuters report. On its part, Tencent backs Shopee, a leading e-commerce operator in Singapore.

JD.com (JD), one of China’s top e-commerce companies, is also keen to stay ahead of Amazon in the Southeast Asian e-commerce market. JD, which last year collected $550 million in funding from Google (GOOGL), has launched in several Southeast Asian markets, including Indonesia, Vietnam, and Thailand.

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