Alibaba and's Battle for Asia Persists

By Kelsi Kobata 

By 2025, 600 million people will have access to the internet in Southeast Asia which is almost twice the size of the U.S. population.

  • China’s Alibaba and compete to expand in order to target Southeast Asia. 

  • Southeast Asia’s e-commerce is predicted to reach $22 billion by 2020 and $88 billion in 2025.
  • Alibaba and face challenges with regional delivery times, border-crossing regulations, and the fragmentation of the region. 

Alibaba and have been key players in the growth of China’s e-commerce as it continues to outpace all other markets. The ongoing battle for dominance between the two online giants has expanded beyond the borders of their home market making their latest pursuit Southeast Asia. With a growing e-commerce market predicted to reach $22 million in 2020 and triple within a decade, it’s no wonder Southeast Asia is an obvious target.


The region’s access to the Internet and technology, like smartphones, is growing rapidly. It is predicted that by 2025, 600 million people will have access to the Internet which is almost twice the size of the US population. As the next major boom market for e-commerce, even Google and Amazon have their eye on Southeast Asia, but the game has already begun for Alibaba and


Alibaba, founded by Jack Ma, is a business-to-consumer marketplace that is considered to be the fastest-growing e-commerce market. They have three main sites: Taobao, Tmall and, and have earned $7.4 billion, a 56% increase since 2016 in the quarter ending June 30, 2017. Alibaba’s revenue is generated from a commission, advertising payments, and service-based fees and therefore raises less revenue than their competitor per transaction. However, their online payment platform (Alipay), cloud computing business (Aliyum) and logistics firm (Cainiao), put them ahead of in terms of profitability and gross merchandise value according to Josh Holmes, BMI Research consumer analyst.


Richard Liu’s offers a marketplace, but most of its revenue is generated from direct sales. The company has earned $13.7 billion, a 43.6% increase since 2016 in the same period. After selling their financial business, they invested their $2 billion earnings in a drone delivery programme and built more warehouses in China to prepare for an anticipated increase in customer demand. Hitha Herzog, chief researcher officer at H Squared Research believes that these preparations are what give the potential to take a larger market share than Alibaba.


Both companies have tapped into the luxury e-commerce market in China. has invested $397 million in Farfetch, Jose Neves’s London-based e-commerce company that includes over 400 independent fashion boutiques and has a strong global presence. They also announced their latest partnership with Saint Laurent.


Alibaba has partnered with Kering and Swarovski to extinguish counterfeited goods in China. They are also launching a high-end platform on Tmall where they will sell brands like Burberry, Hugo Boss and La Mer. Rumors of a partnership between Alibaba and Yoox Net-a-Porter (YNAP), an online luxury fashion retailer, have been floating around too.


In order to conquer Southeast Asia, one of the goals for Alibaba and is to make the online luxury goods more accessible. is currently operating in Indonesia, focusing on finding the right local partners and earning consumer loyalty to develop strong inroads. They also have Farfetch who is operating all throughout the ASEAN (Association of Southeast Asian Nations).


Alibaba’s approach is much different. They are developing a digital, free-trade zone in partnership with the Malaysian government, the first outside of China in Kuala Lumpur. There is already one set up in Alibaba’s home base of Hangzhou which they hope to eventually link with  the one in Kuala Lumpur. Furthermore, the company has gained access into an unmatched consumer base and local expertise in Southeast Asia after they invested $2 billion in Lazada, an e-commerce site based in the region.



While the competitors have separate tactics to win this battle, they are both realizing that Southeast Asia is fragmented, making no two customers alike in terms of social, economic and business needs. To Alibaba’s advantage, their partnership with Lazada allows them to reach a large group of the region’s consumer base, meeting their unique needs.


Other problems they face are regional delivery times and border-crossing rules. Under Alibaba, Lazada uses motorbikes instead of bulky trucks to minimize the time needed for cross-border deliveries. has invested in drone delivery services to remote areas in China.


The battle has just begun for China’s e-commerce monsters, and their contrasting approaches and business models make it difficult to determine who is in the lead. What it comes down to is honing in on infrastructural issues like cross-border deliveries and mapping routes outside of major cities, but Alibaba and are still learning about their consumers as they tap into the online market of this rapidly growing region. With the help of technology and newly developed partnerships with local businesses, both companies will continue to make strides toward the prize.


 Kelsi KobataComment