The dispute between Tencent and Alibaba in Southeast Asia

The red sea of ​​e-commerce in Southeast Asia has unlimited opportunities

In recent years, the Southeast Asian market has been a popular destination for domestic products to go overseas. Under the epidemic, the digital economy in Southeast Asia will continue to accelerate and reach 100 billion U.S. dollars in 2020.

Statista data shows that by 2025, the total e-commerce online retail market in major Southeast Asian countries (Indonesia, Thailand, Singapore, Malaysia, Vietnam, and the Philippines) will reach US$87.8 billion.

The dispute between Tencent and Alibaba in Southeast Asia

Speaking of cross-border e-commerce in Southeast Asia, many people may know Shopee and Lazada, but they do not know that the competition between these two platforms is actually a contest between Ali and Tencent in the cross-border retail market in Southeast Asia.

Why is the Southeast Asian market favored by everyone? Which one is better, Shopee or Lazada?

Cross-border market in Southeast Asia with green light all the way

Southeast Asia occupies an important position in the Belt and Road Initiative, and under the favorable policies in the field of cross-border e-commerce, it has burst out market potential.

In the first three quarters of 2020, the Association of Southeast Asian Nations is the main body with the highest proportion of China’s total import and export trade, reaching 14.62%, followed by the European Union, accounting for 13.98%, and the United States in third place, accounting for 12.19%.

The dispute between Tencent and Alibaba in Southeast Asia

Source: Prospective Industry Research Institute

Southeast Asia is the fastest growing region in the world. In 2020, the number of Internet users will reach 480 million, and the proportion of young people (under 40 years old) in Southeast Asia will reach 70% (only 57% in China), and young people will gradually take over the Southeast Asian market.

The high penetration rate of smartphones in the six Southeast Asian countries has caused users to skip PCs and accelerated the development of mobile terminals.

With the further development of Southeast Asian economies, these users will have a higher acceptance of consumption upgrades and e-commerce overseas shopping.

Domestically, many brands early in targeting the Southeast Asian market, 2020 August, Lazada and Lynx jointly launched the “new domestics out of the sea count plan”, Phoenix, Konka , special steps , Luoma Shi , perfect diary and other domestic brands have settled platform mall, Among them, 3C products and beauty products achieved outstanding results.

According to a report from Counterpoint, in the Q2 quarter of 2020, Chinese manufacturers in the Southeast Asian smartphone market will occupy four of the TOP5 seats, with only one overseas brand Samsung.

The dispute between Tencent and Alibaba in Southeast Asia

OPPO, Realme, vivo and Xiaomi have a total market share of 65%. In addition, the three Southeast Asian countries (Thailand, Africa, and Malaysia) have reached cooperation with Huawei on 5G technology.

In terms of beauty, the brands of Huaxizi, Perfect Diary, Xiaoaoding, and Mao Geping are very popular in Southeast Asia. Last year, Perfect Diary was No. 1 in the Malaysian market on Double Eleven, and No. 1 in the Singapore Market on Double Twelve in the same year.

The dispute between Tencent and Alibaba in Southeast Asia

Regarding the concept of e-commerce market size, the industry will use a number for comparison, that is, the proportion of total e-commerce retail sales to total social retail sales.

After more than ten years of development in the domestic e-commerce market, the e-commerce retail penetration rate is 19.6%, and Lazada Thailand’s Chief Commercial Officer Molly has publicly stated that the e-commerce retail penetration rate in Southeast Asia is only 2.9%, and we can look forward to the future The development of the e-commerce market in Southeast Asia.

Shopee VS Lazada

Lazada was first established in Singapore in 2013. Three years later, Alibaba bought a 51% controlling stake in Lazada from Rocket Internet at a price of USD 1 billion. In June 2017, Alibaba once again increased the controlling stake by USD 1 billion, increasing the controlling stake to 83%.

Unlike Lazada, which has been deeply cultivating the Southeast Asian market, Shopee, established in 2015, has achieved certain results from the Taiwan market and then turned to Indonesia to expand its business to the entire Southeast Asian market.

On December 10, 2017, Shopee’s parent company Sea went public. Tencent became the largest shareholder as a strategic investor on the eve of Sea’s IPO. According to the shareholding statement, Tencent held 39.7% of the shares.

We can see the shadows of Ali and Tencent in the business development of the two platforms.

Ali’s underlying logic is to open up the infrastructure of e-commerce business and realize empowerment. Therefore, Lazada has received support from Ali in many aspects such as technology, overseas warehouses , logistics, and payment system, and its logistics and distribution performance is outstanding.

And shopee’s blood is flowing with Tencent’s “flow gene”. It has obtained the game agency rights of League of Legends and Glory of Kings in Southeast Asia, and “prescribes the right medicine” in the seven Southeast Asian markets, and localized marketing is flourishing.

Which of the two giants is better?

“Shopee is like the Southeast Asian version of Taobao, and Lazada is like the Southeast Asian Tmall”.

Lazada focuses on the brand’s B2C model, but the threshold is relatively high, suitable for the development of medium and large sellers; while Shopee takes the low-cost C2C model. Therefore, most Shopee sellers will choose the route of small profits but quick turnover, using low-priced products and explosive models to obtain traffic through the model of no-source store groups, and then slowly increase product prices.

It is worth noting that Lazada has launched a comprehensive APP for Southeast Asia to meet the needs of countries by switching languages.

Shopee regards this ” barrier ” as an opportunity to create exclusive shopping APPs for various Southeast Asian sites. This method quickly gained a large number of users.

The traffic of Lazada and Shopee is evenly divided, and the market and users are highly overlapped. In Indonesia, Vietnam, Malaysia, Shopee’s market share ranks first, and in Vietnam, Thailand and the Philippines, Lazada is more popular.

The dilemma of the Southeast Asian market 

“The local accent changes every 50 kilometers, and the language changes every 250 kilometers.” This is the description of Indonesia by Sea Group executives, and it is also a microcosm of the huge gap in the entire Southeast Asian market.

The economies, cultures, religions, and customs of various Southeast Asian countries are very different, which puts forward higher requirements for the localized operation of cross-border e-commerce in Southeast Asia.

Low prices have become a powerful tool for the two platforms to attract consumers in Southeast Asia. The protracted price war has made many platform merchants complain, and it is not uncommon for users to complain about product quality.

The layout of Lazada and Shopee proves that the red sea of ​​e-commerce in Southeast Asia has unlimited opportunities.

Shopee achieved a phased victory in the confrontation between Tencent and Alibaba due to its high degree of localization. However, online retail in Southeast Asia is in a stage of rapid development and the market is unstable. At the same time, it faces strong competition from Amazon and local e-commerce. The war of business has just begun.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Leave a Reply