After having a dominant presence in China, ecommerce giant, Alibaba is optimistic about expanding in Southeast Asia. Recently the Chinese firm signed a deal with the Thai government to speed the development of the country’s ecommerce sector.
As Alibaba acquired a controlling stake in ecommerce platform Lazada earlier this year, the agreement calls for Lazada—the leading ecommerce site in Thailand to provide ecommerce training to 30,000 small- and medium-sized Thai businesses. The deal also states that Alibaba will advise the country’s postal service, Thailand Post, on shipping and logistics.
No doubt, ecommerce makes up just a tiny shelf of Thailand’s total retail sales (1.5%), but it is growing rapidly. eMarketer projects that ecommerce sales, excluding travel, will grow at a rate exceeding 15% annually over the next four years, reaching total $5.69 billion by 2020.
Where other large international ecommerce players like Rocket Internet and Rakuten have been pulling up stakes in Southeast Asia this year, Alibaba has steadily hung in.
Alibaba has the capital to outlast local competitors in order to gain market share, as well as deep experience handling payments and logistics problems in emerging markets. And it owns Lazada Thailand.
But Alibaba faces two potentially significant challenges in Thailand. One is that Thailand still lags behind developed markets in terms of internet usage. eMarketer estimates only 49.8% of the population of Thailand uses the internet as of 2016. Markets that are still in the early stages of internet adoption tend to need time to grow into ecommerce.
The second challenge for Alibaba is the other 800-pound gorilla in the global ecommerce sector: Amazon, the only competitor with the budget and will to battle Alibaba in a Southeast Asia turf war.
Alibaba already competes with Amazon in India via two surrogates in which it holds sizable stakes: Paytm, a payment and ecommerce company, and marketplace Snapdeal. The battle shaping up in India is likely a harbinger of things to come in Southeast Asia, according to Pawoot (Pom) Pongvitayapanu, the CEO and founder of local Thai ecommerce marketplace Tarad.com. “I think in the next 10 years there will be a few very big ecommerce sites,” According to Pongvitayapanu, Alibaba or Amazon are going to control the world.