Weekly Focus APAC: China Tech Giants to Battle for SEA Online Retail Pie

In this edition of Weekly Focus APAC: China Tech Giants to Battle for SEA Online Retail Pie; Alibaba Inks Partnership Deal with Spanish Retailer; and UNPay Pushes Chinese QR in Singapore.

China Tech Giants to Battle for SEA Online Retail Pie

Southeast Asia’s online retail market will be worth USD$53bn (£41.53bn) by 2023, fuelled by the region’s high smartphone penetration and growing economy, and become a battleground for China’s technology giants.

Estimated to clock USD$19bn (£14.89bn) in online retail sales this year, the Southeast Asian market would grow at a compound annual growth rate (CAGR) of 23% over the five-year forecast period, noted Forrester’s predictions for the region’s online retail industry.

With an estimated USD$7.6bn (£5.96bn) in online retail sales, Indonesia would be the largest market this year and account for 41% of the region’s online retail market, according to a report authored by Forrester’s senior forecast analyst Satish Meena, who is based in New Delhi. The Indonesian online retail sector would grow at a CAGR of 19.6%, before hitting USD$19bn (£14.89bn) in 2023.

The Philippines would be the region’s fastest-growing, expanding at a CAGR of 30.4% over the forecast period to reach USD$4.5bn (£3.53bn) in 2023, when online would account for just 3.5% of the country’s total retail sales.

Southeast Asia’s growing online retail market would mark a new battleground for Chinese tech giants – specifically, Alibaba, Baidu, Didi, JD.com, and Tencent, which last year collectively invested more than USD$8bn (£6.27bn) in the region’s e-commerce, logistics, and payments sectors.

Alibaba, for instance, had pumped in more than USD$4bn (£3.13bn) over the last two years in Lazada, as well as USD$1.1bn (£861.96m) in Indonesia’s online marketplace Tokopedia.

In May 2017, Tencent also invested USD$500m (£391.8m) in SEA Group, which operates games, payments, as well as e-commerce businesses including Shopee, and USD$1.2bn (£940.32m) in Indonesian ride-sharing app Go-Jek, which had since expanded its services to include food ordering and payments.

JD.com also has been investing in the Indonesian market, launching a local site in 2015 and its first cashierless store in the country earlier this year. In addition, the Chinese e-commerce giant had invested in Vietnamese online retailer Tiki, Go-Jek, and Thai online fashion retailer Pomelo.

Meanwhile, U.S. e-commerce juggernaut Amazon had placed its focus on India, but is expected to invest in Southeast Asia next year, Meena noted.

The Forrester analyst explained: “With increasing competition in India from Walmart after the acquisition of Flipkart and investment by Alibaba, Amazon is taking its time in Southeast Asia.

“Although it launched Prime services in Singapore in July 2017, it has been in watch-and-wait mode for the rest of the region. However, Amazon is already starting to work with sellers in Southeast Asia”, he said, pointing to its partnership with the Vietnam E-Commerce Association of Online Merchants, which would provide the latter’s members a platform on which to export local made products.

Alibaba Inks Partnership Deal with Spanish Retailer

Alibaba Group has signed a letter of intent with Spanish department store chain, El Corte Inglés, to collaborate on several technology areas including offline-to-online (O2O) retail, payments, logistics, and cloud computing.

This would see the respective business units and subsidiaries from both companies working together on various initiatives, such as Alibaba’s Alipay, Tmall, and AliExpress, as well as explore new business opportunities in O2O retail.

Europe’s largest department store chain, El Corte Inglés, also would be able to tap Alibaba Cloud’s technologies including big data analytics and artificial intelligence to provide personalised customer service.

In retail, the Spanish company would have the opportunity to showcase its products to Alibaba customers in China via the Chinese e-commerce operator’s online marketplaces, including Tmall and AliExpress. Such efforts would include setting up a flagship store on the Alibaba platform, so its online customers could access Spanish and international brands commonly sold in El Corte Inglés department stores.

AliExpress also would explore the feasibility of creating physical points at the Spanish company’s shopping centres to offer a “unique and engaging” shopping experience. This would be a expansion of AliExpress’ popup store in El Corte Inglés’ Sanchinarro shopping centre in Madrid during last month’s Singles Day on 11 November.

In addition, the two companies would look to collaborate on delivery and supply channels, tapping each other’s logistics knowledge and capabilities, as well as distribution centres in their respective markets as collection points for online purchases.

El Corte Inglés CEO Victor del Pozo said the partnership would enable the company to meld the physical and online realms to offer better shopping experiences to its customers.

Alibaba’s business development general manager of Tmall in Europe, Rodrigo Cipriani Foresio, added: “As a global technology company, digital transformation and innovation in all fields are fundamental drivers of Alibaba’s mission of making it easy to do business anywhere; with the ultimate goal of better serving our consumers and stakeholders worldwide, today, and tomorrow. Hence, we are confident the expertise and skills brought by both companies will generate incredible value and opportunities as the co-operation takes shape.”

UNPay Pushes Chinese QR in Singapore

The digital payments provider is looking to push QR code payments amongst retailers in Singapore by bringing in regional players over the next several months.

To start off, it would expand its support to include Chinese QR code payments, including Alipay and WeChat Pay, said UNPay Global. This would allow tourists from the country to pay for their purchases at retail outlets in Singapore with their preferred payment platforms.

The payments vendor added that it would continue to add more e-wallets from the region to offer more payment options for various tourists.

Launched in June last year, UNPay currently operates its regional headquarters in Singapore and supports more than 500 online payment platforms. It has local teams in China, Indonesia, and New Zealand.

UNPay’s CEO and founder, Zhang Zhenghua, said: “Through our active acquisition of merchants, we hope to drive the use of QR code payment in Singapore, keeping in line with the rollout of [Singapore’s universal QR code] SGQR code in September.

“We are confident that with our expertise and technology we will be able to bring greater benefits to our merchants via our integrated payment platform, while providing a more seamless and convenient way for consumers to pay.”