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Alibaba vs. Lazada: ASEAN e-commerce fight looming

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As world shifts to borderless e-commerce system, Amazon & China-backed Lazada set for intense ASEAN competition.

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Alibaba vs. Lazada: ASEAN e-commerce fight looming

15/12/2016
Bloomberg News agency

Alibaba and Amazon are about to clash in Southeast Asia.

Lazada Group which Alibaba bought this year for US$1 billion will be right at the heart of that conflict.

Lazada is ASEAN's largest e-commerce site.

Amazon, it's competitor, is entering ASEAN next year.

LAZADA TAKING ACTION BEFORE AMAZON ENTERS ASEAN

Lazada is rolling out a series of initiatives in anticipation of the US giant Amazon’s entry into the ASEAN market next year.

For one, Lazada is expanding its delivery network within the region and beyond, via partners in China and Korea.

It’s also on the prowl for investments and acquisitions to shore up its supply chain.

And it intends to delve deeper into online groceries in 2017, a notoriously difficult market it got into by buying RedMart.

RedMart is an online grocer in Singapore selling supermarket items for home delivery (see here).

ASEAN: THE NEW BATTLEGROUND FOR ECOMMERCE

Lazada’s home turf of ASEAN is shaping up to be the next battleground for Alibaba co-founder Jack Ma and Amazon chief executive officer (CEO) Jeff Bezos.

ASEAN has become the world’s fastest-growing internet arena, with a combined populace of 620 million people getting more comfortable with online shopping.

ASEAN, however, still lacks the transport and payments infrastructure crucial to the widespread adoption of e-commerce,

AFTER CONQUERING DOMESTIC MARKET, GLOBAL EXPANSION PLANNED

“It’s a jungle out here,” Lazada CEO Maximilian Bittner said when asked about an incursion by the world’s largest online retailer Amazon into ASEAN.

“We are looking forward to seeing how they will differentiate themselves.”

[Note: One obvious way that Amazon is different is the shear quantity and variety of different products. that includes every book in print and strange things that only a few people like, for instance accordions and vibraphones, the author's particular favourites]

Alibaba has established its dominance of China and Amazon has taken the lead in the US. Now both are looking to make their mark overseas.

Amazon, in particular, has made progress in India.

ALIBABA'S TAKEOVER OF LAZADA

Alibaba took control of Lazada from Rocket Internet in what remains its largest overseas move to date.

The company Bittner started in 2012 is now pivotal to quickening the Chinese e-commerce giant’s so far tentative steps abroad, and fulfilling Ma’s ambitions of becoming a truly global business.

AMAZON'S PLANS FOR ASEAN?

Amazon meanwhile hasn’t yet voiced its intentions for Southeast Asia, but the industry expectation is that its constant quest for growth will lead it there by 2017.

Techcrunch reported in November that Amazon is likely to bring its Prime delivery service and Amazon Fresh to Singapore in the first quarter, using the wealthy, cyber - savvy city state as a springboard to the rest of the region.

Amazon Fresh offers same or next day delivery of food straight to the home (see here).

Amazon has demonstrated a willingness to spend on building a local presence, and an ability to thrive in the difficult, fragmented market conditions that characterise Southeast Asia.

ALIBABA DEFEATED AMAZON IN CHINA

Alibaba’s experience quashing Amazon in China may yet prove indispensable.

Although a Chinese company defeating an American company perhaps doesn't sound too difficult.

Central to Lazada’s effort is building a system that can deliver goods into Southeast Asia from merchants in other countries, a cross-border model akin to Alibaba’s.

The region is now split between a mere handful of operators dominant in certain areas, including MatahariMall and Tokopedia in Indonesia and unicorn startup Garena.

LAZADA'S BUSINESS PLAN

Lazada covers six countries -- Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam -- and runs 12 warehouses and 92 distribution centres from which it conveys goods directly to buyers.

It counts Kerry Logistics Network and DHL in Thailand and JNE Express in Indonesia among its more than 100 logistics partners. It has also teamed up with China’s state postal service and CJ Korea Express Corp.

In September, Lazada’s volume in Indonesia grew 2.5 times from a year ago.

Lazada is looking at building a better, more sophisticated logistics capability.

The world is shifting toward borderless e-commerce system and that’s very much the vision of Alibaba and Lazada.

ONLINE GROCERIES COMING TO THAILAND SOON

Now that RedMart’s given Lazada a foothold in Singapore, Lazada also plans to begin selling groceries online in one of the capital cities of Malaysia, Indonesia or Thailand as early as the second half of 2017.

RedMart has more than 150 trucks ferrying an average of 22 food items from chocolate to frozen dumplings per order.

It plans to cut delivery times to four to six hours (from mostly next-day) by the end of the first half of 2017.

By the second half, the company will offer an express service, shipping groceries within an hour or two of ordering online.

Grocery is seen as notoriously difficult one to do online, but it’s the largest market representing 60% of overall Southeast Asian retail.

Customers are much more engaged. They visit a store twice a week so the frequency allows you to develop a deep relationship with customers.

http://www.bangkokpost.com/news/asean/1160209/alibabas-lazada-braces-for-a-sea-brawl-with-amazon

Vocabulary:

abroad

acquisition

adoption (noun)

ambition : the desire or determination to be successful, rich, powerful, etc; something that you want to do or achieve very much - ความทะเยอทะยาน, ความปรารถนาอันแรงกล้า

arena : an area of activity that concerns the public, especially one where there is a lot of opposition between different groups or countries - เวที

average : an amount calculated by adding several amounts together, finding a total, and dividing the total by the number of amounts - เฉลี่ย, ค่าเฉลี่ย

battleground : a place where a battle (a major fight, especially in war, but in this case against a flood) is being fought or has been fought - สนามรบ, แนวรบ

borderless

capability

capital

characterise

chief executive officer (CEO)

clash

co-founder

combined

comfortable

competitor

conditions

conflict

crucial

delivery

delve

demonstrate

differentiate

directly (adv)

distribution

distribution centre

dominance

dumpling (noun)

e-commerce (noun)

expand

expectation (noun)

express (adj.)

ferry

foothold

fragmented

fulfilling

global

goods

grocery

growth (noun)

in anticipation : the fact of seeing that something might happen in the future and perhaps doing something about it now - ความคาดหมาย,ความมุ่งหวัง,การทำล่วงหน้า

in particular

incursion (noun): the sudden appearance of something in a particular area of activity that is either not expected or not wanted - การบุกรุก, การรุกล้ำ

infrastructure : a set of systems within a place or organisation that affect how well it operates, e.g., the telephone and transport systems in a country or the system of train tracks that a railway uses - สาธารณูปโภค

initiative

intend

intention

investment (noun)

jungle (noun)

lack (verb)

local : in or related to the area that you live, or to the particular area that you are talking about - ท้องถิ่น

logistics : the practical arrangements that are necessary in order to organise something successfully, especially something involving a lot of people or equipment - การส่งกำลังบำรุง

looking at

make their mark

meanwhile

move (noun)

network

notoriously

online

order (verb)

order (noun)

overseas

partner (noun)

partner : one of the people who owns a business and shares the profits, etc or works together with another business in an activity - หุ้นส่วน, ผู้ร่วมมือ,

pivotal

populace

presence

progress

prowl

quest

region

rolling out

savvy

shaping up to be

shift

shore up (verb): to help to support something, often that something that has problems or that is weak and in danger fo failing - ยัน, พยุง, เสริม

site

so far

sophisticated

springboard (noun)

step

supply chain (noun): the series of processes involved in supplying a product to someone, including the companies that manufacture all the parts going into a product - โซ่อุปทาน, สายโซ่อาหาร, ห่วงโซ่อุปทาน

teamed up with

tentative

thrive

to date

transport

truly (adv)

turf

vision : the ability to imagine how a country, society, industry, etc. could develop in the future and to plan in a suitable way - วิสัยทัศน์

voiced : said what you think about a particular subject, especially to espress a doubt, complaint, etc. that you have about it - แสดงความคิดเห็น

wealthy

widespread

willingness (noun)

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