Is Amazon’s global star dimming? Can it compete with the Chinese behemoth Alibaba’s e-retailing websites? The global e-commerce market is changing and Asia Pacific has become a hotbed of e-commerce activity. Recent news in the region includes Flipkart acquiring Myntra to enlarge further in India and Lazarda officially expanding its website into Singapore to extend its reach further in Southeast Asia. And now comes word that Alibaba has acquired a 10% stake in Singapore Post (SingPost).
A smart deal for both companies – Alibaba will be able to take advantage of Singapore Post’s logistics network throughout Southeast Asia and possibly its overseas network. Meanwhile Singapore Post gains access to an even larger customer base along with additional financial funding to invest in its own e-commerce expansion plans.
Indeed, according to Alibaba’s Chief Operating Officer Daniel Zhang, the company hopes to take advantage of SingPost’s “strong delivery networks and end-to-end e-commerce logistics solutions to facilitate international e-commerce.”
So, as Alibaba extends its tentacles outside of China and prepares for an eventual IPO, what about Amazon? Has it lost its luster? Many start-ups strive to emulate Amazon’s business model but it appears, at least in Asia-Pacific, this is changing.
For example, Sachin Bansal, Chief Executive Officer of India’s Flipkart, was quoted recently as saying “Back in 2008, Amazon was the dominant player in the world and that was the role model. But we believe India is different and we’re going to play in a different way. Our role model now is the Alibaba Group, more than Amazon. We believe that is the model for India and more suitable than anything else. The market is similar, the customers are similar, their thought processes are similar, their income levels are similar, and the whole supply and distribution are similar if you compare China of a few years back.”
And from Lazarda’s Chief Executive Officer Max Bittner, “We’re called the Asian Amazon but we see of ourselves more as a Tmall or an Alibaba.”
While the role model may have changed for some Asian startups, Alibaba appears to be emulating Amazon by expanding beyond its Chinese home-base. It is also interesting to note that for companies such as Flipkart, they, as well as Amazon are building out their own logistics network within India and China respectively – unlike Alibaba which has opted to partner with logistics providers. However, investing in such logistics businesses as SingPost and Haier Electronics Group Co. Ltd (Ti Brief: Alibaba creates joint-venture in logistics for China e-retailing, Dec. 12, 2013) may indicate a shift in strategy for Alibaba. Still, these investments are not 100% ownership and remain partnerships – which model will mean success – an owned network such as Flipkart and Amazon or one built on partnerships such as Alibaba? While both can be successful, how they are managed will serve as the measurement of true success for the company.