Opinion: 10 predictions for Southeast Asian ecommerce in 2018

Disclaimer: Opinions expressed are solely my own and do not express the views or opinions of my employer.

This year, we’ve seen exciting activities in Southeast Asian ecommerce:

• Alibaba doubled down on its Lazada investment, upping its share from 51 percent to 83 percent. And in a push to monopolize the market, it put grips on Tokopedia, arguably one of Lazada’s biggest competitors in Indonesia.
• Tencent began executing its China playbook (either through JD or directly) by investing in companies like Sea, Go-Jek, Traveloka, Pomelo, and Tiki.vn.
• US-based KKR, through Emerald Media, put US$65 million into ecommerce arms dealer aCommerce (Disclosure: I work here) in a bid to replicate Baozun’s dominance in the Chinese Tmall Partner (TP) landscape.

The plays don’t stop here. In 2018:

• Marketplaces will move toward private label brands and offline distribution.
• Brands will also feel increasingly cornered, facing a damned-if-you-do-damned-if-you-don’t situation.
• Those that will survive 2018 will have to find a niche because there isn’t much room left for another horizontal ecommerce player.
• Others will be tempted to take risky shortcuts like raising money through ICOs.
• Tencent—not Alibaba or a local company—will emerge as the winner in mobile payments in Southeast Asia.

It might be a good time to start learning Chinese.

1. Ecommerce in Southeast Asia will be split into Alibaba and Tencent, and locals will pick sides

Given its similarities to China roughly 10 years ago, Southeast Asia has become a gold rush for Chinese internet giants looking to expand beyond the mainland. Alibaba’s acquisition of Lazada last year has triggered an arms race between China and Southeast Asia, which will cause local companies to choose sides.

Alibaba also led a US$1.1 billion investment in Tokopedia this year, continuing to place its biggest bets on ecommerce. Moving forward, the company is expected to position Lazada and Tokopedia as the Tmall and Taobao of Southeast Asia, respectively.

Meanwhile, Tencent has aggressively tried to replicate a three-pronged formula (gaming, mobile, and payments) that was successful in its fight against Alibaba in China.

The first step was becoming the largest shareholder of Sea, a mobile-first ecommerce marketplace and gaming powerhouse that runs Shopee. The second step was placing bets on Go-Jek to become a “super app” like WeChat and WeChat Pay.

WeChat Pay now commands an impressive 40 percent market share in China; AliPay has 54 percent, up from 11 percent in 2015.