Alibaba said to lead $500m funding round for Indonesia’s Tokopedia

William Tanuwijaya, co-founder and CEO of Tokopedia. Photo credit: Tech in Asia.

Alibaba is supposedly in talks to make an investment in Tokopedia, Bloomberg said this morning.

The Chinese firm is expected to take the lead in a US$500 million funding round for the Indonesian ecommerce marketplace. Existing investors SoftBank and Sequoia Capital are also slated to join the round.

Earlier this year, Bloomberg reported that Tokopedia has been in investment talks with JD, Alibaba’s Chinese rival. The rumor was never confirmed by JD or Tokopedia.

A source with direct knowledge of the discussion told Tech in Asia that JD was in talks to fund many companies in Indonesia, including Tokopedia. But it did not hold talks with Tokopedia in the past few weeks.

Indonesia’s Taobao

Chinese tech firms are firmly placing their stakes in Southeast Asia.

The biggest bet so far was Alibaba’s takeover of Lazada, which is headquartered in Singapore and operates across the region.

Lazada runs its ecommerce operation with a wide range of products, its own warehouses and logistics. It also works with third-party merchants.

Tokopedia has been called Indonesia’s Taobao

It’s been operating in Indonesia since 2012 and established itself as one of the top online shopping destinations in the archipelago, though competition is fierce. Others, such as local startups Tokopedia, Bukalapak, Blibli, and Sale Stock, as well as regional or international players like OLX, Zalora, and Shopee, each hold their place in the market with varying business models.

Tokopedia, a consumer-to-consumer (C2C) marketplace, launched in 2009. It lets sellers and buyers connect directly through its platform. Its closest competitor is Bukalapak.

It has been called Indonesia’s Taobao, as the model resembles Alibaba’s own C2C marketplace.

If Alibaba invests in Tokopedia, this would cement the Chinese company’s position in Indonesia’s ecommerce landscape and turn Tokopedia and Lazada into allies, covering online shoppers’ needs for buying from established brands and individual sellers.

Since Alibaba acquired a majority stake in Lazada, the two companies have begun exploring ways to work together, Lazada CEO Max Bittner told Tech in Asia in February.