INDONESIAN PT Tokopedia is rumored to be in negotiations with Jack Ma’s Alibaba Group Holding Ltd. which might be considering a major investment in the company which has put up a stiff fight against Alibaba’s e-commerce platform, Lazada.
According to sources speaking to Bloomberg, Alibaba may emerge as the lead in Tokopedia’s latest US$500 million funding round, joining existing backers Softbank Group Corp and Sequioa Capital. The new deal would push Tokopedia further in its battle to dominate against its regional rival, Alibaba-owned Lazada. Southeast Asian e-commerce platform Lazada has been unable to conquer Indonesia, but stubbornly refused to fade away.
However, all sorts of obstacles will need to be reckoned with, along with a couple of mismatched alliances: Alibaba’s Chinese rival, JD.com, was also rumored to be planning a major deal with Tokopedia, as reported back in May.
Indonesia is home to one of the biggest e-commerce markets in the world, with expectations the entire industry could achieve US$130 billion in value due to the highly connected population. The country has a population of 250 million people, many of whom have yet to be aboard the e-commerce train, but analysts are expecting a significant rise in online transactions in the near future.
However, Indonesia has proven to be a difficult market to crack. Early this year, there were unconfirmed rumors that fashion retailer Zalora was facing trouble in the country, and retail giant MAP Group was considering a buy-out of the business. Those rumors have since been refuted. *
The mismatch of alliances that is coming to light with regards to Tokopedia is endemic of the great slicing up of Southeast Asia’s markets by huge technology giants from China. The last six months have seen some mega-deals being struck all across Southeast Asia by some of the biggest names in Chinese business, like Tencent and Alibaba, who have been snapping up acquisitions all over the region in an effort to expand beyond their home shores.
Alibaba alone has been not only acquiring local businesses and giving it the Alibaba stamp, but also setting up entire payment infrastructures designed to keep it at the heart of Asian e-commerce.
*Editor’s note: A previous version of this article inaccurately suggested that Zalora had pulled out of Indonesia after finding the market too tough to crack. The error has since been corrected.