Asia
31. August 2017

Deal Watch in SEA: Alibaba invests in Tokopedia

IEG - Singapore covers Alibaba's investment in Indonesia's Tokopedia, one of the most exciting e-commerce transactions in Southeast Asia

Alibaba's investments over the time - 2017 was majorily impacted by the high investments in Sun Art (USD 2.9bn), Intime (USD 2.6bn) and Tokopedia (USD 1.1bn)

Tech in Asia, 2017

Why This

Indonesia is experiencing significant growth in tech-focused investments with over 100% YoY growth (USD 1.4 bn in 2016 to USD 3 bn in Augst 2017) and Alibaba is currently riding on this wave with its first-ever direct investment in an Indonesian company.

The Backdrop

Tokopedia is one of Indonesia's largest online marketplaces. Launched in 2009, the Company allows individuals and business owners in Indonesia to open and manage their own online stores easily and for free. The Company has previously raised USD 100m from SoftBank and Sequoia Capital in 2014.

The Deal

In August 2017, Alibaba led a USD 1.1 bn investment in Tokopedia. The investment is expected to help scale Tokopedia's operations and enhance quality of service to customers, making it easier for merchants and partners to execute business. Moreover, the investment in Tokopedoa offers Alibaba a foothold into Indonesia'S e-commerce landscape with pitential for strategic collaboration and partnership between both, Tokopedia and Lazada, in the near future.

“The partnership with Alibaba will enhance the scale and quality of Tokopedia’s offerings to its customers and make it easier for merchants and partners to do business across the archipelago and beyond."

Press Release Alibaba | Tokopedia

The Conclusion

By investing in the two largest e-commerce companies in Southeast Asia (Lazada and Tokopedia), Alibaba is not funding rivals, rather two firms with distinctive strengths with the opportunity to complement one another. Is is crucial for upcoming e-commerce players outside of the Alibaba-Tokopedia-Lazada alliance to adapt and strategize in order to uniquely position themselves and compete.