This Singles’ Day, China’s JD is hoping to make its mark in The Land of Smiles.
Also known as Double 11, the shopping festival originally popularized in China by Alibaba, is the world’s biggest in terms of sales. For JD’s joint venture in Thailand, this year’s shopping holiday is an opportunity to establish itself in Southeast Asia’s second-largest economy.
The Chinese e-commerce company has a 50:50 partnership with Central Group, Thailand’s largest retail conglomerate. That group is controlled by the powerful Chirathivat family, one of the wealthiest and most influential in the country.
According to Forbes, the Chirathivats have an estimated net worth of over $21 billion, and rank as the 10th richest family in Asia and the second in Thailand, a kingdom where economic and political power is concentrated among a small elite, often connected through familial ties.
The official launch of the Sino-Thai platform, called JD Central, took place in late September, although it opened to consumers in June. The shopping festival, which kicked off earlier this month, represents an important chance to stake a foothold in Thailand’s fast growing e-commerce landscape.
In China, Singles’ Day is famous for flash sales where products are sold at steep discounts, and top e-commerce firms such as Alibaba and JD clock up billions of dollars in sales.
Although not immediately profitable, these shopping holidays are a method by which e-retailers attract users to their platform, who they hope to retain as loyal customers even after the deals die down.
JD Central has rolled out a 14-day campaign, titled “11.11 Crazy Hot Sale.” This involves several user-enticing specials and deals including “Super Deals Day,” with up to 90% discount of prices in every category, discounts to Central Group-owned restaurants, an in-app game in which users can accumulate points, which they can redeem for discounts on purchases. There’s even a lucky draw to win a trip for two to Beijing.
JD’s joint venture approach in Southeast Asia is different from its Chinese rival Alibaba, who has steadily expanded their presence in the region through a series of investments in Singapore-based Lazada Group.
Alibaba took a controlling stake of Lazada in 2016 with a $1 billion investment, followed by another billion the following year, and $2 billion earlier this year. As the Hangzhou-based e-commerce giant increased its financial control over the company, it has put its own people in place as well, replacing a number of senior executives, including installing Alibaba co-founder Lucy Peng as the company’s CEO this past March.
E-commerce is not the only area in which Chinese internet companies who are seeing their fierce battles spill over to this part of the world. Ride-hailing giant Didi, as well as Alibaba and their long-time investment partner Softbank have invested heavily in Grab, the Singapore-based platform that has made impressive moves not only into ride-hailing, but mobile payments and food delivery as well.
Not to be outdone, Google, Tencent, JD, and Meituan-Dianping have all backed Go-Jek, the Indonesian mobility super-app, quickly expanding across the region, setting the stage for what looks to be a showdown pitting the alliances of Alibaba and Softbank vs Tencent and Google, in a fight for dominance in some of the world’s fastest-growing markets.
There is good reason for these companies’ aggressive land-grabs as well. According to a joint research report by Google and Temasek Holdings, Southeast Asia’s internet economy—travel, media, ride-hailing and e-commerce—surpassed $50 billion in 2017, placing it on a trajectory to grow to roughly $200 billion by 2025.
With a population of approximately 600 million people, the region has around 330 million internet users, gaining 70 million since 2015.
Still, as JD tries to leverage its strong brand in China and its reputable Thai joint-venture partner to build a name for itself in Thailand, it faces an environment that could be even more vicious than the notoriously knock-down-drag-out e-commerce space from where it came.
As it attempts to attract users through its first 11.11 campaign, it must compete with both Lazada and Shopee, two well-established brands that have long been recognizable brands in the country, including introducing the first “Singles Day” promotions a few years back.
JD is entering unfamiliar territory and may struggle against the native players who considerate Southeast Asia to be their home turf. To further complicate matters, Amazon is making a push into the region as well.
As it has in China, JD hopes to set itself apart through its quality and reliability, guaranteeing the authenticity of high-end electronics and luxury goods in a part of the world where the prevalence of counterfeit goods still gives some consumers pause when making purchases online.
Over the next few years, industry observers are likely to see a battle royale of the world’s biggest names in e-commerce, fighting over Asia’s most attractive emerging markets. It may be a question of who can spend the most cash, attract the most users, and outlast the rest.
In the years to come, expect to see companies taking heavy losses in a grab for market share acquisition in the region. That’s sure to make CFOs uncomfortable and shoppers in Southeast Asia quite happy.