THE BIG STORY

The keys to J&T Express’ rapid global expansion

Image credit: Timmy Loen

J&T Express made waves by capitalizing on its ties to Oppo and Shopee. But will that be enough to drive global expansion?

THE HOT TAKE

Amazon marketplace’s indisputable power

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Here’s what happened:

• Amazon's third-party sellers now account for 25% of U.S. ecommerce, clocking a gross merchandise value (GMV) of US$390 billion in 2021, according to estimates from MarketplacePulse.
• The figure has even surpassed that of Amazon Retail (GMV of US$210 billion in 2021), which handles goods sold by Amazon directly to consumers.
• The Amazon Marketplace consists of millions of online businesses worldwide that sell through Amazon. While they have delivered stellar growth in recent years, these businesses are subject to rules and restrictions set by Amazon.

Here’s our take:

While Amazon Web Services, the firm's cloud computing service, has received high praise from analysts, Amazon Marketplace remains the most profitable part of the ecommerce giant's retail operations. In this segment, Amazon doesn't own any inventory and receives a hefty fee on the nearly $400 billion in gross merchandise value it handles, as this Forbes analysis pointed out.

Despite the impressive numbers, Amazon’s success in ecommerce is not global, with around 60% of its US$469.8 billion in net sales in 2021 coming from North America alone.

Notably, it’s not the market leader in any Asian market.

Even though it was an early entrant in China, Amazon failed to overcome the stiff competition from Chinese giants Alibaba and JD.com, and eventually shut down its Chinese domestic ecommerce business in 2019.

In Singapore - the only Southeast Asian country where Amazon operates - it’s trailing behind Sea Group’s Shopee and Alibaba’s Lazada both in terms of web traffic and app traffic, according to iPrice’s data for Q3, 2021. Moreover, in late 2019, Amazon also skipped out on an opportunity to gain a foothold in Indonesia, Thailand, and Vietnam after the firm ceased talks to acquire a stake in super app Gojek.

However, with recent signs of significant momentum in Amazon's third-party marketplace, is the time ripe for Amazon to have another serious crack at Asian markets where it has struggled?

In Southeast Asia, Shopee and Tokopedia have demonstrated the importance of implementing the consumer-to-consumer model from the start, which some analysts say is more suitable for acquiring buyers and sellers quickly in emerging markets.

Image credit: Timmy Loen

There are hurdles aplenty, but the rise of third-party sellers globally might mean it’s time for Amazon to up its game in Asia.

Still, small businesses fear being priced out and Tech in Asia previously analyzed why the multiplatform strategy - selling both on marketplaces and independent websites - is the way to go in Southeast Asia.

For Asia-based sellers, Amazon’s biggest appeal is its ability to connect them with global buyers.

"Our success depends on the success of our selling partners," an Amazon spokesperson said in a statement to Tech in Asia. The person added that the company is committed to "helping sellers grow and reach a global audience easily" through its 20 country stores around the world, giving them access to over 200 million of Amazon Prime's paying members worldwide.

However, established regional ecommerce players like Shopee are well stocked to compete. Shopee’s significant inroads in Europe and Latin America can give third-party sellers another window to reach customers overseas.

Amazon often thrives on countering skepticism. So it’s hard to see why it doesn’t want to grab a bigger slice of Asia’s US$2 trillion ecommerce market.

-- Shravanth

NEWS YOU SHOULD KNOW

Check out Tech in Asia’s coverage of Asia’s ecommerce scene here.
 

1️⃣ Carousell, the classifieds major, is in talks to acquire Singapore-based proptech 99.co for US$150 million.

2️⃣ TikTok has launched Dmonstudio, a fast-fashion ecommerce platform to compete with Shein.

3️⃣ Indonesia-based e-grocery startup HappyFresh wants to open 100 dark stores across Southeast Asia in the coming years after running trials in early 2021.

4️⃣ Vietnam’s social commerce startup Selly has raised US$2.6 million in its pre-series A round. Selly claims to have 300,000 resellers, most of whom are homemakers or people who have lost their jobs due to the pandemic.

FYI

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Why bulk-buying is here to stay

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