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Here’s what you should know today.

1. Amazon Wins Battle to Buy Souq.com

Terms of the agreement were not disclosed in a joint statement from Amazon and Souq.com. Amazon trumped an offer from Emaar Malls PJSC, the operator of the world’s biggest shopping center, which bid $800 million for Souq.com.

Souq.com was valued at $1 billion in its last funding round.

Amazon has been making moves beyond its home country as of late, with talks of entering Australia, and most recently, a delayed entry into Singapore.

Read the rest of the story here.

Interested in reading more about Amazon? Check out eIQ’s insights on whether the ecommerce giant is really making a move into Southeast Asia here.

 

2. China’s Tencent has bought a 5% stake in Tesla

Tencent, maker of the popular WeChat messaging app, has taken a 5% stake in Tesla for nearly $2 billion.

It comes months ahead of Tesla’s biggest ever test as Elon Musk’s electric automaker prepares to ramp up production far beyond its current tiny output for the $35,000 Model 3.

Tencent is perhaps the most prolific investor and acquirer among China’s multiple tech titans. It has stakes in Snap, Kik, and ride hailing app Didi

Read the rest of the story here.

 

3. Recommended Reading: Alibaba gets serious in Southeast Asia in preparation for battle with Amazon

Two smaller, but important developments this week show Alibaba is executing on a plan to build out a strong presence in Southeast Asia.

  • Ma partnered up with the Malaysian government to launch a series of initiatives aimed at easing red tape and barriers around cross border ecommerce, a sector that is poised for growth. Alibaba also launched a hub in Malaysia, a physical location to handle inbound and outbound deliveries, and other aspects of the initiative
  • Ma bridged Taobao with Lazada through a new feature that debuted in Singapore this past week. Lazada Singapore is boosting its existing catalog with the addition of 400,000 listings that have been selected from Taobao, called “the Taobao collection”.

Viewed separately, the Malaysia project and Taobao Selection are interesting developments, but occurring in the same week, they reveal much of the blueprint that Alibaba is building for domination in Southeast Asia.

Read the rest of the story here.

Interested in reading more about Jack Ma’s plans for Southeast Asia? Read here for eIQ’s analysis on Alibaba’s Trojan Horse strategy for the region.

Amazon was initially poised to make its much anticipated foray into Southeast Asia in Q1 this year. Now, it seems like the ecommerce giant hat delayed its entry to ‘later this year’, according to reports.

The long awaited launch has been relatively under the radar, although sources revealed that Amazon was planning to introduce its Prime and Fresh services to Southeast Asians. The region’s current most popular marketplace Lazada has in turn doubled down in the region to prepare for Amazon’s arrival, having acquired online grocery service Redmart in November last year.

But it seems that the US ecommerce giant is prioritizing other projects for now. Here are some of its most recent activity, including an acquisition and other market entry:

Source: Amazon Australia Twitter Account (Not yet verified)

Amazon poised to enter Australia

ABC Australia reported on 22nd March that Amazon is planning a launch down under and promising cheaper prices, faster delivery times and its online groceries delivery service. The company has reportedly hired more than a hundred people to cover roles in IT and logistics.

“They are the animal that went right across America devouring all before it, sending everyone broke,” said Gerry Harvey, founder of Australian online retailer, Harvey Norman.

There isn’t a confirmed launch date yet for Amazon AU.

Amazon acquires Souq.com to tackle the Middle East

Amazon has confirmed its acquisition of Dubai online retailer, Souq.com. The online retailer has similar offerings as Amazon, selling electronics, fashion and household items to six Middle Eastern countries. It was launched in 2005 as an online auction site, and pivoted to become an online marketplace in 2011.

Saudi Arabia and the UAE are attractive to Amazon being among the top countries worldwide for mobile penetration.

Souq has gained a large following, with an average 27 million visits spanning over six months based on SimilarWeb traffic.

Source: SimilarWeb

India’s ongoing battle

With Alibaba’s injection of $200 million into Paytm and biggest rival Flipkart’s recent $1 billion fundraising to solidify claims on India, Amazon will need to focus on the country to capture India’s projected $220 billion online GMV opportunity.

Bank of America Merrill Lynch report stated that India could become Amazon’s second largest market (after the US) after its investment of $5 billion into operations there.

“While revenues are relatively small to Amazon’s global scale, Amazon India could generate $81 billion in GMV and $2.2 billion in operating profit by 2025,” – Economic Times India  

There’s a lot of buzz brewing in India – Flipkart restructuring, Walmart investment, etc. – it’s no wonder Amazon is focusing on the activity.

But let’s not forget about Southeast Asia

Delayed or not, Amazon’s postponed launch date should be encouraging for local online and offline players alike, as it gives them more time to gear up to fight the giant.

Amazon is quietly laying down the groundwork for its Southeast Asian launch to meet the clear demand for its services here.

Google Trends over 12 months show that people are searching for Amazon, in relations to Singapore.

Google Trends search for Amazon.com, Inc. in Singapore

And it isn’t only retail businesses that are sweating because of Amazon’s global stretch. Advertising giants such as Google, especially as over 55% of Indonesians start their product search on a popular marketplace such as Lazada ID or Tokopedia.  

“The long-tail capacity, common for marketplaces, makes it feasible for Amazon to not just be an online retailer and a marketplace but also the search engine where it all starts.” Early Moves

Players, are you ready?

Welcome back to Monday-here’s what you need to know.

1. Alibaba makes its first entry into India-launches Paytm Mall

The new Paytm mall is an android application and is designed to replicate Alibaba’s ecommerce platform Tmall.

This comes at a time when India’s ecommerce market has become a two horse race between Amazon and Flipkart. Alibaba has already injected approximately $200 million into Paytm, valuing the company at around $1 billion and effectively making it a unicorn.

Alibaba would also be bringing sellers from Southeast Asia,  especially from Alibaba’s other investments such Lazada, and has set up 17 fulfillment centers for efficient service.

Read the rest of the story here.

 

2. Cross-border VC firm K2 Global has closed a $183M fund to bridge Singapore and Silicon Valley

K2 Global, a Venture Capital firm with its headquarters in Silicon Valley and Singapore, announced today it has closed a $183 million fund with the primary goal of “bridging Asia and Silicon Valley to create impact on a global scale.”

K2 Global also said it wants to work with “third-wave” startups — defined as companies that actively challenge incumbent players in major industries.

Read the rest of the story here.

 

3. Vietnamese tech startups could become target of private equity investors in 2017

“Service sectors such as health care, education and food and beverage are where we see the most attractive opportunities for private quitty in the short to medium term. Tech is the other sector to watch, with a vast number of startups attracting funding,” said Vinh Du Tran, partner at Ernst & Young Vietnam.

Vietnam’s attraction is in its rising economy, and an expanding middle class of 90 million people-more than 50% of the population are under 35 years old.

Read the rest of the story here.

 

4. Recommended Reading: J.C. Penney Is Latest Retailer Forced to Downsize

The 114-year-old chain, which had avoided mass closings despite years of losses, said it would shut as many as 140 of its roughly 1,000 stores by June.

Penney Chief Executive Marvin Ellison said the closings will allow Penney to adjust its business to “effectively compete against the growing threat of online retailers.” He said the remaining store base gives Penney an advantage since the locations can be used to ship or pick up online orders, minimizing delivery costs.

Key Takeaway

Read the rest of the story here.

Here’s what you should today.

1. Walmart makes an acquisition-buys outdoor retailer Moosejaw for $51m

Walmart announced that it has acquired a leading outdoor retailer Moosejaw for approximately $51 million in an all-cash deal. Headquartered in Michigan, the retailer has both a large online presence as well as 10 physical stores across Michigan and the midwest U.S.

Walmart’s interest in the retailer has a lot to do with the category it operates in and the industry relationships it brings to the table. The Moosejaw deal will give Walmart another entry point into apparel, a popular online retail category, as the retailer offers over 120,000 SKUs from more than 400 apparel brands, including Patagonia and The North Face.

85% of Moosejaw’s business is online.

This news comes right after Warren Buffett declares he has sold $900 million of his Walmart shares, signifying an entry into a different kind of retail era.

Read the rest of the story here.

 

2. StockX raises $6M to grow its marketplace for limited-edition products

StockX, a marketplace for sneakers, has announced that they’ve closed a $6M round from a group of high-profile investors like Mark Wahlberg.

How does it work? The startup calls itself a “stock market of things”, meaning that it uses a “bid/ask” market to connect buyers and sellers – just like an actual stock market does. For example, a buyer would place a bid for $650 for a pair of shoes, and a seller may be asking $680 for the same pair that they currently own. And when the bid/ask spread eventually meets, a transaction happens.

Read the rest of the story here.

 

3. China’s Tencent rumored to be eyeing Indonesia’s Go-Jek

Chinese Internet company Tencent Holdings is in talks about a possible investment in Go-Jek, Indonesia’s biggest mobile ride-hailing and delivery service.

Why would Tencent be interested?  Go Pay could offer Tencent a way to expand its payments network beyond China, similar to how Ant Financial has backed Indian payment company Paytm. High frequency services such as ride-hailing have proven to be a driver for use of mobile wallets. In China, Tencent grew its mobile payment system by teaming up with Didi.

Read the rest of the story here.

Wal-Mart Stores Inc. is in talks to buy online discount retailer Jet.com Inc, reports Wall Street Journal. 

A deal could give Wal-Mart’s ecommerce efforts a much-needed jolt as the world’s largest retailer seeks to grow beyond its brick-and-mortar storefronts with speedy home delivery from a network of massive suburban warehouses.

Although Wal-Mart has not announced how much it would pay for the startup, it is speculated that Jet could be valued at $3 billion. This would make it Wal-Mart’s biggest acquisition since buying South African retailer, Massmart Holdings for $2.3 billion in 2o1o.

This is a sign that Wal-Mart is willing to spend big to compete with Amazon and save itself from “traditional retailer death” plaguing legacy businesses.

However, industry analysts are questioning the slightly odd decision.

“I’m struggling with the math of why you would pay this much money for this business model at this particular time,” says Bryan Gidenberg, an analyst at Kantar Retail.

Jet is barely a year old and was set on going up against Amazon itself. A part of its early growth strategy relied on taking orders for products it didn’t sell and placing orders on behalf of its customers on other sites, often selling the items below what it paid while absorbing steep shipping costs. Jet has since abandoned the practice.

Wal-Mart has scrambled to keep pace with Amazon, which overtook Wal-Mart by market capitalization a year ago and now sports a market value that is 50% larger.

Wal-Mart’s ecommerce sales reached nearly $14 billion, or 3% of its $482 billion in annual revenue last year. Amazon’s revenue was $107 billion last year, including its Web-services business.

Wal-Mart Chief Executive Doug McMillon acknowledged his company’s ecommerce growth “is too slow” and that the company needed to expand the number of products sold on its site and give third parties more access to its website.
For Jet, a takeover by Wal-Mart would demonstrate the challenges of attempting to go it alone in the hypercompetitive ecommerce market. Jet has yet to prove that its unique pricing and supply chain model is sustainable.A version of this appeared in The Wall Street Journal on August 3. Read the full version here