Accompanying the rapid rise of online shopping around the world, the leading e-commerce companies have thoroughly implemented their services in many developed countries. Now, these global giants have turned their focus toward the newest competitive market: Southeast Asia, a region ripe for expansion due to its rapid development and the explosion of mobile device users. But not only is the time fitting, these countries also provide a huge market due to their large populations and growing middle class. For example, Indonesia, the most populous country in the region, is expected to see its number of consumers double from 74 million to 141 million by 2020 according to research from the Boston Consulting Group. There are five other primary markets in the region, Singapore, Thailand, Vietnam, the Philippines, and Malaysia, which are undergoing similar phenomena, especially due to the rising sales of smartphones. This market only continues to grow, as Google estimates the $7 billion valuation of the Southeast Asian e-commerce market to grow to $22 billion in 2020 and up to $88 billion in 2025.

It is natural to expect that China, a strong economic power and neighbor of the region, has looked toward the region for expansion. The two largest e-commerce companies, Tencent and Alibaba, have already invested billions of dollars into the region. They have a long-standing rivalry in China—from online retail between heavily Tencent-funded and Alibaba’s Taobao to bike-sharing with Tencent-backed Mobike and Alibaba’s choice, Ofo. Even the ride-hailing market, which has been dominated by Didi Chuxing in China, has been split between the two internet giants by investments into Southeast Asian competitors, with Alibaba and long-time Japanese ally SoftBank Group funding Grab and Tencent investing in local competitor Go-Jek.

The first major move was made in April 2016, when Alibaba invested $1 billion into the Southeast Asian company Lazada, taking 51% ownership of the company. Lazada has since relied on Alibaba’s immense amount of resources and experience as a “big brother” figure, and in June 2017, Alibaba invested another $1 billion to raise their total stake in the company to 83%. Since then, there have been many investments into countless regional companies as Alibaba and Tencent have effectively divided the region’s companies into two parties of competitors.

US-based Amazon has, however, been slow to enter the new market. Both shoppers and regional e-tailers have taken the company’s arrival as a given, but Amazon has only taken its first steps in July 2017, over a year after the first big Chinese investments in the region. Amazon made its first moves in the smaller urban market of Singapore by offering its Prime Now service, which offers 2-hour delivery on most household and daily-use items. Amazon seems poised to use Singapore as a launching pad to expand to other countries in the region due to its Westernized consumption habits and status as a regional center of influence, but they have yet to initiate their full-force expansion into the rest of the less-developed market.

The full effects of Amazon’s entry into the region remain to be seen. Clearly, Alibaba and Tencent have an edge with their early entry and establishment in the region, but as the world’s largest e-commerce company, Amazon is still a fierce competitor. How the issue will play out will rely largely on Amazon’s long-term strategy; they have already been skittish with their expansion into the region, delaying their original Q1 release after deeming it too ambitious. But the main question focuses on how Amazon will differentiate itself from established local and Chinese companies. One of the clearest differences is how Alibaba has chosen acquisitions and equity investments as the main strategy for entering the region, while Amazon has decided to build local services from scratch rather than relying on local companies—a practice which can also be observed through Amazon’s expansion strategy within the US.

Another distinguishing factor that researchers at Forrester note is, that Amazon typically offers a higher level of service quality. They believe that Amazon’s entry marks the end of “digital complacency” in the region, as it will pressure the local companies to take similar measures to ensure the same level of service as Amazon. One possible explanation for this gap in service is that e-commerce infrastructure is still developing in these new markets, unlike the established markets of the US. Regardless, it still highlights the higher quality experience Amazon is able to offer to its customers.

These improvements to quality include not only the speed of delivery, which is highlighted in Amazon’s delivery guarantees, but more notably the reliability and security of online transactions. The legitimacy of products provided is a major concern in a market with significant quality control issues regarding defective or knock-off products, which can be a major point of differentiation. Rapid advancement into the digital age has also brought about a shift from cash payments, which have inefficiencies due to cancelled orders and potential robberies, to more reliable digital payment alternatives. A similar shift has already been seen in India, where a battle has begun over mobile payment apps and is likely to also be a major point of contention in Southeast Asia generally. If Amazon is able to set itself apart through its quality of service and reliability, it would not only redefine the quality standards of the region’s e-commerce, but also find itself a major windfall in building a loyal customer base.

Another one of the major distinguishing factors between Amazon and its Chinese counterparts is the scope of Amazon’s focus, which remains much more limited than that of Alibaba and Tencent. Despite being such a successful high-tech company, Amazon has little experience with many of the related fields in which the two Chinese companies have fought over so intensely, such as bike-sharing, ride-hailing, and food delivery. So far, Amazon does not appear to be making moves to expand in this direction, and as a result, their stake will then rely heavily on online retail and e-commerce. While this could indicate friction regarding Amazon’s adaptation to the needs of the region, which more closely align with its geographic neighbors, it also could allow Amazon to cement a stronger position in e-commerce and distance itself from the expensive regional battle between the Chinese companies.

Nevertheless, the Southeast Asian market is still a critical point of interest regarding economic dominance between China and the US. While American internet companies have traditionally faced issues entering the Chinese market due to strict censorship and regulation laws that target foreign companies, the lack of such restrictions heightens the competition in the Southeast Asian market between the e-commerce giants. If Amazon does indeed elect to enter the Southeast Asian market, it will be a much more level playing field where the relative power of the Chinese and American titans, each outside their home territory, can be properly gauged. Until then, Alibaba and Tencent continue to be locked in a fierce rivalry with one another, extending their battleground beyond China and into Southeast Asia where they continue to carve up the region with their respective investments and acquisitions.

Kevin Lin is a student at Princeton University. He can be contacted at