News that JD Thailand (yes, the same JD from China) is slated to launch in May 2018 has started to make some waves. It seems that Thailand’s market is far too attractive to be let alone without any major competitors.
We have in the past covered 11street, who spared no expense in splashing ads, only to see mediocre performance. Even Garena’s Shopee, which we covered recently, suffer from eye-watering losses. It does really seem that competing ecommerces should be resigned to lose a lot of money to gain some ground.
In addition, the recent ongoings in Lazada, and the re-shuffling they are currently experiencing, may signal that perhaps the stars are aligned for JD? Will they successfully seize this opportunity and immediately grab market share? Here are our thoughts:
Money is no object
Our sources tell us that although Central Group is very conservative in their business practices and ventures, they will not apply the same rules for their joint venture (JV) with JD. They are, and we quote word by word, “ready not to make any money”.
So, while other players have already burned through their piles of money, JD is just starting. We believe it will be finally down to Shopee, Lazada and JD to fight it out. However, it should be fair to say that the fight would only be limited to Thailand (or Indonesia) for now, as JD is only present in 2 countries in Southeast Asia. It will be interesting to watch, and our money may still be on Alibaba, as Lazada has already established presence in almost all the Southeast Asian countries.
Growth by acquisition
JD is choosing to make a mark in Southeast Asia through Thailand – which is very interesting. We believe this to be a very shrewd move, as Thailand is indeed a good pick due to size of the market, income per capita, and availability of supporting infrastructure (logistics, payments etc). Also perhaps with Central Group, they may be able to attack the huge opportunities outside of the larger cities such as Bangkok or Chiang Mai.
Regionally speaking, our take is that in order to grow into other countries, JD may have to acquire smaller players (think ezbuy, 11street) in other countries, if speed is what they are seeking. Otherwise, partnerships like the one struck with Central Group takes a really long time. However, only time will tell.
Conclusion
We at Momentum Works are of the opinion that the ecommerce space is again the space to watch. New capital is from ecommerce giant such as JD.com will reinvigorate the startup ecosystem in Southeast Asia, and especially welcomed when the likes of Rocket Internet is leaving.
