Alphabet’s GOOGL division Google is making every effort to bolster presence in Southeast Asia by strengthening investments in uncharted territories.
Reportedly, Google and Temasek Holdings are in talks to invest in Indonesian e-commerce giant PT Tokopedia.
The investment will further expand Google’s presence in Indonesia, which is one of the emerging markets of Southeast Asia due to rapid Internet usage penetration.
Indonesian E-commerce Space Holds Promise
Historically, Southeast Asian countries have attracted investors from across the globe, thanks to solid growth rates, booming populations and good governance on a general basis. In fact, Southeast Asia has started attracting attention due to increasing growth of Internet services.
Per a report from Statista, the e-commerce market in Indonesia is expected to generate revenues of $28.6 billion in 2020. Further, the figure is likely to reach $50.7 billion by 2024 at a CAGR of 15.4% between 2019 and 2023.
Additionally, user penetration is projected at 50.5% and 73.3% for 2020 and 2024, respectively.
Google will be able to expand into this market by investing in Tokopedia, the online marketplace, backed by SoftBank Group Corp.’s Vision Fund.
We believe growing investment activities of Google in Asia are likely to yield good returns in the long run, as the emerging Asian countries hold immense growth potential driven by improving proliferation of smartphones and Internet.
The deal will also give a competitive boost to Google. If the investment plans materialize, it will be able to better compete with Facebook FB, Microsoft MSFT and Amazon AMZN that are also making efforts to reap benefits from this promising market.
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Google’s Aggressive Stance
E-commerce has been witnessing an unprecedented spike buoyed by the COVID-19 pandemic. This is especially true as lockdown and social distancing have resulted in forced closure of malls and retail stores.
Therefore, just like other biggies, Google has been making strong efforts to reinforce presence in the e-commerce world on the back of advanced technologies.
We believe that with this move, Google is looking to strengthen global foothold in the field of e-commerce.
Just last month, the company strengthened ties with Carrefour by launching a voice-based grocery shopping service via Google Assistant in France that will bolster the French retailer’s food e-commerce footprint.
In addition, the company is expanding presence in France with innovative shopping apps and services. Google aims at helping retailers improve customer reach with these services.
In this regard, it has teamed up with big retailers like Walmart and Target to make its products available online via the app called Google Express.
All these efforts have helped Google in reinforcing competitive position against Amazon, which has been the company’s biggest rival in almost every sector including home automation, cloud, voice assistants, audiobooks and so on.
Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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