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Alibaba is booming in a key Amazon battleground

Krystal Hu
Alibaba and Amazon are both eyeing the Southeast Asia market.

Alibaba (BABA) nailed its earnings again. On Thursday, the Chinese e-commerce giant reported a 61% revenue rise for its third quarter, pushing its shares to a record high of $190.

Besides continued strong growth in its mobile engagement, Alibaba is also seeing booming opportunities beyond China. International retail business more than doubled compared to the same quarter last year, reaching $433 million.

“We have a very clear international strategy and we’re on track,” Daniel Zhang, CEO of Alibaba Group, said on Thursday’s earnings call. “Our current focus is Southeast Asia.”

Amazon has been eying Southeast Asia, too

Similar to Alibaba’s home market China, the once-nascent e-commerce business in Southeast Asia has been taking off as the area’s middle-class grows and smartphone penetration deepens. Business-to-consumer e-commerce sales in the region are predicted to grow by 17.1% annually, from $11 billion in 2015 to $25 billion by 2020, according to New York-based consultancy Frost and Sullivan.

Amazon (AMZN) is eyeing Southeast Asia, too. As a latecomer to the emerging market, Amazon made its first move in the area by launching the Prime Now delivery service in Singapore this July.

FILE PHOTO: An employee is seen behind a glass wall with the logo of Alibaba at the company’s headquarters on the outskirts of Hangzhou, Zhejiang province, April 23, 2014. REUTERS/Chance Chan/File Photo

Southeast Asia has been the main battleground that puts the two e-commerce behemoths in direct competition. While Amazon offers its two-hour delivery service in the area, Alibaba is committed to spending more money to hold onto its lead there.

The company says its Southeast Asian online retailer Lazada and English-language e-commerce site AliExpress are driving the increased business in that region. AliExpress is one of the go-to places for many third-party sellers on Amazon to source their products from factories at a low cost. With more than $2 billion invested, Alibaba now owns 83% of Lazada, the most visited online retailer in the region.

Alibaba has been working on integrating its domestic shopping portals Taobao and Tmall with its overseas arms. Lazada now offers collections from Taobao and Tmall in Singapore, Malaysia, Indonesia, the Philippines and Thailand.

Correction: An earlier version of this story incorrectly stated that Alibaba had invested $3.9 billion in Southeast Asia.

Krystal Hu covers e-commerce for Yahoo Finance. Share your thoughts on the future of retail by writing to krystalh@oath.com

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