Alibaba and Amazon, each unrivalled in its home market, are meeting on the battlefield in India and Southeast Asia.

Until now there has been little direct competition between the two ecommerce titans. Amazon has a small footprint in China, and Alibaba does some business in the US through its AliExpress platform. Neither has made a real effort to assert itself on the other’s home turf. In India and Southeast Asia, however, competition between the two is mounting.

Both companies are spending billions to expand in Asia – and with good reasons, not the least of which is the vast region’s growing, digital-savvy middle class. Projections from Google and Singaporean sovereign wealth fund Temasek Holdings put Southeast Asia’s ecommerce sales at about $88 billion by 2025. Within around the same period, Bain & Company estimates, India’s ecommerce market could increase by 600% and reach a similar number.

Amazon has committed $5 billion in India, and for the moment is focusing on signing up customers for its Prime service. Along with same-day deliveries, the service includes Western movies and television shows, which could give it some leverage, particularly with young customers. Alibaba has invested about $500 million for stakes in Paytm, a hugely popular Indian mobile payments platform, and its e-commerce arm, Paytm Mall.

Alibaba is going bigger in Southeast Asia, where it has already had a significant head start. Last year it acquired a controlling stake in ecommerce company Lazada, which does business in Indonesia, Malaysia, Philippines, Thailand and Vietnam, and is based in Singapore. In addition to having established regional logistics and infrastructure, Lazada owns RedMart, an online grocery store. Alibaba is now building up its infrastructure across Southeast Asia. This year it took a minority stake in an Indonesian online marketplace, Tokopedia.

Quarterly sales for Alibaba’s international business have more than doubled in a year, the New York Times reports, in part from Lazada’s contribution. Still, Lazada and RedMart comprise a small and unprofitable part of Alibaba. Lazada’s Chief Executive, Max Bittner, said its Chinese parent company is prepared to invest more to build up the business. “E-commerce is an economy of scale game,” Bittner said. “I don’t feel constrained in any way. I can go after this opportunity with the amount of firepower I need.”

Amazon’s Southeast Asian presence is more limited. While most ecommerce industry analysts expect it will expand into other countries, so far its only market is Singapore, where it introduced its Prime Now service in July. In a previous attempt to set up shop in Singapore, Amazon’s service proved too popular, and it was forced it to turn away customers. It has since garrisoned itself to serve the growing market.

The dream for both Amazon and Alibaba is to find the next China, the world’s biggest online shopping market, in Southeast Asia. But this is a very different place: a diffuse region of 600 million people, divided by politics, language and culture, with wide variation in terms of development. “It’s a mix of urban, semi-urban and rural areas, separated by large distances and – in the Philippines and Indonesia – by water,” said Mike Booker, a partner at Bain Southeast Asia. “Cash on delivery is still prevalent, and other local players are in the fray.”

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