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Tag: E-Commerce

  • PDD Profit Falls 12% as Price Wars and Overseas Tariffs Bite

    PDD Profit Falls 12% as Price Wars and Overseas Tariffs Bite

    PDD Holdings posted a 12 per cent drop in second-quarter net profit to 27.2 billion yuan as domestic price discounting squeezed margins. Revenue at the Chinese e-commerce group rose 8 per cent to 112.36 billion yuan ($15.7 billion) in the three months ended June 30, missing the 116.35 billion yuan consensus collected by LSEG.

    Adjusted earnings per American depositary share reached 19.33 yuan, beating analyst expectations. Shares rose 2.3 per cent in early New York trading following the release.

    Domestic price wars and margin compression

    The company operates discount platform Pinduoduo in China, where it trades against Alibaba Group’s Taobao and Tmall, JD.com, and ByteDance’s Douyin. Weak consumer confidence, real estate market weakness, and persistent employment worries kept shoppers cautious through the peak ‘618’ shopping festival in June. Platform operators responded with direct subsidies, price-matching guarantees, and merchant incentives, pushing profitability down across the sector.

    Management told analysts that platform governance spending will increase as the fight for market share continues. PDD increased spending on logistics and merchant support programmes during the quarter to lower consumer prices and protect seller retention.

    For retailers across Asia, PDD’s slowing topline growth shows the limits of low-price customer acquisition when competitors match subsidies yuan for yuan. Alibaba and JD.com have reoriented their core marketplaces around low-price algorithms over the past year, stripping Pinduoduo of the uncontested cost advantage it held during its initial expansion.

    Cross-border tariff friction in Western markets

    Temu, the group’s international marketplace, confronts tightening import policies in its core Western territories. The platform built its market share by dispatching low-cost parcels directly from Chinese factories to consumers, using de minimis customs exemptions to bypass import duties.

    Policy changes in the United States have eliminated duty-free status for low-value Chinese parcels, while the European Union introduced a customs fee on small inbound packages in July. Rising shipping and compliance overheads have forced marketplace merchants to lift retail prices, slowing cross-border parcel volumes.

    “In the short term, cross-border orders in the affected markets will face slower fulfilment efficiency and higher costs which will have a considerable impact on those parts of our business,” said PDD co-chief executive Chen Lei.

    Investors now await third-quarter customs clearance data from European ports and the platform’s upcoming gross merchandise volume figures during the year-end holiday shopping cycle.

  • Coles Lifts Underlying Profit to $1.26 Billion as Supermarket Sales Surge

    Coles Lifts Underlying Profit to $1.26 Billion as Supermarket Sales Surge

    Coles Group lifted underlying annual profit 13.7 per cent to A$1.26 billion in Melbourne, powered by grocery volume and fast-expanding digital channels.

    Group sales revenue advanced 2.8 per cent to A$45.58 billion across the 2026 financial year. Reported net profit came in lower at A$1.09 billion after the grocer set aside A$235 million to cover remediation costs and penalties from a Federal Court staff underpayment judgment.

    Supermarkets drove the operating momentum. Core grocery revenue rose 3.7 per cent to A$41.47 billion, while division earnings before interest and tax increased 12.2 per cent to A$2.37 billion as the retailer took market share. Supermarket e-commerce sales jumped 26.4 per cent to A$5.6 billion, pushing the group’s automated customer fulfilment centres into positive earnings in their second full year of operation.

    Shoppers pinched by living costs continued to trade down to private labels and loyalty discounts while eating more meals at home. That grocery strength insulated Coles from regional retail headwinds, contrasting with discretionary Asian department store and hypermarket chains that continue to struggle against softer household demand.

    Liquor Slump and In-Store Shrink

    The liquor arm proved the main drag on the group balance sheet. Liquor sales slipped 3.3 per cent to A$3.55 billion, and division operating earnings plunged 47.8 per cent to A$59 million. Management responded with a multi-year restructuring plan that includes shutting standalone shops, co-locating bottle shops alongside supermarkets, and bundling food and beverage offerings.

    Security issues also weighed on store operations. Victoria recorded an 85 per cent surge in threatening incidents against staff over two years, pushing Coles to trial facial recognition systems, though management has not committed to a full network rollout.

    Restructuring Corporate Roles Under Accenture Deal

    Coles will cut hundreds of corporate jobs in the 2027 financial year as part of an expanded technology partnership with Accenture. The retailer plans to spend about A$190 million during the year on restructuring and redundancy costs to establish a dedicated capability centre.

    Store and customer-facing teams will remain exempt from the staff reductions, with the company offering reskilling pathways for affected corporate workers. Capital expenditure will increase in parallel, with Coles allocating an extra A$300 million across FY27 and FY28 to fund technology upgrades, store refurbishments, and 45 new supermarket openings.

  • Dingdong Lifts Second Quarter Profit to $40 Million Ahead of Meituan Deal

    Dingdong Lifts Second Quarter Profit to $40 Million Ahead of Meituan Deal

    Dingdong boosted second-quarter net income by 153 per cent to $40 million, lifted by higher domestic order frequency and an accounting adjustment on assets designated for sale.

    Revenue rose 8.6 per cent to $956.1 million for the three-month period, while gross merchandise value increased 11.8 per cent to $1.07 billion.

    Accounting Shift Drives China Earnings

    Net profit from operations in China surged 155 per cent. That increase stemmed primarily from the cessation of depreciation and amortisation charges on long-lived assets classified as held for sale under US GAAP rules. Overseas operations moved in the opposite direction, with net losses widening 166 per cent despite a 36.2 per cent rise in international revenue.

    The divergent performance comes as Dingdong prepares to hand over its domestic operations. In February, the grocer agreed to divest its China business to on-demand delivery giant Meituan. That transaction remains pending regulatory and closing conditions.

    Summer Peak Drives Daily Volumes

    Chief executive Song Wang credited higher order frequency among loyal members for driving the gains. Dingdong has now recorded non-GAAP profit across 15 consecutive quarters, alongside 10 straight quarters of year-over-year revenue expansion and positive GAAP net income.

    Trading accelerated further as the platform entered its summer peak in July. Monthly gross merchandise value hit a record high, with single-day sales exceeding RMB 100 million multiple times during the month.

    China’s instant-grocery sector has shifted decisively toward consolidation after years of heavy cash burn, forcing independent warehouse networks to integrate into larger delivery ecosystems or redirect resources abroad. Dingdong’s run of GAAP profitability shows the frontline warehouse model can deliver positive margins once promotional subsidies recede.

    Market attention now centers on the completion date for the Meituan transaction, which will determine how quickly Dingdong pivots its core focus toward international expansion.

  • Online Merchants Face Rising Fraud Rates as AI Tools Lower Attack Costs

    Online Merchants Face Rising Fraud Rates as AI Tools Lower Attack Costs

    Retailers face rising fraud losses as bad actors deploy low-cost artificial intelligence tools at scale, according to global payment processor Worldpay. A survey of 1,466 payment specialists across major markets including Australia shows fraud as a percentage of merchant revenue is climbing.

    The shift leaves digital store operators fighting automated attacks at checkout while trying to prevent unnecessary transaction rejections that destroy legitimate sales. Traditional card-not-present theft remains common, but pressure is shifting rapidly towards bot-driven credential stuffing, account takeovers, and refund abuse.

    The Cost of False Declines

    Rejecting good customer transactions out of caution carries a steep penalty. When checkout software incorrectly blocks a legitimate shopper, merchants lose both the immediate basket and the customer acquisition cost spent bringing that buyer through the sales funnel.

    Colin Baines, vice president of commercial and country manager at Worldpay, said false declines act as a silent drag on merchant margins. Using risk-based authentication backed by device intelligence and behavioral analytics allows retailers to challenge suspicious orders without adding friction to trusted buyers.

    Optimizing payment routing improves conversion. Implementing network tokenization, managing card credentials across their lifecycle, and configuring soft-decline retry schedules give merchants measurable lifts in completed orders across domestic card networks.

    Cross-Border Payment Routing

    Cross-border expansion introduces friction when checkouts fail to support local acquiring banks or domestic payment preferences. Presenting buyers with unfamiliar currencies, foreign checkout flows, or rigid 3D Secure rules increases cart abandonment.

    For retailers trading across Asia-Pacific markets, pairing stored network tokens with domestic acquiring infrastructure lifts card acceptance rates and cuts interchange processing expenses. Baines said store operators must treat payment routing and compliance as active components of their commercial strategy rather than administrative checkout settings.

  • Oz Hair and Beauty Discloses Customer Data Breach Across Order Platform

    Oz Hair and Beauty Discloses Customer Data Breach Across Order Platform

    Oz Hair and Beauty has suffered a cyber incident on its online purchasing platform. The breach exposed the personal details and transaction histories of customers who placed orders before August.

    An unauthorised third party gained brief access to data managed through an external service provider. The Australian e-commerce merchant disclosed the incident to shoppers in a direct notification.

    Exposed records include full names, email addresses, mobile numbers, and purchase details showing total spend, currency, city, state, and postcode. Attackers did not obtain passwords, credit card numbers, payment details, or street addresses, the company stated.

    Third-Party Platform Compromise

    External technical specialists launched an investigation immediately after staff detected the intrusion. Early findings point to data held by a contractor rather than a direct breach of internal systems.

    Oz Hair and Beauty has not disclosed the total number of affected customer accounts. It reported the incident to the Australian Cyber Security Centre and the Office of the Australian Information Commissioner while notifying affected buyers.

    Earlier this month, a separate cyber attack hit furniture retailer Nick Scali and forced core IT infrastructure offline across its regional business. Australian consumer brands face tightening scrutiny over vendor data storage as regulators press merchants to shorten retention schedules.

    Security Audit Underway

    The beauty retailer is now overhauling its data protection controls and third-party storage policies to prevent repeat exposures across its digital channels.

    Technical investigators are still determining the full timeline of the intrusion. The retailer has yet to submit its final incident report to federal privacy regulators.

  • Kogan Group Gross Sales Pass $1 Billion as Core E-Commerce Offsets Mighty Ape Loss

    Kogan Group Gross Sales Pass $1 Billion as Core E-Commerce Offsets Mighty Ape Loss

    Kogan Group lifted annual gross sales past $1 billion in the year ended June 30, driven by double-digit expansion across its core Australian e-commerce platform.

    Group revenue rose 5 per cent to $510 million, while statutory net profit after tax reached $11.2 million. The result masked a sharp divergence between the company’s flagship Australian portal and its struggling New Zealand subsidiary.

    The main Kogan.com business expanded gross sales and revenue by 16 per cent during the period, delivering $16.3 million in net profit. Management credited internal automation and AI-driven processes with lowering operational expenses, freeing cash to reinvest in customer marketing while defending profit margins.

    Restructuring the New Zealand Arm

    Mighty Ape remained a drag on bottom-line earnings, posting a $5.1 million net loss. Gross sales at the Auckland-headquartered online retailer fell 14 per cent, while annual revenue dropped 30 per cent as the group dismantled unprofitable operations.

    To stem the losses, management halved inventory from $21 million to $10 million and shuttered its Christchurch fulfillment center. Those reductions lowered quarterly fixed operating costs from $4.9 million to $3.4 million, pushing Mighty Ape into positive adjusted EBITDA in the fourth quarter.

    Higher-margin digital services cushioned the hardware contraction. Paid subscriptions via Primate, marketplace commissions, and the Mighty Mobile telecommunications service all expanded their share of the subsidiary’s total top line.

    Marketplace Shift Across Australasia

    The split performance mirrors a broader transformation across Australasian e-commerce, where pure-play retailers have moved away from holding heavy direct inventory to rely on third-party marketplace commissions and automated logistics. RetailNews Asia has tracked similar inventory purges at competing digital platforms seeking to protect gross margins against stubborn freight and handling costs.

    Group management confirmed it will maintain strict capital discipline across both divisions entering fiscal 2027, with full-year performance hinging on whether Mighty Ape can convert its fourth-quarter operating stability into sustained annual profit.

  • Pop Mart Overseas Revenue Falls 11% as Labubu Toy Craze Cools

    Pop Mart Overseas Revenue Falls 11% as Labubu Toy Craze Cools

    Pop Mart International Group posted an 11.1 per cent decline in overseas revenue to RMB4.97 billion for the first half, hit by cooling international sales for its signature Labubu character.

    Shares in the Beijing-based toy maker fell more than 4 per cent in Hong Kong following the release, even as strong domestic sales lifted total group revenue 23.8 per cent to RMB17.17 billion ($2.55 billion). Profit attributable to shareholders rose 10.1 per cent to RMB5.04 billion, while operating profit gained 11.3 per cent. Revenue from Greater China jumped 47.3 per cent to RMB12.20 billion, now generating 71 per cent of group sales compared with 59.7 per cent a year earlier.

    Online sales slump outside China

    The international drop was sharpest across digital channels. Online sales fell 45.6 per cent in the Americas, 39.8 per cent in Asia Pacific excluding Greater China, and 59 per cent in Europe. The company’s own app and website sales in the Americas dropped 44.6 per cent.

    Physical stores showed resilience abroad. Offline sales grew 19.5 per cent in the Americas, 16.2 per cent in Asia Pacific, and 49.8 per cent in Europe. Yet store expansion failed to offset the online drop in the Americas, where regional sales fell 16.5 per cent despite the local store count jumping from 41 to 86 locations over the twelve-month period.

    Plush toys replaced vinyl figurines as Pop Mart’s primary sales driver, surging 60 per cent to RMB9.82 billion to account for 57.2 per cent of total turnover. Figurine sales remained flat with 0.3 per cent growth. Revenue from The Monsters series, which includes Labubu, contracted 7.5 per cent to RMB4.45 billion, marking its first recorded drop and shrinking its revenue share to 26 per cent. Twinkle Twinkle rose 580.6 per cent to RMB2.65 billion to become the second-largest intellectual property, while Crybaby, Dimoo, Skullpanda, and Hirono each surpassed the RMB1 billion mark.

    Rivals step up domestic pressure

    Domestic retail chains across Asia are accelerating their push into collectible toys to capitalize on the same customer demographic. Miniso has refiled to list its Top Toy business in Hong Kong, while rivals Kayou and 52Toys expand store networks across tier-one and tier-two Chinese cities. Frost & Sullivan projects China’s collectible toy market will reach RMB110 billion this year.

    Pop Mart is diversifying into location-based entertainment and hospitality through its Pop Land theme park, Pop Bakery food outlets, and a live-action Labubu feature film developed with Sony Pictures. Chief executive Wang Ning stated the company may fall short of its full-year 20 per cent revenue growth target as management executes operational adjustments across international distribution networks.

  • ALO Enters China with Tmall Debut After RMB10 Million First-Minute Sales

    ALO Enters China with Tmall Debut After RMB10 Million First-Minute Sales

    Alo Yoga entered the mainland Chinese market on August 12 through an exclusive storefront on Alibaba Group’s Tmall platform, generating over RMB10 million in its opening minute.

    Pre-sales opened at 12:30 a.m., setting a record for the fastest launch sales in Tmall’s sports and outdoor category.

    Targeting high-spend shoppers

    The premium activewear label is retailing women’s and men’s apparel, footwear, accessories and wellness products through the flagship store. The partnership gives Alo direct access to Tmall’s 88VIP program, an active pool of more than 62 million top-tier spenders across the platform.

    “The partnership reinforces Tmall’s position as the go-to choice for global brands in China seeking high-value customers and scalable growth,” said Gu Di, general manager of sports and outdoors at Taobao and Tmall Group.

    Digital-first route into activewear

    Selling online first allows Alo to test product demand across Chinese provinces without committing capital upfront to prime shopping mall leases. Rival athletic apparel brands established their presence in China by building city-by-city community hubs before opening physical stores, whereas Alo is relying on Alibaba’s customer database to build scale immediately.

    The Chinese online rollout follows Alo’s wider expansion across Asia-Pacific, which recently included a physical store launch in the Philippines. The next test for the company is whether early online demand will translate into brick-and-mortar locations in tier-one retail hubs.

  • TikTok Shop Tracks Toward US$100 Billion in Global GMV by 2026

    TikTok Shop Tracks Toward US$100 Billion in Global GMV by 2026

    TikTok Shop is on track to surpass US$100 billion in global gross merchandise volume in 2026 as its social commerce format expands across Asia and Western markets.

    The projected milestone reflects steep annual transaction volume growth, driven by aggressive merchant acquisition in Southeast Asia and rapid adoption in the United States.

    Challenging Incumbents Across Southeast Asia

    ByteDance built TikTok Shop around short-form video feeds and live shopping broadcasts, funneling consumer traffic directly into merchant checkout flows. In Southeast Asia, the platform has eaten into market share held by Sea Group’s Shopee and Alibaba’s Lazada, particularly in Indonesia, Thailand, and Vietnam.

    Cross-border competition has intensified as PDD Holdings’ Temu and fast-fashion platform Shein push discount goods into the same consumer segments. TikTok Shop countered by integrating local logistics partnerships and offering subsidized shipping to lock in high-frequency buyers.

    Global Footprint and Platform Competition

    Western market expansion provides the second engine behind the US$100 billion trajectory. After scaling up operations in the United Kingdom and the United States, ByteDance began preparing localized rollouts in continental Europe and Latin America to diversify revenue away from single-market regulatory risks.

    RetailNews Asia notes that conventional marketplace apps rely primarily on search intent, while TikTok generates spontaneous purchases by inserting checkout prompts into entertainment feeds. That structural difference forced Shopee and Lazada to invest heavily in their own live streaming hubs to defend market share.

    The key metric to track heading into 2026 will be TikTok Shop’s take rate, as ByteDance lifts seller commission fees to convert platform volume into operating profit.

  • Alibaba Net Profit Plunges 75 per Cent on Heavy AI Infrastructure Spending

    Alibaba Net Profit Plunges 75 per Cent on Heavy AI Infrastructure Spending

    Alibaba Group reported a 75 per cent plunge in quarterly net profit to June as capital expenditure on artificial intelligence surged. Group revenue rose 9 per cent to 268.95 billion yuan, matching market forecasts while cloud computing gains offset slowing domestic commerce.

    Capital spending climbed 75 per cent year on year to 67.68 billion yuan in the three months to June 30. The Hangzhou-based group has already deployed half of its 380 billion yuan AI investment budget scheduled through 2029, buying server processors and expanding data centres to handle surging enterprise demand.

    Surging Compute Costs and In-House Silicon

    Chief executive Eddie Wu said the company expects to break even on its AI-related capital expenditure within three years at current gross margins. Revenue from AI cloud and compute services jumped 45 per cent to 48.44 billion yuan during the quarter, with annual recurring revenue from AI model-as-a-service exceeding 16 billion yuan.

    To rein in hardware expenses, Alibaba is replacing commercially procured processors with silicon built by its in-house chip division, T-head. The proprietary semiconductors are now running across clustered server racks for both model training and inference workloads, which management expects will widen operating margins as deployment expands.

    The margin squeeze mirrors the heavy infrastructure spending across Asia’s technology sector, where hyperscalers and platform operators are absorbing massive upfront costs before enterprise software monetization matures. Alibaba is defending its cloud dominance against domestic rivals Tencent and Baidu, while simultaneously backing frontier model developers such as Moonshot to anchor future compute traffic to its ecosystem.

    Reorganisation and Core Retail Headwinds

    Adjusted earnings per American Depositary Share fell to 8.52 yuan, trailing the 10.53 yuan consensus tracked by LSEG. Softer consumer demand in mainland China continues to weigh on the core marketplace division, prompting chief financial officer Toby Xu to highlight macroeconomic friction across domestic online shopping.

    Wu now leads the dedicated Alibaba Token Hub following an internal restructuring that split operations into four divisions: e-commerce, AI cloud and compute, model applications, and other businesses. Affiliate Ant Group recorded a 1 per cent rise in quarterly profit as it tests AI shopping assistants and digital health tools.

    Management is targeting overall profitability for the group’s quick-commerce unit by fiscal 2029, while tracking a three-year payback window on its current infrastructure outlays.

  • Adore Beauty Hits Record Sales of $207 Million as Store Costs Cut Profit

    Adore Beauty Hits Record Sales of $207 Million as Store Costs Cut Profit

    Adore Beauty lifted full-year revenue 4.3 per cent to a record $207.3 million for the 12 months ended June 30, but heavy physical expansion cut underlying earnings by more than half.

    Underlying EBITDA fell to $3.8 million from $8.1 million a year earlier. Physical stores contributed $18.6 million to total revenue, while gross margin declined 52 basis points to 34.8 per cent.

    The Cost of Opening 13 Stores

    The Australian retailer added 13 locations during the financial year, comprising 11 Adore Beauty outlets and two Ikou shops. That took its national footprint to 20 doors after years of operating as a pure-play digital platform. New customer numbers climbed 14 per cent over the period.

    Alongside lease and fitout costs for an immature store network, the company funded a new national distribution centre, an enterprise resource planning software overhaul, and broader technology upgrades. Weak consumer sentiment in the fourth quarter added further pressure on margins.

    Adore Beauty expects store drag to ease as locations mature over an 18 to 24 month cycle. Pure-play e-commerce operators across the Asia-Pacific region have faced similar margin friction when transitioning into physical storefronts, trading immediate cash flow against long-term customer acquisition.

    Targets for the New Fiscal Year

    Chief executive Sacha Laing said the group has completed its core infrastructure overhaul on budget and on schedule, positioning the business for operational use.

    “The foundations to support our scaling omnichannel operations are now in place,” Laing said.

    Management has set an underlying EBITDA target of $9 million to $13 million for FY27, predicated on top-line revenue expanding by at least 10 per cent.

  • Tokopedia and TikTok Shop Lift Indonesian Merchant Sales 51 per Cent

    Tokopedia and TikTok Shop Lift Indonesian Merchant Sales 51 per Cent

    Tokopedia and TikTok Shop drove a 51 per cent increase in sales of Indonesian local products during the first half of 2026. The combined marketplace moved nearly 700 million items over the period.

    Gross merchandise value for the joint #BeliLokal initiative climbed 14 per cent during the six months. Merchant participation rose 50 per cent compared with the first half of 2025.

    Expanding beyond Java

    Agency Bukacerita created an Independence Day campaign named Pahlawan Beli Lokal for the platform. It promotes domestic makers of fashion, packaged food, automotive goods, and electronics. The campaign runs on social feeds and a dedicated web hub, featuring regional brands like Malang snack producer Apelicious and cosmetics brand Facetology.

    According to internal survey data from TikTok Shop, 72 per cent of participating sellers gained new customers through discovery commerce tools. Another 67 per cent used the channel to launch new product lines. Live shopping sessions, affiliate tie-ups, and short videos generated most of those initial sales.

    ByteDance and GoTo are working to satisfy Indonesian regulators following the state-mandated merger of TikTok Shop and Tokopedia. Both operators face stiff competition from Shopee and direct-from-factory platforms in Southeast Asia’s largest consumer market. Alignment with local merchants remains critical for their political and commercial standing.

    Training and registration push

    The platforms have turned the promotional campaign into a permanent merchant onboarding track. More than 4,800 micro, small, and medium enterprises, creators, and affiliates have completed training modules. These sessions cover intellectual property rules, live selling, and official business registration numbers.

    Most participating merchants operate outside Greater Jakarta. Half of the training workshops took place outside Java to tap production hubs across the outer islands.

    “In the spirit of Independence Day, we want to continue strengthening collaboration with the government, creators, partners, and the community through #BeliLokal so that more local businesses can move up a class, build more competitive businesses, and grow sustainably,” said Stephanie Susilo, executive director of Tokopedia and TikTok Shop Indonesia.

    Plans are underway to expand regional onboarding workshops into secondary cities across Sumatra and Sulawesi through the fourth quarter.

  • India Quick Commerce Discounts Ease to 20% as Rivals Add Dark Stores

    India Quick Commerce Discounts Ease to 20% as Rivals Add Dark Stores

    Average discounts across India’s quick-commerce platforms have dropped to between 19 and 20 per cent, cooling from early-year peaks as operators focus on unit economics. The pull-back comes even as larger e-commerce rivals prepare to roll out up to 1,500 new dark stores over the next 12 to 18 months, according to research by UBS.

    Price discounting reached its height in early 2026 when Amazon Now raised discount rates from 26 per cent in November 2025 to 57 per cent two months later. Competitors responded in kind. Flipkart Minutes and incumbent platforms increased promotional discounts by 200 to 300 basis points across key retail categories before the pricing war settled over the past four months.

    Dark Store Land Grab

    The total addressable market for quick commerce across India is projected to reach $59 billion by FY30, upgraded by UBS from an earlier forecast of $34 billion. Quick-commerce networks now operate across more than 100 towns and are expected to capture roughly half of all incremental growth in online retail across the country.

    Network footprints are widening beyond standard grocery lines. Dark stores increasingly handle consumer electronics, personal care, and apparel, directly competing with traditional parcel delivery networks. To contest this volume, conventional e-commerce groups are setting up 400 to 600 micro-warehouses each, with plans to scale their combined networks to between 1,200 and 1,500 facilities.

    Unit Economics and Margins

    Incumbents enter this new round of competition with substantial cash reserves. Blinkit and Swiggy’s Instamart hold roughly Rs 18,000 crore each on their balance sheets, while Zepto holds about Rs 7,000 crore. Blinkit posted positive adjusted EBITDA margins in the first quarter alongside rapid net order value growth. Instamart reached contribution-margin break-even in May, lifting its sequential quarterly margin by 160 basis points to negative 0.2 per cent. Zepto cut promotional pricing and removed more than four million unprofitable customer accounts before restarting growth spending in July.

    Across Asia’s instant-delivery markets, platforms in South Korea and Southeast Asia experienced a similar shift once order density matured: headline subsidies gave way to monetisation through merchant advertising, platform fees, and branded marketing tie-ups. In India, UBS reduced its steady-state operating margin forecast for the sector by 250 to 300 basis points, reflecting the lower margins found in non-grocery merchandise and higher fulfilment costs outside top-tier metros.

    Attention now shifts to food-delivery user activation, where platforms report that more than 70 per cent of accounts transact less than once a month. Zomato and Swiggy are rolling out smaller basket sizes, tighter delivery radiuses, and reduced restaurant commissions to draw those dormant accounts into regular ordering cycles.

  • Human Trust Remains Key Driver for Southeast Asia E-Commerce Amid Rising AI Adoption

    Human Trust Remains Key Driver for Southeast Asia E-Commerce Amid Rising AI Adoption

    Human trust continues to be a primary factor in consumer purchasing decisions across Southeast Asia, even as generative artificial intelligence (AI) tools gain traction in product discovery. A new report by impact.com, Cube, and Dentsu reveals that while AI is emerging as a significant channel, established human connections still hold sway over shoppers in the region’s burgeoning e-commerce market.

    The “E-commerce Influencer and Affiliate Marketing in Southeast Asia 2026” study indicates that recommendations from family and friends are the most influential factor, scoring 2.42 out of four. This outranks online reviews (2.36) and even creators (1.98). However, the report also highlighted the direct impact of creators, with two-thirds (67%) of consumers making a purchase specifically due to a creator’s recommendation. This trend underscores the enduring power of trusted individuals in guiding consumer choices.

    AI’s Growing Role in Discovery and Research

    Generative AI tools such as ChatGPT, Gemini, and Claude are increasingly being used by Southeast Asian consumers for shopping, particularly in product discovery and research. Approximately 24% of consumers in the region currently use these AI tools for initial product discovery, a figure that rises to 28% during the product research phase. Vietnam leads the adoption curve for AI in product discovery at 34%, followed by Indonesia at 31%, while Singapore recorded the lowest usage at 14%.

    Despite AI’s ascent, influencers retain their importance as a research channel, cited by 51% of consumers. YouTube garners the highest engagement for influencer content at 23%, with TikTok at 17% and Facebook at 15%. The report suggests that AI complements the existing commerce ecosystem, rather than replacing it. Consumers frequently navigate between AI assistants, marketplaces, creators, publishers, retail media, and brand-owned channels throughout their purchasing journey. RetailNews Asia has observed similar patterns in other markets, where technology enhances rather than entirely supplants traditional trusted channels, prompting brands to integrate diverse strategies.

    E-Commerce Growth and Influencer Impact

    Southeast Asia’s e-commerce sector is experiencing robust growth, with sales forecast to increase by nearly 15% year-on-year to $219 billion in 2026. This trajectory is expected to almost double to approximately $410 billion by 2031. Indonesia and Thailand collectively dominate the regional market, accounting for 58% of all e-commerce sales, with marketplaces holding an average 72% share. Influencer and affiliate marketing combined are linked to an estimated 32% of the region’s e-commerce sales, translating to about $70 billion in 2026.

    The study, which surveyed 2,400 consumers, also details conversion methods. For purchases made via influencer or creator channels, in-video product tags were the most common conversion route at 56%. This was followed by links in descriptions or comments (43%) and stories (41%). Consumer engagement with various purchasing incentives varies by market. Singapore shows high adoption of cashback and deal sites at 69%, contrasting with Vietnam (28%) and Indonesia (25%) where usage is considerably lower.

  • Alibaba and ByteDance Divest from Gaming and Retail to Fuel AI Ambitions

    Alibaba and ByteDance Divest from Gaming and Retail to Fuel AI Ambitions

    Alibaba Group Holding and ByteDance are restructuring their business portfolios, selling off non-core assets in gaming and retail to private equity firms. This strategic shift aims to re-focus substantial resources and investment into the burgeoning field of artificial intelligence, as competition in the AI sector intensifies across Asia.

    Strategic Divestment For AI Focus

    The move sees Alibaba Group Holding in the process of selling Lingxi Games, its video game unit, to a private equity fund. This divestment reflects a broader trend among leading Chinese technology firms to streamline operations and concentrate capital on high-growth, strategic areas like AI. The decision comes as these companies face mounting pressure to innovate and secure a leading position in the global AI race.

    For retailers and consumer brands in Asia, this reorientation by tech giants like Alibaba has significant implications. Alibaba’s strong presence in e-commerce means that resources diverted to AI are likely to enhance capabilities in areas such as personalised recommendations, supply chain optimisation, and customer service automation. Similarly, ByteDance’s TikTok, a major platform for consumer engagement, could see advanced AI integration impacting everything from content delivery to advertising effectiveness.

    Implications For Asia’s Retail And Tech Sectors

    The decision by Alibaba and ByteDance signals a clear prioritisation of AI development over other business segments, including those with direct ties to consumer spending like gaming and certain retail operations. While the full scope of ByteDance’s retail divestments is not detailed, Alibaba’s move with Lingxi Games indicates a willingness to shed assets to fund core strategic initiatives. This aligns with broader market trends where technology companies are doubling down on AI infrastructure and research, viewing it as the next frontier for competitive advantage.

    This redirection of investment could lead to more sophisticated AI tools and platforms becoming available for businesses, potentially driving efficiency and innovation within the retail and consumer sectors. RetailNews Asia has observed similar strategic realignments across the region, where companies are either investing heavily in AI or partnering with AI specialists to stay competitive in an increasingly tech-driven market.