Yahoo Finance Amazon's Gojek Investment Interest to Boost Asian Presence
Amazon AMZN is making every effort to bolster presence in Asia by strengthening investments in uncharted territories.
This is evident from its latest talks with Gojek, which is an Indonesia-based ride-hailing services company. Notably, the e-commerce giant is in early stages of talks to invest in Gojek in order to buy a stake in the startup.
The investment will offer Amazon a strong entry in Indonesia, which is one of the emerging markets of Southeast Asia due to rapid Internet usage penetration.
Further, the company’s transportation initiatives will strengthen with investment in Gojek. Notably, Amazon holds several patents related to transport of passengers, on-demand transportation service through a network of self-driving vehicles and to name a few.
Indonesian Ride-Hailing Space Holds Promise
Per a report from Statista, ride hailing services market in Indonesia is expected to generate revenues of $3.6 billion in 2019. Further, the figure is likely to reach $8.3 billion by 2023 at a CAGR of 22.9% between 2019 and 2023.
Additionally, user penetration is pegged at 8% and 13.5% for 2019 and 2023, respectively.
Amazon will be able to foray into this market by investing in the widely popular and efficient, Gojek.
The competition is between Gojek and its primary rival, Grab, is likely to intensify if the deal materializes.
Further, if the investment plans materialize, Amazon’s will be up against Alibaba BABA, Alphabet GOOGL, JD.com JD and Tencent, which have already invested in Gojek in an attempt to reap benefits from this promising market.
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Strengthening Asian Footprints
Apart from ride hailing services, Gojek offers online payments, food-delivery and other on-demand services like medicine and grocery delivery and courier services.
Consequently, Amazon’s latest investment interest is expected to strengthen its presence in the abovementioned areas of the five Southeast Asian countries including Singapore, where Gojek has expanded operations.
Further, Amazon is witnessing strong Prime momentum in Singapore with Prime Now warehouse in the country. Outside of Southeast Asia, the company has been expanding presence in India rapidly on the back of its strengthening e-commerce services and regional content portfolio.
Additionally, the company owns several fulfillment centers in countries like India, Japan, China and Israel.
We believe growing investment activities of Amazon in Asia is likely to yield good returns in the long run as the emerging Asian countries hold immense growth potential driven by improving proliferation of smartphone and Internet.
Currently, Amazon 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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