Southeast Asia is a lucrative market for e-commerce as millions of first-generation internet users are starting to embrace online shopping. A frequently cited study from Google and Singapore investment firm Temasek Holdings predicted the region's internet economy to grow to $200 billion by 2025, driven mostly from growth in e-commerce.
Its proximity to China, which has already become a leading market for e-commerce, also makes the region Alibaba's "backyard," according to Forrester Senior Forecast Analyst Satish Meena.
"[Alibaba wants] to be the major player in this market, beating Amazon. When it comes to a direct battle between these two, Alibaba doesn't have many countries left where they can actually take a lead," Meena told CNBC, adding that those markets are still at a relatively early stage of development for e-commerce.
Among markets outside the United States and China, Meena explained that Amazon already had a sizable presence in Europe and was also doing well in the Indian market. Indeed, local media reported earlier this month that Amazon had invested more than $2 billion to-date in their India operations.
But Meena said it is unlikely that Amazon will invest as aggressively in Southeast Asia as it has done in India. Instead, they are likely to test the waters in one or two markets to grow the business and and gain customers.
"They will take their time, increasingly grow their investment in logistics, warehousing and everything. So that they can gain the customers and gain them for a long time," he said.