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Business deals

Aeon teams with Go-Jek in new Southeast Asian drive

Japanese retailer looks to Indonesian ride-hail startup to go beyond physical stores

Aeon expects the combination of its physical stores and Go-Jek's online services to attract consumers.

TOKYO -- Japanese retail group Aeon will partner with Indonesian ride-hailing startup Go-Jek on digital payment and home delivery to speed the store operator's overseas expansion, company sources said on Thursday.

Starting in mid-December, the two companies will cooperate in cashless payments and other areas, according to the sources.

Since Go-Jek began operations in 2015, it has grown into one of Indonesia's largest unicorns -- startups with valuations over $1 billion. The company claims over 100 million users of its smartphone app and has diversified into areas such as home delivery and mobile payments.

Under the alliance, Aeon will accept payments using Go-Jek's Go-Pay digital money at its two malls in Jakarta. The Japanese company also will offer home deliveries using Go-Jek drivers.

The services will be expanded to three new outlets Aeon plans to open after the 2019 business year, the sources said.

Aeon's delivery service will feature Go-Jek drivers standing by at the malls, ready to pick up and deliver items for customers ordering online. Japan's biggest retailer by sales expects the combination of physical stores and delivery services to attract customers while helping it gain a stronger foothold in the online shopping sector.

Go-Jek began Vietnamese operations in September and plans to expand into Thailand and the Philippines. Google, Microsoft and other global tech companies have invested in the startup.

Go-Jek hopes partnering with the Japanese retailer will give it more fuel in its race with Singapore's Grab to become the dominant "super-app" in Indonesia and other Southeast Asian countries. Both companies want to be the go-to app for doing everyday tasjs such as payments or grocery shopping, and having more retail partners on the company's platform is essential for success.

Aeon operates about 1,300 shopping centers, general merchandise stores and convenience stores in Southeast Asia. The two partners plan to work together in other regional markets besides Indonesia.

Southeast Asia's internet economy is worth an estimated $72 billion in 2018, according to a survey by Google and Singapore investment company Temasek. This figure is forecast to hit $240 billion by 2025, making the region ripe for mergers and acquisitions. China's Alibaba Group Holding acquired Lazada, the biggest e-commerce operator in the region, in 2016.

Like Go-Jek, Grab offers a wide range of services, including cashless payments and deliveries. Both rivals are keen to solidify their presence in a region where e-commerce is catching on faster than traditional logistics services can keep up.

Aeon has expanded in Southeast Asia since entering the region in 1984 with a Malaysian store. The company's Southeast Asian locations logged an operating profit of 224.9 billion yen ($1.98 billion at current rates) for the business year that ended in February, up 7% from the previous year.

The Japanese retailer has continued its regional growth, pouring 83.2 billion yen into new investments for the current business year, a twofold increase over 2017.

But as the internet-based economies of Southeast Asia keep growing, Aeon is refocusing away from bricks-and-mortar stores toward technology-driven services. As part of its new strategy, the company teamed with Singapore-based Honestbee -- Asia's biggest concierge shopping service provider -- to operate an online grocery store in Malaysia.

Nikkei staff writer Shotaro Tani contributed to this article.

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