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Amazon yet to win over everyone after Singapore debut

Aug 11. 2017
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By THE STAR
ASIA NEWS NETWORK
KUALA LUMPUR

IT’S BEEN two weeks since Amazon, the world’s largest online retailer, arrived in Singapore.

While many expected “everything” to be offered online, synonymous with its “the everything store” tag line, some were left “less than satisfied” after visiting the app and website.

They found the product range “limited”, although others liked the “two-hour delivery” promise, unrivalled in the republic until now.

We can’t fault anyone for expecting too much because Amazon has built a reputation for itself … that it can provide “everything”.

Amazon has evolved from a book delivery company into the world’s largest online retailer, taking advantage of technology to sell almost everything online.

It has in place all that is required to make its business work in its markets – merchants, warehouses, logistics and financing methods.

Its global sales from April to June this year amounted to US$38 billion. Southeast Asia is a market full of potential but it is still in its infancy and Amazon is using Singapore as its gateway to the region.

However, it is a latecomer compared to China’s Alibaba and Tencent. Lazada has also established a strong foothold here in six countries in Southeast Asia.

Alibaba paid $1 billion in June to increase its stake in Lazada, while Tencent invested in both Tokopedia (the largest e-commerce platform in Indonesia) and Thailand’s Sanook. The presence of Alibaba and Tencent in the region explains why Amazon is here.

Southeast Asia has its own unique issues, from regulation and language barriers to logistics, given the many islands around, especially in the Philippines, as well as traffic jams.

Also not to be forgotten is that broadband connectivity is not the same in every country – some are fast while others still operate at a snail’s pace.

Logistics, delivery issues and payment methods are things Amazon has to iron out before it ventures into other countries in the region.

There are also several other online sites that it will have to conten. Insofar as malaysia is concerned, the competing sites include Zalora, 11street Malaysia, lelong.my, eBay Malaysia, Fave and EZBuy Malaysia.

The attraction is the region’s market of 640 million people, of which 70 per cent are below the age of 40, middle class and with huge purchasing power. 

There are more than 260 million Internet users and the figure is expected to grow to more than 480 million by 2020.

Frost & Sullivan has forecast online product sales to grow to $71 billion by 2021 from $16 billion in 2016, which explains why Amazon is here.

China is the biggest online retail market; sales last year reached $752 billion and are expected to increase to $1.089 trillion by 2021, while India’s online market is estimated to be at $64 billion by then.

Amazon’s entry certainly sets a new dimension in online sales in Southeast Asia from product range to quality and pricing, and may accelerate the maturing of the regional e-commerce market.

It could also force industry consolidation, where the bigger players buy or merge with smaller ones, creating bigger giants in this region.

More importantly, it is an opportunity for our merchants to explore all these sites to sell online, which is the way forward.

 

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