Monday, September 28, 2020

Battleground Singapore

Dec 25. 2016
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By Suwatchai Songwanich
Chief executive Officer,
Bangkok Bank (China)

Singapore is about to become a regional battleground between the world’s two largest e-commerce giants. From the US, we have Amazon.com. From Asia, there’s Lazada Group, a Singaporean business started by Rocket Internet in Germany, in which China’s Alibaba Group purchased a controlling US$1-billion stake in April.

Amazon currently doesn’t offer a Southeast Asia-based service, though that is set to change within the first quarter of next year when it will launch in Singapore. 

Recent activity, such as Amazon’s reported acquisition of refrigerated trucks and its unsuccessful attempt to buy Redmart, a Singaporean grocery delivery business, suggest it will be launching its AmazonFresh service alongside its better-known online marketplace.

Success in Singapore could be a bellwether for Amazon’s opportunities across the region, which is home to some 600 million consumers. 

And Amazon is certainly increasing its activities in Asia, having recently rolled out Amazon Prime in China and invested US$3 billion to expand its operations in India. 

However, those regional opportunities will depend on how able it is to fend off fierce competition from Lazada.

The group, which operates in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, reported turnover of more than US$1.36 billion in March, making it by far the largest e-commerce sales and delivery service in the region. Now it will benefit from Alibaba’s expertise, not to mention potential to expand its offering through the thousands of businesses trading through the Chinese e-commerce network.

Many people in the retail, e-commerce and investment communities will be watching how the fight between Lazada and Amazon develops. It is too early to guess what the outcome will be. It is also hard to think that either of the businesses will simply give up and go home if their competitor gains the upper hand in Singapore. 

The Lion City will be an important acid test for regional expansion, but it is unlikely to become the be-all and end-all in this emerging story. 

Lazada already has an established Southeast Asian footprint. Amazon has none, yet. But how can such a company afford not to have a presence in the world’s seventh-largest market, which is also one of the fastest growing?

Overall the developments should be very good for consumer choice. It will also help SMEs across the region, including in Thailand, to expand their trade although this could be to the detriment of existing brick-and-mortar retailers.

It will be especially interesting in Thailand. There have been rumours for years that Amazon will open locally, though we’ve seen nothing more than speculation on this front. 

The regional rumour mills are now spinning (as-yet unsubstantiated) stories that Amazon is looking to open in Indonesia. Lazada is already popular in the Kingdom, demonstrating local demand for the convenience of online shopping. 

Whatever the outcome, we should expect the lessons Lazada learns in Singapore to be translated into their local business in Thailand. While consumers may wait for such developments with eager anticipation, incumbent businesses should use every second to up their game before it’s too late.

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