The move by Amazon to launch its Prime Now service in Singapore has been seen as a direct challenge to the influence of Chinese e-commerce giant Alibaba in the region.
Alibaba recently invested a further US$1bn in Lazada, a South East Asian e-commerce portal operating in six countries, raising its ownership stake to 83%. (Read more on key e-commerce trends in South East Asia here: Five insights from Lazada on e-commerce on South East Asia.)
Alibaba’s investment and Amazon’s launch in Singapore reflects the belief that South East Asia – where internet connectivity and middle-class spending power is skyrocketing – is the next frontier for growth.
With online product sales in South East Asia projected to rise to US$71bn by 2021, up from just US$16bn in 2016, Singapore is likely just the first step in Amazon’s growth plan for the region.
“Singapore will be a test bed,” said Ajay Sunder, VP of Digital Transformation at Frost and Sullivan, in comments to Reuters on Amazon’s launch.
“I would give Amazon another two quarters, they should be rolling out soon in South East Asia, at least the major cities.”
While Amazon will likely disrupt the market to some extent, long established e-commerce companies in Singapore believe they retain an advantage over the international giant when it comes to market knowledge.
“It might take them a while to adapt to the local landscape,” HyunWook Cho, Singapore country manager for local e-commerce Qoo10, told TODAY.
“With all the available e-commerce options, Singaporean shoppers are becoming very demanding – aside from speed of goods being delivered to their doorstep, they still view product diversification and price, among others, as major factors in their purchasing decision.”
Data sourced from Reuters, TODAY; additional content by WARC staff