Amazon launched its express delivery service in Singapore on Thursday, the U.S. online retail giant's first foray into Southeast Asia and a move that puts it in direct competition with China's Alibaba. Prime Now allows online shoppers in the affluent city-state of 5 million people to order a wide range of goods from baby products to food, electronic items and beer. It marks Amazon's entry into a region of more than 600 million people, where many countries have a growing middle class, and which is seen as the next e-commerce battleground.
"Amazon's entry augurs well for shoppers in the region who will benefit from more choice, price competition and better delivery services," said Prem Shamdasani, an associate professor for marketing at the National University of Singapore Business School. Alibaba already has a head start in the region with an 83 percent stake in Southeast Asia-focused online retailer Lazada. The Chinese firm, founded by China's richest man, Jack Ma, raised its stake in Lazada last month with a further $1 billion investment. The Prime Now application was made available for download in Singapore on Google's Play store and Apple's iTunes. By just entering their postal zip code after opening the app on their devices, online shoppers can start placing their orders. The service promises delivery of items within two hours. Business consultancy Frost & Sullivan projects online retail sales in Southeast Asia to more than quadruple to $71 billion by 2021 from $16 billion in 2016. The e-commerce sector made up 4.1 percent of the total retail market for the region last year but this share is set to rise to 11.5 percent by 2021, the consultancy said. But Shamdasani warned that it could be difficult market. Southeast Asia includes relatively wealthy countries such as Singapore, but also developing nations with poor infrastructure where it is harder to do business.
"While e-commerce is set to grow the market in Southeast Asia is relatively small and fragmented with narrow margins," he said.
He said Amazon will "face increasing competition from many established store retailers who are embracing e-commerce and providing their customers with seamless omni-channel shopping experiences." Mei Lee Quah, an analyst for telecoms and payments strategy at business consultancy Frost & Sullivan, said that while Amazon and Alibaba are rivals, their product offers are also complementary. "Their offerings will be slightly different because they [Amazon] bring products in the form of US inventory," Quah told Agence France-Presse (AFP).
"Lazada plays in a slightly different field. They are also of quality but the range is different, it caters more for the overall Asian market," she added.
