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Friend or Foe? Amazon Launches First Southeast Asian Market in Singapore

A new challenger enters the e-commerce arena of Southeast Asia, and it’s not one to be trifled with

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BY Jared Carl Millan - 27 Jul 2017

Amazon Southeast Asia

PHOTO CREDIT: Getty Images

The news of Amazon launching its first Southeast Asian market in Singapore has been much anticipated since its announcement last year, prompting other regional, more established competitors to step up their game.

And step up their game, they did.

Last November, Lazada, Southeast Asia’s leading online shopping and selling platform, acquired RedMart, Singapore’s pioneer e-grocer. “This partnership will help us to increase the scale at which we are able to deliver our mission to save our customers time and money for the important things in life,” says co-founder and CEO of RedMart, Roger Egan, in a press release. “We are partnering with Lazada to serve our customers better.”

Maximilian Bittner, CEO of Lazada Group, adds, “As part of our growth strategy, we are always looking for ways to serve our customers better by adding new product categories and improving our service offering. RedMart’s strong management team and their relentless focus on putting the customer first has resulted in customers loving them in Singapore.”

Just recently, Alibaba also invested a billion dollars in Lazada to strengthen its presence in Southeast Asia, extending its reach into the markets of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

In a statement, Daniel Zhang, Alibaba Group’s CEO says, “The e-commerce markets in the region are still relatively untapped, and we see a very positive upward trajectory ahead of us. We will continue to put our resources to work in Southeast Asia through Lazada to capture these growth opportunities.”

But with Amazon’s foray into the same arena, the question remains: how will it change the Southeast Asian e-commerce landscape?

For consumers in the region with an ever-expanding middle class, this is good news. In an Inc. Southeast Asia interview, Paul Ong of Innoven Capital says, “Connected consumers now have endless choice, and the power and accessibility to data and information to help them make decisions…I think there is huge room for growth of the Internet consumer in Southeast Asia, and e-commerce will play a big role in that.”

There’s very little doubt that Amazon’s entry into the SEA market will shake things up, especially for other e-commerce start-ups in the region, as Shannon Kalayanamitr, founder and former CMO of female-focused e-commerce site Orami, suggests.

She says this move will specifically affect players that are heavily focused on using promotions and discounts as their customer acquisition strategy.

“In a world of competitive prices and commodities on a platform…players will need to rethink their strategy to have a larger vision on how they can build an ecosystem to keep customer loyalty and provide real value to customers to retain market share,” Kalayanamitr says.

For Arvi Lopez, head of branding and public relations at ALTUS Digital Capital and formerly the head of PR for Lazada, “As Amazon enters Southeast Asia via Amazon Prime Now, it will have direct impact on Singapore's e-commerce landscape and indirect impact regionally, especially with the mechanics and perks that Amazon offers to its new segment of shoppers. As it is, Amazon is not only increasing the e-commerce bandwidth but also changing the way people live.”

Lopez adds, “[Amazon] will need to be prepared to handle logistics especially in islands and archipelagos, embracing the cash-is-king culture across the region, and socio-political diversity across the region. A certain level of excellence is expected of Amazon, and everyone in the region is watching.”

But Ankiti Bose, co-founder and CEO of fashion marketplace Zilingo, is particularly excited about this development. “Since we are a fashion marketplace and Amazon is a giant that sells everything, and sells it really well, we think two things will happen: 1.) the delivery and payments infrastructure in the region will develop, further helping all sorts of online businesses, and 2.) only quality companies that are building a strong proposition will survive.”

She believes the region will have one or two winners in horizontal e-commerce, as well as market leaders in each vertical like fashion, grocery, and transportation. “A lot of me-too companies will die unless there is clarity of purpose. And that’s great for our ecosystem,” Bose says.

Perhaps the best person to look to for insights on the matter is Jack Ma himself, who expressed that he has trouble with Alibaba being compared to Amazon in the first place.

At the World Economic Forum, speaking with CNBC anchor and New York Times columnist Andrew Ross Sorkin, Ma says that the difference between Alibaba and Amazon is the core principle that fuels their operations.

“Our philosophy is that we want to be an ecosystem,” Ma says. “Our philosophy is to empower others to sell, empower others to service, making sure the other people are more powerful than us…Our philosophy is, [by] using Internet technology, we can make every company become Amazon.”

 

*With reporting from Marishka M. Cabrera and Tricia V. Morente