Enter Amazon Prime Singapore: A threat to the local players?
It’s been quite a wait for Singaporeans. We look at the entry of the e-commerce behemoth, Amazon Prime Singapore, and its implications on the already weakening local retail industry:
Amazon launched its Prime Now service in Singapore on 27 July, signifying the giant’s first foray into the Southeast Asian market. Prime Now will allow Singaporeans to place orders from a specific catalogue for expedited delivery on a variety of items.
The list includes (at launch there were 20, 000 items) beer, beverages, milk, eggs, fresh produce, dried goods, consumer electronics, toys as well as baby products. The service is free to use without any subscription and orders can be made through the Amazon app, available on both Android and iOS.
Entering a new market is never easy. Industry analysts believe that the company will need to pivot its business model considerably to compete locally. Yes, it does have deep pockets with seemingly insurmountable amounts of funds from its base in the U.S but that on its own doesn’t guarantee success.
During Amazon Singapore’s first few days in operation, the company faced over orders that they struggled to cope with adequately.
The company had to engage the help of taxis as well as freelance drivers to cope with demand. This practice is not sustainable in the long run. Uber and Grab, for example, charge rather high fees in comparison to delivery drivers. On top of that, Amazon announced on its website a few hours after launch that they were unable to take orders. This was presumably due to the above-mentioned delivery issues.
The latest entry into the ecommerce sphere is one that promises to cause a shake-up in the local market. There is no doubt that it will create competition with bricks and mortar establishments as well as other online competitors. That being said, they will get a run for their money with local online platforms also aggressively scaling their businesses.
On the local front, Amazon Singapore’s direct competitor seems to be a name familiar to many – Alibaba. The company recently injected US$1 billion into e-commerce company Lazada, which bought it an 83 per cent stake. Lazada, in turn, recently acquired RedMart. The hugely popular Singapore based online grocery marketplace offering competitive prices on a wide range of groceries and household essentials.
The fact that Amazon Prime Now has only been around in Singapore for a few weeks makes it a hard call on how successful and viable it will be as a competitor for market share. Its success will determine how rapidly it introduces its Amazon and Amazon Prime (annual subscription based) services to attempt to gain dominance in the overall ecommerce landscape here.