Amazon picks on Asean pockets in new growth strategy

Amazon picks on Asean pockets in new growth strategy

August 3, 2017 0 By WFTV

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AMAZON has entered into uncharted territories in Southeast Asian and is now in direct competition with Alibaba, Lazada and other brands that have the advantage of local market knowledge.

Alibaba has dropped its anchor deep in the region with the building of Malaysia’s digital free trade zone (DFTZ).

On top of that, Bloomberg recently reported that it entered into talks with Indonesia’s PT Tokopedia, thus consolidating its expansion into Southeast Asia’s largest economy.

But Amazon is coming with its own advantages, including the promise to deliver orders within a two-hour bracket.

The other advantage that Amazon will have in the long run will be its capacity to build its own warehouses in the countries where demand will be flowing.

It will create jobs that will be linked to the digital sectors of the countries where it will lay its footing, and this will be one of the many ways — not withstanding its army of drones — that will help it conquer this vast marketplace.

The big question is whether it can conquer the region as a whole and dominate in other parts of the Asean region where efficiency is nothing compared to what we have in Singapore?

Slow business elsewhere

Nevertheless, experts are in agreement on what will be the outcome of a bigger push by Amazon in the region: A price war that will benefit customers!

Its existing competitors will be forced to innovate if they want to fight off the threat posed by Amazon, which has been a very successful online brand indeed.

Amazon has contributed largely to the rise of online shopping in the world, but its entry in the region has more to do with their search for a rapid growth market.

The e-tailing giant saw its net profit dip 77% to US$197 million (RM843.16 million) in the second quarter (2Q) — with its international operations losses widening to US$724 million against a loss of US$135 million in the corresponding quarter last year.

Amazon saw its revenues jump close to 25% to US$37.5 billion and the operating income of its North America business fell 38%, while that of Amazon Web Services rose 27%.

Despite widening losses, Amazon is certainly committed to investing in Singapore.

The choice of Singapore as the launch pad for Amazon Prime in the region altogether has more to do with a strategic decision, considering the fact that Singapore is the right place for global e-commerce platforms.

But while online customers in the region can order electronics, toys and sports gear, as well as food and drink from Amazon, the Prime Now service will not initially include other Amazon Prime services.

Hence, there would be no video streaming or Amazon Echo, and no way to purchase books from Southeast Asian authors, the BBC reported.

Nevertheless, Amazon seems to have made the right move, in choosing Singapore with its plans to battle it out against the likes of Lazada and Shopee in Southeast Asia.

Lazada is present in several Southeast Asian nations, including Malaysia, where it is leveraging on the rapid ascension of online shopping among the locals.

With its entry into the region, Amazon is picking the brains of online shoppers in a market of 600 million people that could, by some estimates, be worth US$70 billion according to the BBC.

Prime Now

Asean is definitely a new growth area for global e-commerce giants given the lack of local success stories in this domain.

Amazon Prime Now in Singapore is offering a free two-hour delivery on grocery items, local favourite products and name-brand goods.

Among the local favourites, there are Tiger Balm, Milo, Scotch-Brite and MamyPoko diapers and don’t forget iconic brands such as L’Oreal, Pampers, and Samsung.

Aarif Nakhooda, Director of Prime Now Asia-Pacific, said at the service’s launch that Prime Now is powered by Amazon’s more than 20 years of operational and technological excellence, and hundreds of Singapore’s talented and skilled associates.

The company said it will leverage on data and technology to achieve greater resource efficiency, and near real-time delivery of goods.

For those who are not aware, Prime Now is an exclusive service for members of Amazon Prime, a membership program to launch in Singapore soon with additional benefits to come. (US$1 = RM4.28)