The report comes on the heels of Lazada’s move to bring in Taobao.
Amazon has decided to postpone its Q1 foray into Singapore and the Southeast Asian market for the time being, pushing it to “later this year.” After the buzz that was built up over the last few months, the e-commerce giant has chosen to channel its resources into its Australian launch, according to sources at TechCrunch. The report comes on the heels of Lazada’s move to bring Taobao, Alibaba’s rival to Amazon’s online marketplace, to Singapore.
Amazon’s supposed local launch was surrounded by reports of the company’s move to procure warehouses and hire staff – but these plans are likely to slow to a crawl for the time being. Although Singapore remains in Amazon’s sights, with the country’s high rate of credit card ownership and wide internet penetration remaining attractive, it seems that the company has been facing troubles with setting up groundwork.
Tough Southeast Asian Market
While Southeast Asian remains a lucrative and growing region for companies, a region that is estimated to be worth US$5.4 billion by 2025 and boasts 600 million potential consumers, some have advised caution for these companies. A 2016 Bain & Company report said that the online market in Southeast Asia is “rapidly approaching a tipping point.” Moreover, many nations in the region are still developing countries, plagued with poor infrastructure and an inefficient logistical network, which makes entrance into the region much more challenging.
It could also be said that their postponement of launch plans might be, in part, due to the highly competitive nature of e-commerce in the region. Established online retailers, like Lazada and Rakuten, have been encountering difficulties of their own. Lazada was recently given a lifeline to the tune of US$1 billion by Alibaba, after nearly running out of capital to keep themselves afloat, while the Japanese-based Rakuten shuttered its efforts in the region in early 2016.
Amazon Going Strong With Australia
Things in Australia, however, seem to be headed a different way. Amazon’s Australian Twitter account recently teased that a launch is imminent. Reports from ABC News backed up the teaser, saying that Amazon has hired a 100-strong team to head things off in Sydney. Experts are predicting that the e-commerce giant’s entry into the Australian market will be a disruptive force, one that could cause huge retail chains like Myer to lose up to half of its potential earnings by 2022, according to a Credit Suisse scenario analysis.
Amazon’s decision to delay its Singapore launch sets up a precedent for Alibaba to swoop in and take the lion’s share of the local market. The Amazon and Alibaba rivalry is nothing new to the e-commerce world – Alibaba has entered Amazon’s home market of the United States, and likewise has Amazon in China. The two, however, are still currently battling it out in the Indian subcontinent, where Amazon has invested US$3 billion, for the region’s $287 billion e-commerce market.
Regardless of Amazon’s timeline for entering the region, ultimately, it is the consumer that ends up the victor as companies are likely to lower prices to remain competitive, a fact we’ve seen with the ensuing Grab vs. Uber battle. And it’s not to say that we will remain Amazon-less, as the company’s Amazon Prime Video service has already entered the country to tackle Netflix’s dominance.
