News Article

Singapore shoppers snub Amazon as Alibaba strides forward

Amazon launches first store in Singapore in October

Following the opening in October of its first online store in Singapore, Amazon appears to lag its China-backed competitors in Southeast Asia.

The U.S. e-commerce giant places a distant 12th behind more proven competitors, including Alibaba-owned Lazada, Qoo10 and Shopee when it comes to unique visits to its shopping site, more than two years since Amazon joined the area by having its members-only Prime service available for citizens of Singapore.

“Our approach is’ shoppertainment,'” told the Nikkei Asian Review James Chang, CEO of Lazada Singapore, the top online retailer in the country. According to information from the iPrice Group, Lazada receives about 7.8 million monthly visits to its website, relative to less than 300,000 for Amazon.

Like Amazon, which allows people to buy as soon as they can, Chang said Lazada wants to make it more fun on its website, allowing customers to spend more time. “I would say there’s a difference in terms of the philosophy of the shopping,” he said.

Amazon announced its first drop in income since last week’s 2017. The net profit declined 26 per cent from last year’s third quarter to $2.1 billion, due to higher investment costs for logistics. The company spent on expanding its footprint across Southeast Asia. Last month, it sent a group to Vietnam to help local traders sell through the global marketplace of Amazon, amid reports that the firm is in negotiations to buy a share in Indonesian ride-hailer turned mega app, Gojek.

With 360 million Internet users in the region, 90 per cent of whom are connected via their mobile phones this year’s online economy in Southeast Asia hit $100 billion for the first time, according to a report published earlier this month by Google, Bain & Co. management consultancy, and Temasek, Singapore’s state investment firm.

The report forecasts the region’s internet economy will triple to $300 billion by 2025, as e-commerce and ride-hailing “continue to beat the most optimistic predictions.” Supporting Lazada’s’ shoppertainment’ strategy, the report found that as far as Southeast Asia is concerned, time spent on mobile apps is directly correlated with revenue for online retailers and ride-hailers, whereas in developed maritime retailers

It has worked to keep users on the site in addition to already waiving fees to sellers: it provides sports, quizzes and live streaming content to support a demographic that is investing more and more time on mobile devices.

“We built the Shopee interface to be highly immersive and interactive by developing in-app live chats, games and social features in our country,” said Zhou Junjie, Chief Commercial Officer at Shopee. “Consumers want a mobile-centric and highly interactive shopping experience,” he said.

With more than 95% of its orders coming from mobile users, Shopee, which has grown in popularity since its launch in 2015, bets that it can not only keep users online longer by enhancing in-app experiences, but also keep them back.

While Amazon has been slow to catch on, it’s too early to write off the world’s largest e-commerce marketplace in Singapore or the region, Boston Consulting Group partner Aparna Bharadwaj said.

“Amazon will also benefit from Singapore’s lower entry barriers for global e-commerce players compared to the rest of Southeast Asia,” Bharadwaj said, adding that businesses need to spend less in logistics in Singapore compared to neighbouring countries like Indonesia with less developed infrastructure.

Bharadwaj said the deep pockets of Amazon would also help it overcome problems such as traffic jams and low penetration of credit cards, key factors in increasing market share across Southeast Asia.

Gervasius Samosir, a partner at YCP Solidiance, an Asia-focused consultancy, added that the natural advantages of Amazon, such as “ability to provide more international selection from trusted sellers, paired with fast and reliable delivery,” will also boost the company’s prospects in Singapore.

To win a significant presence in Southeast Asia, Amazon “will establish a distinct approach and operate locally” Samosir said.

Lazada, which primarily uses an “Alibaba approach”— where the firm does not own the stock of retailers— still claims that the involvement of Amazon is going to be suitable for sales.

“Having more competition, especially players like Amazon, which is a huge organization— it helps us to stimulate the market,” Lazada’s Chang said.

Lazada has also increased its range of fresh foods after the purchase of digital retailer RedMart in 2016. Lazada introduced RedMart into its online platform earlier this year, allowing shoppers to buy items from RedMart.

CIMB Bank - Best exchange rate SG > MY

Login to your account below

Fill the forms bellow to register

Retrieve your password

Please enter your username or email address to reset your password.