Taking on Alibaba, Amazon launches Prime Now in Singapore

World
Europe

Amazon launched its two-hour delivery service in Singapore on Thursday, marking the e-commerce giant's biggest push into Southeast Asia and its first head-on battle with Chinese rival, Alibaba Group Holding.

While Amazon already delivered to Singapore, higher-end services had not been available, including Prime subscriptions which provide access to the company's video-streaming service. The Prime Now Singapore app promises to deliver everything from Tiger Balm ointment to eggs, hammer drills and Pampers nappies within two hours.

In Asia, Amazon has largely sidestepped China and focused on India, where it is the number-two player behind local rival Flipkart. But its arrival in Singapore, a tiny but wealthy city state of just over five million people, has been hotly anticipated as a gateway to a Southeast Asian region of 600 million, where currently only a fraction of sales are conducted online.

Amazon launched its two-hour delivery service in Singapore on Thursday. /Reuters Photo

Industry executives, meanwhile, are preparing for a battle of titans in Singapore and beyond.

Alibaba owns Southeast Asia-focused Lazada, and spent an extra one billion US dollars to boost its stake to 83 percent last month.

Ahead of Amazon's arrival, it launched subscription-based customer loyalty program LiveUp in Singapore in April, a venture which includes ride-hailing app Uber, streaming service Netflix and local online grocer Redmart, which it owns.

"Singapore will be a test bed," said Ajay Sunder, vice president of digital transformation at Frost and Sullivan. "I would give Amazon another two quarters, they should be rolling out soon in Southeast Asia, at least the major cities."

Amazon's campus in Singapore. /Reuters Photo

Frost forecasts online product sales in Southeast Asia to grow to 71 billion US dollars by 2021 from 16 billion US dollars in 2016.

Home Advantage?

Since launching five years ago, Lazada has expanded into six markets in Southeast Asia: Singapore, Malaysia, Indonesia, the Philippines, Thailand and Vietnam. Amazon has yet to detail its plans for the wider region and a spokeswoman declined to comment.

Besides financial support, Alibaba's investment has boosted Lazada's range of merchants and improved its logistics. Lazada and Alibaba could already be ahead, said Xiaofeng Wang, a senior analyst at research firm Forrester, with their longer experience of local customers, and with logistics and vendor systems.

Amazon, though, has deep pockets, technological nous and an inventory of US products, she added.

Amazon plans to tie up with third-party providers in Singapore to tackle last-mile logistics. /Reuters Photo

But while Southeast Asia may be the last big battleground for e-commerce in Asia, it is not easy: there are regulatory differences, language barriers and logistical hurdles like the huge number of islands that make up the Philippines, or Jakarta's paralyzing traffic. Internet connections can be slow or non-existent, and in many places card payments are rare.

In Singapore, Amazon said it plans to tie up with third-party providers to tackle last-mile logistics, but gave no details on partners. Lazada has also used third-party providers and developed its own logistics and warehouses.

The market is also fragmented, with several local players including Indonesia's Tokopedia, in which a source has said Alibaba rival, Chinese e-commerce group JD.com Inc., is considering an investment.

(Source: Reuters)