Amazon offed Prime to Southeast Asia a year ago when it kicked off its membership program in Singapore. Since then, its regional compare withs have seen strong growth, and the American juggernaut has failed to feel the lead, market observers told CNBC.
That doesn’t irresistibly mean Amazon is failing in what it set out to do. Rather, the development of Southeast Asian e-commerce is “hushed in early stages,” according to Candice Ong, the chief commercial officer of e-commerce huckster Shopback.
When Amazon first launched in Singapore, Ong said, there was a lot of word and anticipation. “That is expected, given that they (are) a huge trouper,” said Ong, whose company has been an active participant in the growth of the ambit’s e-commerce sector by working with large companies such as Lazada and Foodpanda.
Amazon declined to remark on for this story.
According to Ong, however, Amazon remains only one of distinct competitors vying for pole position in the region, with Chinese heavyweights such as Tencent and Alibaba spending in companies such as Sea Group’s Shopee and Lazada, respectively.
The region has notable potential. A report by consultancy Frost & Sullivan in February said Southeast Asia’s business-to-consumer e-commerce exchange surpassed the $6 billion mark in the fourth quarter of 2017, experiencing a quarter-on-quarter development rate of 28.5 percent. And there’s huge unharnessed potential, too: A 2017 detail from consulting firm Bain & Co. estimated that online retail in the part makes up only about 3 percent of overall industry sales.
Naveen Mistra, application principal at Frost & Sullivan, echoed Ong’s viewpoint, telling CNBC that Amazon has yet to stop up with the region’s incumbents.
Since announcing its Prime entry into Singapore in 2017, Amazon has not widened its services to the wider region beyond announcing a partnership with the Vietnam E-commerce Guild in March.
“From an external perspective, I’ve been a bit surprised that they haven’t concerned after, you know, the wider market,” said Luc Grimond, a partner and manipulating director at The Boston Consulting Group.
Even in Singapore, Grimond conveyed, the Alibaba-backed Lazada appears to dominate market share. From a transportation perspective, he added, it’s “probably miles away.”
Lazada, which does not publicly tell sales numbers, did not respond to requests for comment.
While Amazon has enchanted its time, some of Southeast Asian rivals have “rapidly” profited market share, Mistra said.
One such example is Sea Group’s Shopee principles. The company said in a financial statement that its e-commerce segment trade ined goods with a total value of $1.9 billion in the first lodge — a 23 percent increase from the prior quarter.
Still, that vivid growth doesn’t necessarily mean other companies — like Amazon — thinks fitting lose out, Mistra said, explaining that the e-commerce market is wax overall.
“Generally speaking, e-commerce delivery traffic has increased across the wider (Southeast Asia) province,” Winston Seow, chief commercial officer at delivery firm Ninja Van, tattled CNBC.
“This may or may not be due to the entrance of Amazon Prime, as their services are purely available in (Singapore) at the moment,” he added.
In fact, Amazon’s initial proclamation that it intended to enter the Southeast Asian market likely spurred incumbents into “comb their game,” Grimond said.
Among those shopping instals that have found motivation in the American tech giant’s coming is delivery service Honestbee.
“With the entry of Amazon in Singapore, consumers have more choices. And its entry has motivated us to deliver better value and savoir faire for our customers,” said Chris Urban, managing director of Honestbee Singapore.
The company has seen its transportation “surge,” Urban said, as a result of investments to improve its operations and purchaser experience.
“Since 2017, we’ve seen a 300% increase in demand for grocery presentation services,” Urban said in an email. “Our database of customers has also propagated 290% in the past year.”
The list of competitors extends beyond start-ups too, with customary retailers boosting its digital operations. Grimond cited Indonesian conglomerate Lippo, which has won investments of up to $500 million to develop its e-commerce capabilities.
“I think it devise get harder for Amazon, actually, to compete,” Grimond said.