Amazon to establish Singapore presence in Q1 2017

REUTERS/Rick Wilking/Files

Amazon is ready to enlarge its presence in Asia through Singapore, following reports earlier this year that it planned to establish itself in the Indonesian market with a war chest estimated at $600 million.

This year, Amazon has already invested heavily into its India unit and has also been building its business operations in China in preparation for competing with Alibaba Group. It has also partnered with Baidu to leverage on its search capabilities and power the Kindle within China.

According to a TechCrunch report, which cited sources familiar with the matter, Amazon has been covertly acquiring various assets and making new hires, with operations in Southeast Asia to be headed by Steven Scrive.

While not currently offering local services in Southeast Asia, it is reported to be planing the launch of select services within Singapore in Q1 2017. This is at a time when the regions’ digital economy is set to undergo a period of significant growth over the next few years, coupled with a population estimated at 600 million and with four countries whose GDPs’ are predicted to exceed $1 trillion by 2030 – Malaysia, Indonesia, Philippines and Thailand.

Currently, online consumption accounted for less than 5 per cent of all commerce in the region but with increasing smartphone proliferation and Internet connectivity, this is expected to change.

Recently, Alibaba’s digital payment service Alipay has entered the region through a strategic investment in Ascend Money, backed the acquisition of online grocer RedMart through Lazada Group and increased its stake in Singapore-based Singpost and Quantium Solutions.

Much like Alibaba Group, the focus on Singapore is aimed at leveraging on the city-state’s business and logistics infrastructure to establish a regional headquarters, as well as capitalising on its small size to developing business operating systems, as its small size makes servicing it easier from an operational perspective. Additionally, its level of customer spend and consumer culture is more closely aligned with Western markets.

By comparison, even with the advent of the ASEAN Economic Community, Southeast Asia represents a fragmented regional market where different jurisdictions have different regulations, economic contexts’ and developmental levels, as well as differing levels of logistics infrastructure development.

This will see the city-state serve as a gateway and general regional hub, which is also enhanced by its network of FTAs with major markets like China, India, Japan, Australia and the US, as well as other countries.

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