/ Ecommerce

What Amazon’s entrance to Singapore means for Asian retailers

The arrival of e-commerce giant Amazon into Singapore on 27 July should come at no surprise. It represents Amazon’s strategic manoeuvre into the rapidly growing Southeast Asian ecommerce market.

Amazon’s differentiating edge does not need much elaboration. Its cutting-edge computer vision, deep learning algorithms and sensor fusion technology—best exemplified through “just walk out technology” via its Amazon Go store – has changed the core essence of the consumer shopping experience.

Amazon’s recent acquisition of two new patented AR technologies is also likely to revolutionize the future of e-commerce, by presenting customers with home system of sensors, cameras and projectors. This will allow them to effectively “try on” items like clothes and jewellery, thereby reducing the cost on millions spent on customer’s returns. There is no doubt that as far as ecommerce experiences go, Amazon is leading the pack.

What does Amazon’s move mean for Asian retailers and ecommerce players?

A larger pie for everyone with increased ecommerce penetration

While e-commerce and retail players’ may see this as a threat, there may in fact be some benefits to Amazon’s entrance. Ecommerce market penetration is likely to increase as consumers are presented with more choices. At present, ecommerce makes up 5.5%, 6.7% and 8.0% of retail sales in Thailand, Singapore and Indonesia respectively, compared to 14.4% in the US.

While Indonesia is the fastest growing ecommerce market in Southeast Asia, hot on its heels are Thailand and Malaysia. All together, estimates peg the Southeast Asian market at a $88 billion market by 2025.

Amazon’s entrance will educate more consumers about online shopping. With the current trajectory of spending trending upwards, e-commerce and retail players may be able to ride off of Amazon’s coattails.

Battle of the giants: Alibaba vs. Amazon

Amazon’s entrance into Asia marks the beginning of a battle between Amazon and Alibaba Group. Alibaba Group has made a serious foray into Southeast Asia by acquiring stakes in Lazada, Redmart and, more recently, Tokopedia. According to Metisa’s market reports, Lazada, which currently services over 8 million customers, maintains a leading position. It will be interesting to see how the battle play out here.

Above: Southeast Asian ecommerce landscape by web and mobile web visits from Metisa’s Southeast Asia market report. As the new kid on the block, Amazon is poised to disrupt this market.

Amazon’s guarantee of 2-hour delivery, its large product set and its comparably low prices allow it to win over counterparts. While Amazon started as a book retailer, it has since expanded its reach into electronics, toys, apparel, shoes and jewelry. In other words, virtually no sectors will be left untouched -- even a simple audit of “Amazon Best Sellers” list--updated hourly-- appears to cut across all products and verticals.

However, while consumers may gravitate towards buying products online, many still prefer offline experiences, especially when shopping for high-value goods like luxury items and furniture.

How should retailers respond?

So while well-funded ecommerce players duke it out, how should retailers stay competitive and relevant to consumers?

First, retailers should leverage their strength in the offline channel to create a seamless omnichannel experience. Riding off the fact that customers still crave the “look and feel” of a product, even a seamless e-commerce website will not be able to replace a particularly memorable in-person experience with store staff. After all, customers do place a premium on human relationships. Providing offline orders for pickup in store, or increasing customer stickiness through well-executed loyalty programs are additional ways in which retailers can stay top-of-mind.

Second, anticipating consumer needs and improving consumer experience by finding answers in data is also key. For instance, research shows that 49% of shoppers want to check product availability prior to stepping foot in the store. Unfortunately, there is a fundamental misalignment between what customers want and what retailers are providing--as only 28% of retailers currently doing this. In order to bridge this disparity, retailers should invest more in customer analytics infrastructure so that they can ask the right questions to their data.

Third, increasing the effectiveness of online-to-offline or offline-to-online strategies (O2O) can help retailers gain an edge. By targeting customers in the online space via email, SMS and online marketing, and giving them a reason to visit their stores, retailers can maintain home-ground advantage. Likewise, allowing consumers to touch and feel products at a store and complete the purchase at the comfort of their own home will remain a critical part of a buying journey.


After setting up shop in Singapore, Amazon is likely to push out to the rest of Southeast Asia. Nevertheless, retailers who can marry their strengths in the offline space with the online arena maintain their competitive edge. Those who level up by embracing digital transformation as well as improving consumer experience through O2O strategies and personalized experiences will undoubtedly be rewarded.

Justin Yek

Justin Yek

Partner & Cofounder @ Altitude Labs. Responsible for our in-house personalization technology Metisa.

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