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Amazon Singapore sees growth backed by logistics capacity

It's expanding its warehouse space at Mapletree Logistics Hub and is on a hiring spree

Mr Low says the Singapore outfit has added one fulfilment centre in an unspecified location to meet demand, on top of the existing facility at Mapletree Logistics Hub in Toh Guan.


AMAZON is able to support its ramp-up of Singapore retail operations, country manager Henry Low told The Business Times, citing "a very long-term view of investments" in areas such as logistics infrastructure.

"It's super early days, and we will grow as fast as required," he said, noting that "we have been on a learning journey since we launched Prime Now" two years ago as well.

While tight-lipped about the e-commerce giant's footprint and growth here, he confirmed that Amazon Singapore has expanded its warehouse space and is on a hiring spree.

The company has also not been shy about tapping third-party sellers on its platform for growth, a global strategy that Mr Low reaffirmed.

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Amazon last week rolled out an website that gives shoppers here access to a wider international selection of products, after introducing the two-hour Prime Now delivery service here in July 2017.

Amazon Singapore has said that will put "millions of products" from around the world at customers' fingertips, against mere tens of thousands of items before.

Not all of those goods are housed here - Amazon has more than 175 "fulfilment centres", in company parlance, worldwide - but Mr Low divulged that the Singapore outfit has added one centre in an unspecified location to meet demand.

That is on top of the Prime Now facility at Mapletree Logistics Hub in Toh Guan, where Amazon Singapore first took 100,000 square feet - about 15 per cent of the six-storey ramp-up warehouse's net lettable area.

Mr Low said that the company has since upped the space occupied, although neither Amazon Singapore nor Mapletree Logistics Trust would disclose the floor area being leased.

Also crucial to Amazon's global growth have been the independent third-party sellers who use its website as a marketplace and can opt to have the goods shipped by Amazon.

With these vendors' sales making up 58 per cent of merchandise sales last year - against a 30 per cent share in 2008 - chief executive Jeff Bezos told shareholders in a letter that they "are kicking our first-party butt. Badly".

Yet, Amazon announced in August that it would invest US$15 billion this year in supporting third-party vendors with measures such as advice on what to stock, and dedicated storing and shipping for their wares.

Mr Low would not say how much of Amazon Singapore's inventory is from third-party sellers, but noted that it has brought in both local brands and "very good sellers who have had a very good track record of selling in other Amazon markets".

"We have also learnt that the conversion of sales works really well when customers are able to see the quality of the products, but tied with the reliability of delivery," he added.

"My hope is that we have all lines of businesses continuing to grow."

Mr Low sought to dispel any doubt from a chaotic Prime Now launch in 2017, when order volumes outstripped resources on tap and forced Amazon Singapore to turn to private-hire and taxi drivers for deliveries.

"We have worked with our delivery partners to be able to secure the capacity. I've worked with our labour providers... and my fulfilment team has worked really hard to make sure that we have the capacity to grow."

It was a conscious decision to enter the market with an ultra-fast delivery service like Prime Now, rather than the full platform - a first for the group - because of Singapore's urban structure, connectivity and comfort with online shopping, Mr Low added.

Another potential concern that he skirted around was the question of Singapore's tight labour market.

The Economic Development Board said in 2017 that "Amazon will create hundreds of good jobs" over three years, though Mr Low would not share the standing headcount or hiring targets.

Still, Amazon Singapore lists more than 260 vacancies on its website, including for a head of marketing and Prime - a new job first advertised in April. Asked why was launched with this position empty, Mr Low said: "We will constantly have roles open, and we have teams that we can rely on from around the world."

Meanwhile, Amazon's international retail businesses' operating losses narrowed last year to US$2.14 billion from US$3.06 billion the year prior on the back of higher sales, including from third parties, but Amazon Asia-Pacific Holdings - the Singapore unit that manages Prime Now - was not spared the red ledger.

The indirect wholly-owned subsidiary reported S$63.3 million in retail sales last year, according to audited financial statements and reported an overall net loss of S$25.1 million on revenue of S$115.8 million.

Calling the timeline to profitability "not something that we would project", Mr Low said that his priority is to invest in the infrastructure for growth and to create new products and features for customers. "We are not in it to buy market share, but it is important that we are here building a sustainable long-term business."

On acquisition and investment prospects in Singapore, he said that "there are a variety of papers in various stages of maturity", although he declined to comment on speculation and dodged reports that Amazon was in talks to take a stake in Indonesian ride-hailing firm Gojek.

With Amazon executives using mock press releases as the first step to asking for investment in pet projects, "let's just say there are a lot of 'press releases' being written, as many of us are pitching internally for new businesses", Mr Low said.

Shoppers chalked up S$3.6 billion in retail sales in August, according to the latest Department of Statistics data, with about 5.5 per cent coming from online transactions.

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