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For Singapore retail, a new Amazon challenge
AMAZON, the world's No. 1 online marketplace, is finally here. Singapore shoppers can now buy on Amazon Prime Now, the highly vaunted platform that delivers orders to your doorstep within a hitherto unheard of two hours.
Even as thousands of consumers embrace its arrival, Amazon's presence here would also witness a major shake-up for many retailers big and small.
Working out of its fulfilment centre at the Mapletree Logistics Hub on Toh Guan Road East, Amazon is offering a curated selection of 20,000 products, ranging from groceries to consumer electronics such TVs and music systems, for delivery islandwide within two hours.
Dave Clark, Amazon's SVP Worldwide Operations, told The Business Times that for an initial period of time customers would be able to try the Prime Now service without a Prime membership. For shopping bills of S$40 or more, two-hour delivery anywhere in Singapore will be free and for orders below S$40 there will be a delivery charge of S$5.99. Amazon will also have an option for one-hour delivery with an additional charge of S$9.99. Amazon Prime Now mobile app was released on the Singapore iTunes and Google Play stores on Wednesday.
Interestingly, Singapore is the first country where Amazon is bringing in what it calls "its most innovative" product, Prime Now, before introducing its flagship offering Prime. However one of Amazon's Prime products, Prime Video has already been rolled out in Singapore as part of a global roll-out of the video service to 200 countries worldwide late last year.
"All of our launches to date have been in places where we already have existing businesses but Singapore is an exception. This is the very first time where we have (our first) retail presence in a country with Prime Now. I expect we will roll out more Prime services to Singapore as we move forward," Mr Clark said.
He added that the leased space has been purpose built and the facility is just under 100,000 sq ft and will have around 100 workers - Amazon calls them associates - working there. "It's going to supply over 20,000 unique items."
Amazon launched its Prime Now service for the first time in New York in December 2014. Till now, the service has been rolled out to 45 metropolitan areas around the world. In Asia, Prime Now was first launched in Japan in 2015 with the service available in Tokyo and Osaka. The next year, Prime Now was launched in India with the service being available in four cities - Bangalore, Delhi, Mumbai and Hyderabad. Mr Clark said Amazon has a variety of Prime products, including its Kindle products, video products and its devices business comprising Alexa and Echo. All these would be progressively introduced into Singapore.
He added that as Amazon set about innovating over the past few years "we started looking around at what cities, what geographies represent the best opportunity" to bring that service (Prime Now) to customers.
We looked at Singapore and said "this is a place where there are five million people and it's a great opportunity and it's such an innovative culture and a tech-forward place to be, it seemed like a perfect fit for us", he said. Singapore is a top export destination for Amazon based on items bought on its global websites.
Xiaofeng Wang, a senior analyst at business and advisory firm Forrester, noted that the primary reason Amazon picked Singapore as its first market in South-east Asia was that consumers here are "more westernised and affluent, and many of them are already shopping overseas". She added: "How successful Amazon will be remains to be seen as there are huge challenges and strong competition in the market, especially from Alibaba-owned Lazada."
Mr Clark noted that every marketplace that Amazon operates in "is competitive and Singapore is no exception". "The reality is we have been in the Singapore marketplace for a long time. We sell a lot of products to the people of Singapore...
"We think this is a way to get closer to Singaporean customers. We think that the two-hour and one-hour slots available to customers is a differentiator in speed and gives them (customers) an opportunity to really get things at another level of urgency and speed. We are going to have the best prices and will have a phenomenal selection of goods that we have put together from hundreds of local suppliers along with the access we have to the global supply-chain we operate in all other marketplaces - if you think about Amazon it's always been about selection, low prices and speed. That's what this is all about."
On the competition, Mr Clark said: "We don't spend our time focussing on competitors. We really do believe, and we've seen it globally, that Prime Now is a compelling offering."
He added that everyday products like Tiger Balm and Milo, among others would be available. Customers here would be able to shop on Amazon and get items delivered to their door, "this is something we have not been able to offer on Amazon.com till now", he noted. Mr Clark said, jokingly, that it would also be possible to order chilled beer as well.
"We have been servicing customers for a long time. This is about bringing a new set of specific selections with the fastest speed that we can provide based on our latest and greatest tech and processes, at the same time at really great pricing that customers are used to seeing on Amazon," Mr Clark added.
Forrester's Ms Wang noted that Amazon has a lot of strengths as a well-established and trusted brand. "Their competitive advantage lies in the strength of US products/brands and (electronic) books. Amazon Prime is also an attractive loyalty programme that has worked in the US, but how it localises to meet the needs of customers here will be the key to success. As a major technology player, they can also leverage on technology strengths... to provide a better customer experience," she added.
The company already has a strong presence in Singapore through Amazon Web Services (AWS) with the city-state being a hub for the cloud services company.