Amazon Enters Singapore With a Pitch to Big Spenders
July 26 2017 - 10:19PM
Dow Jones News
By Laura Stevens and Liza Lin
Amazon.com Inc. is launching in Singapore with a twist: It is
targeting loyal, time-strapped shoppers by starting with its more
limited one- and two-hour subscription delivery option.
The new approach, contrary to its usual online retail offering
to the masses, could prove a tactic for entering new markets and
attracting high-income shoppers where the U.S. e-commerce firm
doesn't yet operate.
For the first time, the Seattle-based retailer is tackling a new
country by initially offering Prime Now, its fast-delivery option
that offers a smaller selection of food, necessities and gifts.
Amazon later plans to introduce Prime membership, which consumers
pay a monthly or annual fee to use. Prime Now is usually offered as
an add-on to Prime.
"In Singapore, the fact that we don't have a classic, local
dot-com offering, that's been really interesting, to think about
how that's going to work for customers," said Stephenie Landry,
vice president of Prime Now. "We're thinking up new solutions that
are required for places where we don't have such a well-worn path
established yet."
Amazon has been pushing into a number of new foreign markets,
most recently Australia, as it works to maintain its growth in both
sales and Prime members.
Prime customers spend double their non-Prime counterparts,
according to UBS analyst estimates. Amazon has about 63 million
Prime members in North America, UBS estimates, nearly twice the
number abroad, leading to expectations of larger gains in
membership internationally.
While Amazon has a presence in Japan, China and India, Singapore
is its first major foray into a smaller Asian country. The
city-state of about 5.6 million people has high average income
levels, a business-friendly government and an urban environment
that allows for straightforward and easier deliveries, said Florian
Hoppe, a partner at Bain & Co.
"There aren't many cities with such concentrated purchasing
power in Southeast Asia," said Mr. Hoppe. "It's a good way to dip
your toes into the region."
Many of the consumers are affluent and already shop overseas,
said Xiaofeng Wang, a senior analyst at Forrester.
Singapore consumers buy on Amazon's Japanese, European and U.S.
websites for import goods, Ms. Landry said, purchases that are
informing the Prime Now offering. The country's heavy mobile usage
makes it a good candidate for shopping on the Prime Now app.
But the market could still prove tough to crack. Stores with
food and necessities are often just a short walk downstairs. And
popular local online players such as Alibaba Group Holdings-backed
Lazada Group and eBay.com Inc.-backed website Qoo10 already sell
everything from smartphones to facial creams.
Alibaba said in June it is plowing an additional $1 billion into
Lazada, which operates online stores for international brands and
merchants in six countries in Southeast Asia.
In addition, Amazon will have to create new methods to ship in
merchandise to restock its Prime Now warehouse rather than relying
on an existing Amazon supply chain and logistics network because it
is starting from scratch.
Prime Now, which has been around for nearly three years, is now
in nine countries. In Singapore, one-hour deliveries will cost 9.99
Singapore dollars (about $7.30). If customers spend a minimum of 40
Singapore dollars, two-hour shipping will be free.
Until the introduction of Prime membership, it will be open to
any Singapore resident, and the company will offer local brands
such as Tiger Balm herbal ointments and foreign labels such as
L'Oreal, Pampers and Samsung, Ms. Landry said. It will also sell
items like board games, baby strollers and groceries.
"We're trying to get this really unique set of selection, all in
one place," Ms. Landry said. "That obviously creates logistical
challenges."
Write to Laura Stevens at laura.stevens@wsj.com and Liza Lin at
Liza.Lin@wsj.com
(END) Dow Jones Newswires
July 26, 2017 22:04 ET (02:04 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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