Here are the headlines you should know today.

1. Amazon to collect sales tax nationwide in the US in April 

Amazon will begin collecting sales taxes from all states with a sales tax as of April 1, 2017. Amazon won’t collect sales tax in Alaska, Delaware, Oregon, Montana and New Hampshire. Those states do not have a state sales tax.

Collecting sales tax on online purchases has been a controversial subject for years. Companies which make sales over the internet are still subject to the same sales tax collection requirements as offline stores.

Read the rest of the story here.

 

2. B2B/G ecommerce platform Mbiz raises Series A

The company has closed its Series A round, led by Japanese leasing company Tokyo Century Corporation (TCC). Though the exact number was undisclosed, co-founder Ryn Hermawan said that it has put the company’s valuation to $75 million.

Backed by Indonesian conglomerate Lippo Group, the launch of Mbiz followed the earlier launch of MatahariMall, the group’s B2C marketplace.

Mbiz itself is an e-procurement and e-catalogue platform which aims at blue chip companies as its main target market. Its purpose is to simplify the procurement process for businesses.

Read the rest of the story here.

 

3. Indonesia’s Bukalapak will hopefully be profitable by the end of 2017

Bukalapak, Indonesia’s third largest player in the marketplace landscape hopes to become profitable by the end of this year.

Bukalapak is among the larger C2C ecommerce platforms that focuses on helping small and medium enterprise go online. The company was rumored to be gearing up for an IPO back in 2016, it remains a long time goal.

Read the rest of the story here.

Sitting comfy where I fit.

A few days back, TechCrunch broke news that sources claimed Amazon would be delaying its highly anticipated Q1 entry into the fast-growing Southeast Asian ecommerce market. Unclear who these ‘sources’ may be, the lack of any substantial evidence that the ecommerce giant is entering Singapore points to the case that it probably will never happen.

Plans of entry into Singapore have never made sense if you take a look at Amazon’s past and present market strategy, as I do here.

Conventional versus Guerilla Warfare

Like the giant in David and Goliath, Amazon performs best in wide-open “terrains” where the juggernaut can accumulate and leverage its scale advantages. Look at the markets where Amazon is currently dominating the competition: US, Japan, UK, Germany, France and increasingly India.

Amazon SingaporeAmazon entering Southeast Asia is comparable to the Americans fighting the Vietnam war. They’ll be battling an enemy that’s scattered across countries, often divided by water and much better equipped at playing the local game. Drop a few Amazon executives from Seattle into the jungle called Jakarta to navigate “Prime” logistics in the city’s legendary traffic and they might beg to go home.

Just look at Europe, which, despite the European Union, is still a loose collection of individual countries. Amazon’s tour-de-force in Europe has whittled down to three major markets — UK, Germany and France.

China seems like the exception — an enormous single market similar to the US — yet Amazon’s market share tanked from 15% in 2008 to less than 2% today. Decision-making was centralized in the US, which slowed down its operations in China and couldn’t outcompete the hungrier competition.

In the end, Amazon China was no match for Alibaba’s Jack Ma and JD’s Liu Qiangdong, leaving them no choice but to throw in the towel and set up shop on Tmall instead in 2015.

In the Middle East, Amazon is currently entangled in a bidding war with UAE magnate Mohamed Alabbar to acquire Souq.com. Souq operates across the Gulf Cooperation Council (GCC) countries, all connected by land and no custom duties between them. This provides Amazon access to 50 million people sharing the same language and culture and fits with its strategy of going after large single markets.

Singapore is not operation D-Day for Amazon

Amazon’s rumored entrance into Southeast Asia has specifically focused around setting up in Singapore first, arguably the most mature, albeit smallest, ecommerce market in the region.

Prior to Lazada snapping up Redmart for $30-40 million, there were talks of Amazon trying to buy Redmart as a way to jumpstart its Singapore operations.

But Amazon setting up local retail operations in Singapore doesn’t make any sense. Singaporeans, due to their country’s GST relief and efficient global logistics, are already ordering from Amazon en masse.

Amazon and Singpost are driving improvements in global cross-border logistics, to enable delivery of packages from US to Singapore within 3 days with priority shipping. That’s the average time for local domestic deliveries inside Indonesia. Expect even faster deliveries in the future when Amazon successfully expand its own fleet of planes.

Custom dutiesPerhaps Singapore could serve as a distribution hub to expand into the rest of Southeast Asia? Also, probably not the case. There are good reasons why Jack Ma decided to set up his new Southeast Asia hub in Malaysia’s new ‘Digital Free Trade Zone’ and not in Singapore:

  • Malaysia is connected to Thailand via land that gives it access to Cambodia, Myanmar, Vietnam, etc.
  • Malaysia is as close to Indonesia, Alibaba/Lazada’s biggest market in Southeast Asia, as Singapore is.
  • Malaysia itself is a much bigger ecommerce market than Singapore – 30M vs 5.5M population.
  • Malaysia has a much bigger overseas Chinese community than Singapore who are regular users of Tmall, Alibaba and AliExpress.
  • Malaysia is a close political ally of China. (Not everything is purely business; read between the lines).
  • Malaysia has more physical space than Singapore to fit in a massive logistics operation.

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But Amazon is recruiting people…right?

You may know someone who works in the ecommerce space in Southeast Asia who has received a phone call from an Amazon recruiter. Yes, Amazon is recruiting but not for the reasons you think.

Most of the jobs sourced are for its cross-border business based in Singapore long ago to get Southeast Asian merchants to sell on the Amazon global marketplace.

ecommerceIQ, Amazon jobs, Singapore

Amazon is hiring in Thailand for Amazon Global Selling (merchant acquisition) and AWS, not for local retail.

Indonesia would be the place to start

In line with Amazon’s strategy of going into large, singular markets, the most recent being Australia, a Singapore landing would be ruled out. If Amazon is really set on conquering Southeast Asia, a more likely entrance would target Indonesia. With a young population of 250 million and growing, Indonesia is the ‘new China’ — an economic and ecommerce powerhouse in a region of 600 million people.

Having said that, the window of opportunity for Amazon in Indonesia is closing fast. With Alibaba’s backing, Lazada is doubling down on its biggest market in Southeast Asia, and local giants like Lippo Group have pumped over $500 million into its ecommerce venture, MatahariMall. Then there’s JD that sneaked into Indonesia in 2015 and seen steady year-on-year growth and ecommerce veterans such as blibli.

To accelerate a move into Southeast Asia, a plausible option for Amazon is to buy its way into the market even though it didn’t work so well with China.

Even its bid to acquire Souq.com in the Middle East is still up for debate.

Fortunately for Amazon, Indonesia’s ecommerce space is still developing with plenty of players that could want a powerful ally like Amazon. Lets wait and see.

By Sheji Ho, aCommerce Group CMO

What do you think? Will Amazon ever enter Southeast Asia?

Here’s what you should know before Monday ends.

1. Cashback and consumer analytics app Snapcart raises $3m

The startup, which has offices in Indonesia and the Philippines has raised $3m pre-Series A funding led by Vickers Venture Partners.

The funding is aimed at improving analytics tech and customer engagement

Snapcart gathers shopper and purchase data by incentivizing consumers to upload their shopping receipts into its app in exchange for cash-back rewards.

The company is currently undertaking due diligence over its next regional expansion. Thailand is likely to be that market, but the company is yet to officially make a move.

Read the rest of the story here.

 

2. eBay is overhauling its homepage to add personalization

The new design features horizontal image carousels stacked one on top of the other. Rows are organized by items you’ve recently viewed, items you’ve added to a list of products you are “watching” and rows set aside for products recommended to you by eBay’s user algorithm.

While recommendations and personalization seem like table stakes for a large ecommerce site today, it is absolutely crucial that eBay gets this right.

That’s because the main advantages eBay has over everyone else — including Amazon — are rare items you can’t find anywhere else.

Read the rest of the story here.

 

3. Recommended Reading: Amazon’s ambitions unboxed

Over time, Amazon could introduce new forms of automation, putting traditional retail jobs in jeopardy. At the same time, locating those stores close to customers’ homes could also help Amazon further its ambitions of delivering internet orders within hours.

The company is exploring the idea of creating stores to sell furniture and home appliances, like refrigerators

The kinds of products that shoppers are reluctant to buy over the internet sight unseen, so to speak. Amazon is also kicking around an electronics-store concept similar to Apple’s retail emporiums.

Read the rest of the story here.

 

Amazon was initially poised to make its much anticipated foray into Southeast Asia in Q1 this year. Now, it seems like the ecommerce giant hat delayed its entry to ‘later this year’, according to reports.

The long awaited launch has been relatively under the radar, although sources revealed that Amazon was planning to introduce its Prime and Fresh services to Southeast Asians. The region’s current most popular marketplace Lazada has in turn doubled down in the region to prepare for Amazon’s arrival, having acquired online grocery service Redmart in November last year.

But it seems that the US ecommerce giant is prioritizing other projects for now. Here are some of its most recent activity, including an acquisition and other market entry:

Source: Amazon Australia Twitter Account (Not yet verified)

Amazon poised to enter Australia

ABC Australia reported on 22nd March that Amazon is planning a launch down under and promising cheaper prices, faster delivery times and its online groceries delivery service. The company has reportedly hired more than a hundred people to cover roles in IT and logistics.

“They are the animal that went right across America devouring all before it, sending everyone broke,” said Gerry Harvey, founder of Australian online retailer, Harvey Norman.

There isn’t a confirmed launch date yet for Amazon AU.

Amazon acquires Souq.com to tackle the Middle East

Amazon has confirmed its acquisition of Dubai online retailer, Souq.com. The online retailer has similar offerings as Amazon, selling electronics, fashion and household items to six Middle Eastern countries. It was launched in 2005 as an online auction site, and pivoted to become an online marketplace in 2011.

Saudi Arabia and the UAE are attractive to Amazon being among the top countries worldwide for mobile penetration.

Souq has gained a large following, with an average 27 million visits spanning over six months based on SimilarWeb traffic.

Source: SimilarWeb

India’s ongoing battle

With Alibaba’s injection of $200 million into Paytm and biggest rival Flipkart’s recent $1 billion fundraising to solidify claims on India, Amazon will need to focus on the country to capture India’s projected $220 billion online GMV opportunity.

Bank of America Merrill Lynch report stated that India could become Amazon’s second largest market (after the US) after its investment of $5 billion into operations there.

“While revenues are relatively small to Amazon’s global scale, Amazon India could generate $81 billion in GMV and $2.2 billion in operating profit by 2025,” – Economic Times India  

There’s a lot of buzz brewing in India – Flipkart restructuring, Walmart investment, etc. – it’s no wonder Amazon is focusing on the activity.

But let’s not forget about Southeast Asia

Delayed or not, Amazon’s postponed launch date should be encouraging for local online and offline players alike, as it gives them more time to gear up to fight the giant.

Amazon is quietly laying down the groundwork for its Southeast Asian launch to meet the clear demand for its services here.

Google Trends over 12 months show that people are searching for Amazon, in relations to Singapore.

Google Trends search for Amazon.com, Inc. in Singapore

And it isn’t only retail businesses that are sweating because of Amazon’s global stretch. Advertising giants such as Google, especially as over 55% of Indonesians start their product search on a popular marketplace such as Lazada ID or Tokopedia.  

“The long-tail capacity, common for marketplaces, makes it feasible for Amazon to not just be an online retailer and a marketplace but also the search engine where it all starts.” Early Moves

Players, are you ready?

Not many companies can say they are growing faster than the country’s expansion but Jing Dong Mall or JD.com, one of China’s most well known online retailers, is growing at almost 40% year on year. The B2C company can also add the following achievements under its belt: Fortune Global 500 member, biggest competitor to Alibaba’s Tmall and last year, acquired Wal-Mart’s Chinese division, Yihaodian.

Louis Li, the Deputy General Manager of JD Worldwide, wants to let the world know that China’s market is still maturing and open for business.

It’s hard for industry businesses to forget about China when the superpower has overtaken the US in total online spend at $752 billion in 2016, see fig below, and expected to grow 20% annually by 2020.

What are some important factors brands and retailers need to consider before selling to consumers in China’s red ocean? eIQ speaks to Louis about his views at Last Mile Fulfillment Asia.

Be the little guy

“Even if you’re big overseas, don’t assume the Chinese will know who you are and what you offer,” comments Louis.

“Be prepared to do what the smaller brands have to do to become familiar.”

This means dedicating resources to consumer education about what your business can offer and rigorous content marketing on the right platforms. This also means legwork to build a trustable name from scratch no matter how big you are elsewhere.

The channels are different

“Unlike the West, the Chinese don’t use Google, Youtube or Facebook,” comments Louis. “Companies will need to find the right tools to do marketing.”

Some of China’s most popular platforms are Mobile QQ and Tencent’s WeChat, the country’s largest chatting app that also facilitates payments, taxi-hailing, news services, food delivery and much more.

The platform boasts over 800 million users and has welcomed notable brands such as Coach, Chanel, Burberry and Apple onboard who share promotions, support followers and run sales campaigns.

JD and Tencent formed a strategic partnership in May 2016 to share big data with brands to reach more niche customers versus general sweeping TV or newspaper ads.

Source: eMarketer

Through a WeChat campaign during Chinese New Year last year, JD was able to increase Japanese skincare SK-II brand followers by 20,000.

Knowledgeable customer service reps

It’s understood that strong customer support is vital to any successful business. Louis suggests automating as much of the general inquiries as possible, for example a chatbot answering common questions such as “where can I track my package? How can I get a refund?“

A few other pointers to keep in mind when serving the Chinese consumer:

  • 73% of consumers would expand their purchases with a merchant by 10% if the merchant delivered superior customer experience
  • If they already provided their telephone number and credit card information online, they do not expect to have to provide the same information again
  • Chinese consumers like to share online and expect to be heard, the reply of the company can determine their repurchase rate
  • 86% of consumers are willing to pay more for a better customer experience

*Source: Deloitte’s “Delivering Superior Customer Experience in China”

Invest heavily or drown in the red ocean

Ecommerce in China is extremely competitive, much more than other markets, so companies should be ready to allocate resources to a team and to logistics to ensure products are delivered quickly to the end customer – especially the Chinese consumer who already has expectations.

“If you promise people to deliver same day, people will more likely buy,” says Louis. “Our people will literally cross rivers and climb mountains to get the package to the end customer.”

In 2016, JD fulfilled a total of 1.6 billion orders through its own extensive logistics network: 256 warehouses covering 5.6 million m2 and 6,906 delivery and pickup stations in China.

China’s cross-border future

By 2020, a quarter of the country’s population will be shopping either directly on foreign-based sites or through third parties. Online consumption already accounted for 13.5% of all retail spending in the country in 2016 and consumers in low-tier cities are outspending those in high-tier cities online.

The demand for goods exists. The demand for goods in Southeast Asia also exists and is strong. Not only do Chinese consumers want Thai consumer goods such as fresh fruits, the amount of trade between China and Cambodia has taken off since 2012.

Source: Bloomberg

The more online retailers, the better growth for China’s economy and its citizens is how Louis sees it.

“Ecommerce helps consumers,” says Louis. “The farmer in China’s outer provinces would never have been able to get their hands on an iPhone 7 until now.”

Forget about China? I doubt anyone will any time soon.

By: Cynthia Luo