Global Stretch: Divided Focus Has Amazon Postponing Launch in Southeast Asia

Written by Rara Kinasih on March 27, 2017

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?

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