Amazon faces hurdles from malls in Singapore

Bloomberg

As Amazon.com Inc. pushes into Southeast Asia with a new venture into Singapore, the online retailer is facing some tough hurdles. Shopping in air-conditioned malls is practically a national sport, and e-commerce rivals moved in long ago.
Delivery delays also marred Amazon’s debut in July,
when on-the-ground operations began with Prime Now two-hour deliveries. Even when including orders placed on its main US website, Amazon lags behind local web store Lazada and its parent, Alibaba Group Holding Ltd.
For the island country’s consumers, a store or a shopping centre is usually just minutes away. In fact there are too many stores, with mall operators scaling back operations after years of over-expansion. While retailers blame a weaker economy and increased web shopping, the country of 5.6 million trails most of the developed world when it comes to e-commerce. Just 4.6 percent of Singapore’s retail sales took place online last year, compared with 15 percent in the UK and 10 percent in the US, according to Euromonitor International.
“Singapore is a very small city-state, so shopping is one of the favourite pastimes for all Singaporeans,” said Chan Hock Fai, a fund manager at Amundi Asset Management. Because retailing is a more mature market in the country, compared with emerging retail and e-commerce markets, “growth rates are harder to come by,” he said.
At stake is a Southeast Asian e-commerce market that’s projected to reach $88 billion by 2025, according to a report by Google and Temasek Holdings Pte. While Amazon is firmly established in Japan, the web retailer has mostly ceded China to Alibaba and JD.com Inc. India remains a top priority, with Chief Executive Officer Jeff Bezos committing $5 billion to expand and vanquish local rival Flipkart Online Services Pvt. Australia could soon be another new market for Amazon.
“We’ve launched Prime Now in 50 cities across nine countries and Singapore is our biggest launch ever,” said Amanda Ip, a spokeswoman at Amazon Prime Now. “We are grateful for the exciting response from customers.”
Jin-Yan Ang, 29, is an Amazon Prime shopper who decided to use the service when he wanted to buy a Go-Pro action camera two days before going on vacation. After that, he also ordered chilled wine for a party and other daily necessities. “On the down side, Amazon Prime Now needs to improve the variety of offerings,” said Ang, a procurement manager.
In terms of scale, Lazada dwarfs Amazon locally, offering more than 30 million products compared with tens of thousands via Prime Now.
The Asian online retailer, originally founded by Rocket Internet SE in 2011, has more than 6.6 million unique visitors a month and has seen orders triple from 2016.
“There is huge potential for the e-commerce industry in Singapore,” said Alexis Lanternier, Lazada Singapore’s CEO.
For web retailers, the lure of opening a physical store to cater to Singaporean shoppers is proving hard to ignore.