Amazon has entered Singapore in a new fashion that should put new countries on alerts. As I wrote in my newsletter last night that this is potentially a very big future indicator. By using Prime Now Amazon is leveraging local assets (local logistics, staff) to enter Singapore.
This past week Amazon entered Singapore via their on demand mobile app, Prime Now. Amazon has used this country as its market entry into South East Asia. Singapore is not large and thus quicker market entry has been possible. Amazon has used 2 Singapore born staff to go run this new market. By appearing in Appstores instead of via a website Amazon has shown their secretive nature but also how they are going to go into new markets in Asia. This past week should provide more than enough evidence of the future battle that is going to appear more and more, Alibaba vs Amazon. Both have significant capital and desire to enlarge their businesses.
In the past Amazon has entered a new market via their Kindle business. The process would be as following:
- Negotiate with local publishers regarding ebooks and publishing rights.
- Once local publishers has provided Amazon with enough content, they then announce that they are entering a new location.
- A new Amazon website is launched and only shows Kindle Books and Kindle devices.
- This was then augmented with the Amazon Appstore and relevant additional Amazon services.
This was the market entry process used by Amazon to enter Brazil. This approach provided the local ecommerce industry with plenty of clues about Amazon’s impending market entry.
The Singapore market entry was totally different which indicates to me that Amazon is constantly looking at fast market entry. Amazon dictates everything they do and are not influenced by media reports, leaks and thoughts mentioned by investment analysts. The Singapore approach:
- Locate a large space for a giant logistics facility which will be used to contain the products bought by local customers.
- Hire logistics staff and move Amazon staff that are Singaporean by birth.
- Find a local logistics partner who would be able to assist with delivery that meets the stringent requirements set by Prime Now.
- Find local partners who would be selling their products via the Prime Now app.
- Upload the Prime Now apps to the relevant Appstores and email Singapore customers who have previously bought products via Amazon.
The strategy used in Singapore is faster, provides opportunities for Singapore based businesses and ensures that Amazon can create an appetite for Prime. Prime Now in Singapore at the moment is open to customer who do not have Prime accounts. Singapore will be a firm test for Amazon as they are currently struggling to keep the service active.
This is a much more aggressive manner to enter a market but Amazon is playing catch up in South East Asia. Lazada has ensured that they are marketleader in most of the South East Asian markets and thus Amazon needs to be aggressive.
Singapore is the first real battle for ecommerce domination
Singapore is also the first real opportunity to see Amazon and Alibaba battling for customers. Alibaba is indirectly battling Amazon via Lazada, who they have majority control over via a $2 billion investment / acquisition. This is the first time in a very long time that Amazon is entering a market and they are not market leader and thus Singapore will be a good indicator as to their plans. I am aware that Singapore is smaller geographical area than any other South East Asian market and thus I would be surprised if they enter other Asian markets in the coming 12 months.
Another Trojan Horse
When I was in the US in October 2016, I saw plenty of advertising for Prime Now and did not realize that Amazon had the intent to use Prime Now as a market entry tool. Yes, the process in the US is entering different States but Country entry is a total different idea. Amazon continues to fascinate me as this proves that they are always learning from their experiments and look at reusing programmes and ideas to spend less capital in operating their business. Prime Now, Alexa and Fulfillment by Amazon (FBA) are all Trojan Horses designed to benefit Amazon and no-one else.