The gloves are off in the ecommerce ring in Southeast Asia
In early November, Amazon shook up the news wires with the announcement they will be (finally) entering the rapidly growing E-commerce scene in Southeast Asia. This comes off the heels of its recent launch of Prime in China as well as a significant cash infusion they executed in its India business to the tune to $3 billion.
This would obviously cause some concern to Lazada, currently the region’s largest e-commerce player, who is now backed by Alibaba, having acquired them for $1 billion earlier this year. Up until this point, Lazada has been dominating the scene here and have had relatively few competitors to deal with.
But with a Southeast Asia populace of around 620 million you would think there is room for a few new players. I do at least.
By 2020 it’s estimated the region’s e-commerce market will surpass US$25 billion compared to 2015 where it hit US$11 billion. Right now Southeast Asia is hands-down the fastest growing e-commerce region in the world. Malaysia and Thailand are the leaders at the moment pulling in around US$2 billion each, but we are expected to see these markets get eclipsed by the more emerging economies of Vietnam and Indonesia.
With only a few e-commerce players in the region at the moment, each of them will have to start working to better differentiate themselves beyond just price and logistics. A good example of this would be Lazada’s recent acquisition of Redmart, Singapore’s largest online grocer. This is a move they’ve made to position themselves in the fast growing online grocers category.
It’s expected that Amazon will come in immediately with its Prime delivery service as well as Amazon Fresh, it’s own online grocery service to Singapore while potentially expanding to Indonesia later in the year.
Just last week in its hometown of Seattle, Amazon launched Amazon Go, its own brick-and-mortar grocery store that has no checkouts. They offer an entirely “checkout free” shopping experience.The store and shelves are equipped with “computer vision, sensor fusion, and deep learning,” meaning it can detect when products are removed and returned to the shelves. When you leave the store, your account is automatically charged.
As Amazon moves to enter the region, looking at an Amazon Go offering could be an interesting way to make some noise and differentiate itself.
Regardless of these moves, E-commerce will continue to be a bright spot in Southeast Asia. The two core areas that need to be focused on more are to improve logistics and payment services. Once these are resolved, there’s no limit for growth.
And yes, competition is good. I welcome Amazon and any other new entrant. Give me choice I say.
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