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Could Amazon Start Southeast Asia Expansion in Indonesia, Not Singapore?

Could Amazon Start Southeast Asia Expansion in Indonesia, Not Singapore?

Amazon is ready to enlarge its presence in Asia. Months after it pumped $3 billion into its India business and a week after it quietly introduced its Prime service in China, plans for its entry into Southeast Asia next year have surfaced.

Amazon is covertly acquiring assets, including refrigerated trucks, and making new hires as part of an initiative led by head of ASEAN Steven Scrive, two sources close to the company told TechCrunch. The current plan is to launch selected services in Singapore within the first quarter of 2017, one source added.

Amazon recently opened offices in Singapore and there were reports of plans to launch in the first quarter — which have now been pushed back to later this year, according to TechCrunch.

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. It is likely to initially offer its Prime delivery service alongside its AmazonFresh grocery service, in Singapore.

Amazon made an offer to acquire Redmart months before a deal with Lazada was concluded, but that bid was judged to be too low, a source with knowledge of discussions told TechCrunch. 

With the delay for Amazon launch in Singapore, analysts see that Singapore may not be a viable strategy. Considering Amazon’s past and present market strategy which perform best in wide-open market in which it can accumulate and leverage its scale advantage, Indonesia would be the best place to start. 

Lazada already has 4-advantage in Indonesia. Image: ECommerceIQ Asia
Lazada already has 4-advantage in Indonesia. Image: ECommerceIQ Asia

Amazon is currently dominating the competition in large market: US, Japan, UK, Germany, France, increasingly India and Australia. With a young population of 250 million (and growing), Indonesia is the “new China,” an economic and e-commerce powerhouse in a region of 600 million people.

However, pundit in Tech in Asia, argue 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 US$500 million into its ecommerce venture, MatahariMall. Then there’s JD that sneaked into Indonesia in 2015 and has seen steady year-on-year growth. There are also ecommerce veterans such as Blibli. 

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

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