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Amazon to Challenge Alibaba for SEA Dominance

Written by Andrew Maxwell

Chinese giant Alibaba is likely to face a challenge to its hitherto unopposed dominance of Southeast Asia next year, when the American online mammoth, Amazon launches its invasion.

Information about the enterprise is still patchy, but it appears that the online retailer will begin to offer services such as Amazon Prime and AmazonFresh within the first few months of 2017. Operations will be based in Singapore, a natural hub and an ideal staging location for reaching out to the wider region. It is thought that there are plans to expand early into Indonesia, and from there into other countries in the region.

This expansion has been some time in the making. It seems that Amazon has been drawing up plans to enter the Southeast Asian market for some time, although this has been kept secret. Perhaps one of the biggest indicators of things to come is the fact that the company has quietly been hiring staff and assembling a fleet of refrigerated trucks in the equatorial city-state.

Singapore is widely recognized as a natural entry-point to SEA markets. It is a well-established hub of banking and business, with a highly educated workforce, high standards of living, great infrastructure, a business-friendly government and English as its working language.

While establishing operations in Singapore may be a smooth process for Amazon, entry into specific SEA markets can be a whole different kettle of fish. Not only does the region possess a great variety of languages and cultures, there are huge differences in political and economic models, regulations and infrastructure. And then there’s the existing competition.

In Malaysia alone, people already benefit from online retail options such as Lazada, 11Street and GemFive. Amazon will need to push its unique selling points in order to open up space in the market, and that will differ from one country to another. On top of that, the American company will need to establish functioning logistics in each country if it is to be successful. All of which means it could take some take to break out of Singapore.

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Andrew Maxwell

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